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   <title>Prepared and filed by St Ives Financial</title>

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<p align="center"><b><font size="2" face="serif">As filed with the Securities
      and Exchange Commission on March 20, 2006.</font></b></p>
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<p align="center"><font size="3" face="serif"><b>SECURITIES </b><b>AND EXCHANGE
      COMMISSION<br>
</b></font><font size="2" face="serif"><b>WASHINGTON, D.C. 20549</b></FONT></P>
<p align="center"><b><font face="serif" size="5">FORM 20-F</font></b></p>
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    <td align="left" width="10%"><img src="emptybox.gif" width="12" height="12"></td>
    <td align="left"><font size="2" face="serif">REGISTRATION STATEMENT
        PURSUANT TO SECTION 12(b) OR 12(g) OF THE</font></td>
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    <td align="left"><font size="2" face="serif">SECURITIES EXCHANGE ACT OF 1934</font></td>
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    <td align="center">&nbsp;</td>
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    <td align="left"></td>
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    <td align="center"><font size="2" face="serif"><b>or</b></font></td>
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    <td align="left">&nbsp;</td>
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    <td align="left"></td>
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    <td align="left"><img src="tickedbox.gif" width="12" height="12"></td>
    <td align="left"><font size="2" face="serif">ANNUAL REPORT PURSUANT TO SECTION
        13 OR 15(d) OF THE</font></td>
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    <td align="left"><font size="2" face="serif">SECURITIES EXCHANGE ACT OF 1934
        for the fiscal year ended December 31, 2005</font></td>
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    <td align="left"></td>
    <td align="center">&nbsp;</td>
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    <td align="left"></td>
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    <td align="left"></td>
    <td align="left"></td>
    <td align="left"></td>
    <td align="center"><font size="2" face="serif"><b>or</b></font></td>
    <td align="left"></td>
    <td align="left"></td>
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    <td align="left"></td>
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    <td align="left"></td>
    <td align="left">&nbsp;</td>
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    <td align="left"></td>
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    <td align="left"><img src="emptybox.gif" width="12" height="12"></td>
    <td align="left"><font size="2" face="serif">TRANSITION REPORT PURSUANT TO
        SECTION 13 OR 15(d) OF THE</font></td>
    <td align="left"></td>
    <td align="left"></td>
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    <td align="left"></td>
    <td align="left"><font size="2" face="serif">SECURITIES EXCHANGE ACT OF 1934</font></td>
    <td align="left"></td>
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    <td align="left"></td>
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    <td align="left"></td>
    <td align="center">&nbsp;</td>
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    <td align="left"></td>
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    <td align="left"></td>
    <td align="center"><font size="2" face="serif"><b>or</b></font></td>
    <td align="left"></td>
    <td align="left"></td>
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    <td align="left"></td>
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    <td align="left"></td>
    <td align="left">&nbsp;</td>
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    <td align="left"><img src="emptybox.gif" width="12" height="12"></td>
    <td align="left"><font size="2" face="serif">SHELL COMPANY REPORT PURSUANT
        TO SECTION 14 OR 15(d) OF THE </font></td>
    <td align="left"></td>
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    <td align="left"></td>
    <td align="left"><font size="2" face="serif">SECURITIES EXCHANGE ACT OF 1934</font></td>
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<p align="center"><font size="2" face="serif">For the transition period from
    N/A to N/A<br>
  <font face="serif" size="1"><br>
  </font>Commission file number: 1-14930</font></P>
<p align="center"><font size="2" face="serif"><b><font face="serif" size="5">HSBC
        Holdings plc</font><br>
  (Exact name of Registrant as specified in its charter)<br>
</b></font></p>
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    <td align="center" width="51%"><font size="2" face="serif"><b>N/A</b></font></td>
    <td align="center"><font size="2" face="serif"><b>United Kingdom</b></font></td>
  </tr>
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    <td align="center"><font size="2" face="serif">(Translation of Registrant&#8217;s
        name into English)</font></td>
    <td align="center"><font size="2" face="serif">(Jurisdiction of incorporation
        or organization)</font></td>
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<p align="center"><font size="2" face="serif"><b>8 Canada Square<br>
  London E14 5HQ<br>
  United Kingdom<br>
  </b>(Address of principal executive offices)<br>
</font></p>
<p align="left"><font size="2" face="serif">Securities registered or to be registered
    pursuant to Section 12(b) of the Securities Exchange Act of 1934:</font></p>
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    <td align="center" width="50%"><font size="2" face="serif"><u>Title of each
          class</u></font></td>
    <td align="center"><u><font size="2" face="serif">Name of each exchange on which
        registered</font></u></td>
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    <td></td>
    <td>&nbsp;    </td>
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    <td align="center"><font size="2" face="serif">Ordinary Shares, nominal value
        US$0.50 each.</font></td>
    <td align="center"><font size="2" face="serif">London Stock Exchange<br>
      Hong Kong Stock Exchange<br>
      Euronext Paris<br>
      Bermuda Stock Exchange<br>
      New York Stock Exchange*</font></td>
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    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
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    <td align="center"><font size="2" face="serif">American Depository Shares,
        each representing 5 Ordinary<br>
      Shares of nominal value US$0.50 each.</font></td>
    <td align="center"><font size="2" face="serif">New York Stock Exchange<br>
    </font></td>
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    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
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    <td align="center"><font size="2" face="serif">6.20% Non-Cumulative Dollar
        Preference Shares, Series A</font></td>
    <td align="center"><font size="2" face="serif">New York Stock Exchange*</font></td>
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    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
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    <td align="center"><font size="2" face="serif">American Depository Shares,
        each representing one-fortieth of a Share of 6.20% Non-Cumulative Dollar
        Preference Shares, Series A </font></td>
    <td align="center"><font size="2" face="serif">New York Stock Exchange</font></td>
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<p align="left"><font size="2" face="serif">Securities registered or to be registered
    pursuant to Section 12(g) of the Securities Exchange Act of 1934: None</font></p>
<p align="left"><font size="2" face="serif">Securities for which there is a reporting
    obligation pursuant to Section 15(d) of the Securities Exchange Act of 1934:
    None</font></p>
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<p align="left"><font size="2" face="serif">The number of outstanding shares
    of each of the issuer&#8217;s classes of capital or common stock as of December
    31, 2005 was:<br>
</font></p>
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    <td align="center"><font size="2" face="serif">Ordinary Shares, nominal value
        US$0.50 each</font></td>
    <td width="50%" align="center"><font size="2" face="serif">11,172,075,550</font></td>
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<p align="left"><font size="2" face="serif">Indicate by check mark if the registrant
    is a well-known seasoned issuer, as defined in Rule 405 of the Securities
    Act:</font></p>
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    <td align="center" width="50%"><font size="2" face="serif">Yes <img src="tickedbox.gif" width="12" height="12"></font></td>
    <td align="center"><font size="2" face="serif">No <img src="emptybox.gif" width="12" height="12"></font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">Indicate by check mark if the registrant
    is not required to file reports pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934:</font></p>
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  <tr valign="top">
    <td align="center" width="50%"><font size="2" face="serif">Yes <img src="emptybox.gif" width="12" height="12"></font></td>
    <td align="center"><font size="2" face="serif">No <img src="tickedbox.gif" width="12" height="12"></font></td>
  </tr>
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<p align="left"><font size="2" face="serif">Indicate by check mark whether the
    registrant (1) has filed all reports required to be filed by Section 13 or
    15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
    (or for such shorter period that the registrant was required to file such
    reports), and (2) has been subject to such filing requirements for the past
    90 days.</font></p>
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    <td align="center" width="50%"><p><font size="2" face="serif">Yes <img src="tickedbox.gif" width="12" height="12"></font></p>
    </td>
    <td align="center"><font size="2" face="serif">No <img src="emptybox.gif" width="12" height="12"></font></td>
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<p align="left"><font size="2" face="serif">Indicate by check mark whether the
    registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
    filer. See definition of accelerated filer and large accelerated filer&#8221; in
    Rule 12b-2 of the Exchange Act:</font></p>
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    <td align="center" width="33%"><font size="2" face="serif">Large accelerated
        filer <img src="tickedbox.gif" width="12" height="12"></font></td>
    <td align="center" width="33%"><font size="2" face="serif">Accelerated filer <img src="emptybox.gif" width="12" height="12"></font></td>
    <td align="center"><font size="2" face="serif">Non-accelerated filer <img src="emptybox.gif" width="12" height="12"></font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">Indicate by check mark which financial
    statements Item the registrant has elected to follow:</font></p>
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    <td align="center" width="50%"><font size="2" face="serif">Item 17 <img src="emptybox.gif" width="12" height="12"></font></td>
    <td align="center"><font size="2" face="serif">Item 18 <img src="tickedbox.gif" width="12" height="12"></font></td>
  </tr>
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<p align="left"><font size="2" face="serif">Indicate by check mark whether the
    registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):</font></p>
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  <tr valign="top">
    <td align="center" width="50%"><font size="2" face="serif">Yes <img src="emptybox.gif" width="12" height="12"></font></td>
    <td align="center"><font size="2" face="serif">No <img src="tickedbox.gif" width="12" height="12"></font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">* Not for trading, but only in connection
    with the registration of American Depositary Shares.</font></p>
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<div style="page-break-before:always"></div>
<page>
<p><a name="#contents"></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
  D I N G S &nbsp; P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Table of </FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B>Contents</B></FONT></P>
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  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Page</FONT></I></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Certain Defined Terms</FONT></B></TD>
        <TD align=right>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">below</FONT></I></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p1"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial Highlights</FONT></B></a></TD>
        <TD width=10% align=right><a href="#p1">
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p3"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Five-Year Comparison</FONT></B></a></TD>
        <TD align=right><a href="#p3"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p5"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cautionary
      Statement regarding Forward-Looking Statements</FONT></B></a></TD>
        <TD align=right><a href="#p5"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p6"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Information about the Enforceability of Judgements made in the United States</FONT></B></a></TD>
        <TD align=right><a href="#p6"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">6</font></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p6a"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exchange
                Controls and Other Limitations affecting Equity Security Holders</FONT></B></a></TD>
        <TD align=right><a href="#p6a"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</font></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p7"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Description of Business</FONT></B></a></TD>
        <TD align=right><a href="#p7"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p20"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Governance, Regulation and Supervision</FONT></B></a></TD>
        <TD align=right><a href="#p20"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p25"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Description of Property</FONT></B></a></TD>
        <TD align=right><a href="#p25"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p25a"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Legal Proceedings</FONT></B></a></TD>
        <TD align=right><a href="#p25a"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p26"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial Review</FONT></B></a></TD>
        <TD align=right><a href="#p26"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p178"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other Information</FONT></B></a></TD>
        <TD align=right><a href="#p178"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">178</FONT></a></TD>
</TR>
</TABLE>
</div>
<div style="float: left; width: 4%">
</div>
<div style="float: right; width: 48%">


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Page</FONT></I></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p184"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Board of Directors and Senior Management</FONT></B></a></TD>
        <TD width=10% align=right><a href="#p184">
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">184</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p189"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Report of the Directors</FONT></B></a></TD>
        <TD align=right><a href="#p189"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">189</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p215"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Directors&#146; Remuneration
      Report</FONT></B></a></TD>
        <TD align=right><a href="#p215"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p233"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Statement
      of Directors&#146; Responsibilities in relation to Financial Statements</FONT></B></a></TD>
        <TD align=right><a href="#p233"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">233</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p234"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Independent
      Auditor&#146;s Report</FONT></B></a></TD>
        <TD align=right><a href="#p234"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p236"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial Statements</FONT></B></a></TD>
        <TD align=right><a href="#p236"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">236</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p243"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Notes on the Financial Statements</FONT></B></a></TD>
        <TD align=right><a href="#p243"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">243</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Including:</FONT></I></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;<a href="#p244"><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Summary of significant accounting policies</FONT></I></a></TD>
        <TD align=right><a href="#p244"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">244</FONT></a></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;<a href="#p332"><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Transition to IFRSs</FONT></I></a></TD>
        <TD align=right><a href="#p332"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">332</FONT></a></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;<a href="#p375"><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Differences between IFRSs and US GAAP</FONT></I></a></TD>
        <TD align=right><a href="#p375"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">375</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p403"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Taxation of Shares and Dividends</FONT></B></a></TD>
        <TD align=right><a href="#p403"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">403</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p406"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Shareholder Information</FONT></B></a></TD>
        <TD align=right><a href="#p406"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">406</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p412"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Organisational Structure</FONT></B></a></TD>
        <TD align=right><a href="#p412"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">412</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p413"><B><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">SEC
                20-F Cross-Reference Sheet and Glossary</font></B></a></TD>
        <TD align=right><a href="#p413"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">413</FONT></a></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><a href="#p417"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Index</FONT></B></a></TD>
        <TD align=right><a href="#p417"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">417</FONT></a></TD>
</TR>
</TABLE>
</div><br clear="all">
<p>&nbsp;</p>
<p><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Certain Defined
Terms</font></b></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="48%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unless
        the context requires otherwise, &#145;HSBC Holdings&#146; means HSBC
        Holdings plc and &#145;HSBC&#146; or the &#145;Group&#146; means HSBC
        Holdings together with its subsidiaries and associates. Within this document
    the Hong Kong Special Administrative Region of the</FONT></td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">People&#146;s
        Republic of China is referred to as &#145;Hong Kong&#146;. When used
        in the terms &#145;shareholders&#146; equity&#146; and &#145;total shareholders&#146; equity&#146;, &#145;shareholders&#146; means
    holders of HSBC Holdings ordinary and preference shares.</FONT></td>
  </tr>
</table>


<p>&nbsp;</p>
<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p1"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
          Highlights</b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s Financial Statements and Notes thereon, as set out on pages 236 to 402, are prepared in accordance with International Financial Reporting Standards (&#145;IFRSs&#146;) as
  endorsed by the EU and effective for HSBC&#146;s reporting for the year ended 31 December 2005. There is no difference between IFRSs currently in effect and EU-endorsed IFRSs as they apply to the Group. This is the first time HSBC&#146;s annual
  financial statements have been prepared under IFRSs. Moving to IFRSs has necessarily involved the application of a number of available transition exemptions which means that prior year figures are not fully comparable with those presented in respect
  of 2005. Details of HSBC&#146;s transition to IFRSs are set out on page 332. HSBC previously reported under United Kingdom Generally Accepted Accounting Principles (&#145;UK GAAP&#146;).</FONT></p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In July 2005, HSBC published </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004 IFRS Comparative Financial
Information</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">, summarising the principal effects of IFRSs on the financial information previously reported in respect of 2004 and including a reconciliation between data
previously reported in respect of 2004 under UK GAAP and under IFRSs. HSBC&#146;s opening balance sheet at 1 January 2005 differs from the closing balance sheet at 31 December 2004 as the former reflects first-time adoption of International
Accounting Standard 32 &#145;Financial Instruments: Presentation&#146; (&#145;IAS 32&#146;), IAS 39 &#145;Financial Instruments: Recognition and Measurement&#146; (&#145;IAS 39&#146;) and IFRS 4 &#145;Insurance Contracts&#146; (&#145;IFRS
4&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain information for years prior to 2004 has been prepared under UK GAAP, which is not comparable with IFRSs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts
its business. Unless otherwise stated, the accounting information presented in this document has been prepared in accordance with IFRSs.</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>2005</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>US&#36;m</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>For the year</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income</font></td>
        <TD width="10%" align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>61,704</B></font></td>
        <TD width="2%" align=right><font size="2">&nbsp;</font></td>
        <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</font></td>
        <TD width="2%" align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>20,966</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit attributable to shareholders of the parent company</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>15,081</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>7,750</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,932</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>At the year-end</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>98,226</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99,197</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholders&#146; equity</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>92,432</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital resources</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>105,449</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,780</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts and deposits by banks</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>809,146</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">777,127</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>1,501,970</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk-weighted assets</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>827,164</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">759,210</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>US&#36;</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Per ordinary share</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basic earnings</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>1.36</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.18</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Diluted earnings</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>1.35</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.17</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>0.69</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.63</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net asset value at the year-end</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>8.16</B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.66</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>At</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>31 December</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
            December</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>2005</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Share information</B></font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 ordinary shares in issue (million)</font></td>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>11,334</B></font></td>
        <TD width=2% align=left><font size="2">&nbsp;</font></td>
        <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,172</font></td>
        <TD width=2% align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Market capitalisation (billion)</font></td>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">182</FONT></B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;190</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Closing market price per ordinary share:</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150; London</font></td>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#163;</FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.33</FONT></B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;8.79</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150; Hong
    Kong</font></td>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">HK&#36;</FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">124.50</FONT></B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;133.00</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Closing market price per
American Depositary Share (&#145;ADS&#146;)<SUP>1</SUP></font></td>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">80.47</FONT></B></font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">85.14</FONT></font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Over 1 year</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Over 3 years</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Over
              5 years</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
HSBC total shareholder
return (&#145;TSR&#146;) to 31 December 2005<SUP>2</SUP></font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">158.8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benchmarks:</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150; FTSE
            100<SUP>3</SUP></font></td>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120.8</font></td>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158.4</font></td>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">105.9</font></td>
        <TD width=2% align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150; MSCI
            World<SUP>4</SUP></font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">123.1</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159.1</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99.1</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<p>    <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 4.</FONT></I></p>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">1</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p2"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
          Highlights </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Capital
and performance ratios</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Capital ratios</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 1 capital</font></td>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.0</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.9</font></td>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total capital</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.0</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Performance ratios</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Return on average invested capital<SUP>5</SUP></font></td>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.9</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.0</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Return on average total
shareholders&#146; equity<SUP>6</SUP></font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.3</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-tax return on average total assets</font></td>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.06</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.14</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-tax return on average risk-weighted assets</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.01</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.13</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Credit coverage ratios</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges as a percentage of total operating income</font></td>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.74</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.06</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges as a percentage of average gross customer advances</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.16</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.04</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total outstanding
allowances against loan impairment as a percentage of</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">non-performing
loans at the year end</font></td>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;<b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">99.1</font></b></font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.9</font></td>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp; </td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Efficiency and revenue mix ratios</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cost efficiency ratio<SUP>7</SUP></font></td>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.2</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51.6</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; constant
    currency basis</FONT></font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52.4</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As a percentage of total operating income:</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; net
    interest income</FONT></font></td>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50.8</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55.5</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; net
    fee income</FONT></font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23.4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.1</font></td>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; trading
    income</FONT></font></td>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.5</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Constant currency</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Constant currency comparatives in respect of 2004 used in the 2005 commentaries are computed by retranslating into US dollars:</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the income
        statements for 2004 of non-US dollar branches, subsidiaries, joint ventures
        and associates at the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">average
    rates of exchange for 2005; and</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the balance
        sheets at 31 December 2004 for non-US dollar branches, subsidiaries,
        joint ventures and associates</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">at
        the
prevailing rates of exchange on 31 December 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No adjustment is made to the exchange rates used to translate foreign currency denominated assets and liabilities into the functional currency of any HSBC
branch, subsidiary, joint venture or associate.</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005
    compared with 2004</font></b></TD>
  <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD rowspan="5" align=left><font size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">As</FONT></B></TD>
        <TD rowspan="5" align=right>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Constant</FONT></B></TD>
        <TD rowspan="5" align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">reported</FONT></B></TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">currency
              on</FONT></B></TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">an
              underlying</FONT></B></TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">basis</FONT></B></TD>
  </TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating income and cost growth</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income</font></td>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net operating income before loan impairment charges and other credit risk provisions</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For details of the underlying constant currency basis, see &#145;Comparison of financial information&#146; on page</FONT><I><FONT size=1 face="TimesNewRoman,Italic,Times New
Roman,Times,serif"> </FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">.</FONT></I></P>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 4.</FONT></I><BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">2</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p3"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Five-year
comparison</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align="right">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2001</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">For the year</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</font></td>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,598</font></td>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,460</font></td>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,725</font></td>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,370</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,889</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,474</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,135</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,163</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,801</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</font></td>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
    impairment charges and other</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">credit risk provisions</FONT></font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions for bad and doubtful debts</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,093</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,321</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,037</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,514</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</font></td>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22,532</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15,808</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15,404</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,816</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,650</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,000</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,081</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
    attributable to shareholders of the</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">parent company</FONT></font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,774</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,239</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,992</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,750</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,932</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,532</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,001</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,467</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD height="16" align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At the year-end</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called up share capital</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,741</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,678</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,432</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholders&#146; equity</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; funds</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,473</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,765</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,688</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">105,449</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,780</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Capital resources<SUP>10</SUP></font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,042</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,430</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,854</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573,130</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">495,438</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">449,991</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,474</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,686</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undated subordinated loan capital</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,617</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,540</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,479</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35,856</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,914</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dated subordinated loan capital</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,580</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,831</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,001</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to customers<SUP>11,12</SUP></font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">528,977</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">352,344</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">308,649</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,970</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,034,216</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">758,605</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">695,545</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Per ordinary share</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.36</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.18</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basic earnings</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.84</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.67</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.54</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.35</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.17</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Diluted earnings</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.83</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.66</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.53</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.69</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.63</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.60</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.53</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.48</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.16</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.66</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net asset value at year-end</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.79</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.46</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.88</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Share information</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,334</FONT></B>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,172</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</td>
        <TD align=left bgcolor="#eeeeee"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50
              ordinary shares in</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> issue
    (millions)</font></font></td>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp; <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,960</font></font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</td>
        <TD align=right bgcolor="#eeeeee"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,481</font>&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</td>
        <TD align=right bgcolor="#eeeeee"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,355</font>&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</td>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=right>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=right>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=right>&nbsp;</td>
  <TD align=left>&nbsp;</td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial ratios</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50.7</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53.4</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividend payout ratio<SUP>13</SUP></font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60.6</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69.7</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76.2</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.06</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.14</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-tax return on average total assets</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.01</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.97</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.86</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.8</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.3</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Return
    on average total shareholders&#146; </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">equity</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Return on average shareholders&#146; funds</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.0</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.4</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.6</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.96</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.35</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
    total shareholders&#146; equity to</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> average
    total assets</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
    shareholders&#146; funds to </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">average
    total assets</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.06</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.91</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.87</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Capital ratios</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.0</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.9</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 1 capital</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.9</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.0</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.0</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.8</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.0</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total capital</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.0</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.3</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.0</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Foreign
exchange translation rates to </FONT><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</font></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.581</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.517</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Closing &nbsp;&#150; &#163;:US&#36;1</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.560</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.620</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.690</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD height="18" align=right><font size="2"><b>0.847</b></font></TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.733</font></td>
  <TD align=left>&nbsp;</td>
  <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150; &#128;:US&#36;1</font></td>
  <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.793</font></td>
  <TD align=left>&nbsp;</td>
  <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.953</font></td>
  <TD align=left>&nbsp;</td>
  <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.130</font></td>
  <TD align=left>&nbsp;</td>
</TR>
<TR valign="bottom">
        <TD height="18" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.550</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.546</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average &#150; &#163;:US&#36;1</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.612</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.666</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.695</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.805</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.805</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150; &#128;:US&#36;1</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.885</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.061</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.117</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
</TABLE>
<P align="left"><font size="2"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For
footnotes, see page 4.</font></i><font size="1">&nbsp;</font></font></P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">3</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p4"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
          Highlights </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Five-year comparison</FONT></B><B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><I><FONT size=1
face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Amounts in accordance with US GAAP</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2001</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Income statement for the year</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income available
for ordinary shareholders</font></td>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,703</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></td>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,506</font></td>
        <TD width=2% align=right><font size="2">&nbsp;</font></td>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,231</font></td>
        <TD width=2% align=right><font size="2">&nbsp;</font></td>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,900</font></td>
        <TD width=2% align=right><font size="2">&nbsp;</font></td>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,911</font></td>
        <TD width=2% align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other comprehensive income</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,271</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">983</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,401</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,502</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,439</font></td>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,750</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,932</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,974</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,632</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,394</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Balance sheet at 31 December</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,406,944</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,266,365</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012,023</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">763,565</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">698,312</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; funds</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93,524</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,082</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,251</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,831</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,444</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Per ordinary share</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basic earnings</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.33</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.15</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.69</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.52</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.53</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Diluted earnings</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.32</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.13</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.69</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.52</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.53</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.69</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.63</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.685</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.495</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.48</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net asset value at year end</font></td>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.25</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.06</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.32</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.89</font></td>
        <TD align=right><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.18</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
</TABLE>
<BR>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Comparison of financial information</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When reference to &#145;constant currency&#146; or &#145;constant exchange rates&#146; is made, comparative data reported in the functional currencies of HSBC&#146;s operations have been
translated at the appropriate exchange rates applied in the current period in respect of the income statement or the balance sheet. When reference to &#145;underlying basis&#146; is made, comparative information has been expressed at constant
currency and adjusted for the effect of acquisitions and the change in presentation of non-equity minority issues.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As the transition to IFRSs affects the comparability of the financial information presented in this document (see Note 1 on the Financial Statements), the
commentary that follows specifies the impact when this is material to a reader&#146;s understanding of the underlying business trends.</FONT></P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Footnotes to &#145;Financial Highlights&#146;</FONT><BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" align=left valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Each ADS represents five ordinary shares.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Total shareholder return (&#145;TSR&#146;) is defined on page 220.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The Financial Times-Stock Exchange 100 Index.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The Morgan Stanley Capital International World Index.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The definition of return on average invested capital and a reconciliation to the equivalent GAAP measures are set out on page 43.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The return on average total shareholders&#146; equity is defined as profit attributable to shareholders of the parent company divided by average total shareholders&#146;
equity.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The cost efficiency ratio is defined as total operating expenses divided by net operating income before loan impairment charges and other credit risk provisions.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">8</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Comparative data for 2004 excludes the provisions of IAS 32, IAS 39 and IFRS 4, which were adopted for the first time with effect from 1 January 2005.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">9</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The periods 2001-2003 were prepared in accordance with UK GAAP. The principal adjustments necessary to conform these periods with IFRSs are described in Note 46 on the Financial
Statements on page 332. HSBC&#146;s accounting policies under UK GAAP are stated in Note 2 on the Financial Statements in the </FONT></I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2004 Annual Report and Accounts.</font></td>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">10</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Capital resources are defined on page 173. A detailed computation for 2005 and 2004 is provided on page 176.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">11</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net of suspended interest and provisions for bad and doubtful debts (UKGAAP).</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">12</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net of impairment allowances against customers (IFRSs).</FONT></I></TD>
</TR>
<TR>
        <TD valign=top align=left>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">13</font></td>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Dividends per share expressed as a percentage of earnings per share (2001 to 2003: excluding goodwill amortisation).</FONT></I></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">4</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p5"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Cautionary
          Statement regarding Forward-Looking Statement</font>s</b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P>
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">This </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Annual Report</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> contains certain
forward-looking statements with respect to the financial condition, results of operations and business of HSBC.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements that are not historical facts, including statements about HSBC&#146;s beliefs and expectations, are forward-looking statements. Words such as
&#145;expects&#146;, &#145;anticipates&#146;, &#145;intends&#146;, &#145;plans&#146;, &#145;believes&#146;, &#145;seeks&#146;, &#145;estimates&#146;, &#145;potential&#146; and &#145;reasonably possible&#146;, variations of these words and similar
expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date
they are made, and it should not be assumed that they have been revised or updated in the light of new information or future events.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Written and/or oral forward-looking statements may also be made in the periodic reports to the United States Securities and Exchange Commission, summary
financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC&#146;s Directors, officers or employees to third parties, including
financial analysts.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in
some instances materially, from those anticipated or implied in any forward-looking statement. These factors include, among others:</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="5%">&#8226;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">changes
        in general economic conditions in the markets in which HSBC operates,
    such as:</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">changes
        in foreign exchange rates, in both market exchange rates (for example,
        between the US dollar and the pound sterling) and government-established
        exchange rates (for example, between the Hong Kong dollar and the US
    dollar);</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">volatility
        in interest
rates;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">volatility
        in equity markets, including in the smaller and less liquid trading markets
    in Asia and South America;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">lack of
        liquidity in wholesale funding markets in periods of economic or political
    crisis;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">illiquidity
        and downward price pressure in national real estate markets, particularly
    consumer-owned real estate markets;</font></td>
  </tr>
</table>
</div>

<div style="float: right; width:48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD>&nbsp;</TD>
        <TD width=5% valign="top">&nbsp;</td>
        <TD width=5% valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the impact of lower than expected investment returns on the burden of funding private and public sector defined benefit pensions;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the effect of unexpected changes in actuarial assumptions on longevity which would influence the funding of private and public sector defined benefit pensions;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">continuing or deepening recessions and employment fluctuations; and</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">consumer perception as to the continuing availability of credit, and price competition in the market segments served by HSBC.</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&#8226;</td>
  <TD colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">changes in
    governmental policy and regulation, including:</font></td>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</td>
  <TD valign="top">&nbsp;</td>
  <TD valign="top">&nbsp;</td>
</TR>
<TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the monetary, interest rate and other policies of central banks and bank and other regulatory authorities, including the United Kingdom Financial Services Authority, the Bank of England,
the Hong Kong Monetary Authority, the United States Federal Reserve, the US Office of the Comptroller of the Currency, the European Central Bank, the People&#146;s Bank of China and the central banks of other leading economies and markets where HSBC
operates;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">initiatives by local, state and national regulatory agencies or legislative bodies to revise the practices, pricing or responsibilities of financial institutions serving their consumer
markets;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">changes in bankruptcy legislation in the principal markets in which HSBC operates and the consequences thereof;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">general changes in governmental policy that may significantly influence investor decisions in particular markets in which HSBC operates;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for HSBC&#146;s products and
services;</font></td>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
        <TD valign="top">&nbsp;</td>
        <TD valign="top">&#8211;</td>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the costs, effects and outcomes of regulatory reviews, actions or litigation, including any additional compliance requirements; and</font></td>
</TR>
</TABLE>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">5</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p6"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Cautionary
            Statement regarding Forward-Looking Statements</font> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<p>&nbsp;</p>
<div style="float: left; width:48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD width="5%">&nbsp;</TD>
<TD width="5%">&#8211;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the effects of competition in the markets where HSBC operates including increased competition from non-bank financial services companies, including securities firms.</font></td>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan=2>&nbsp;</td>
</TR>
<TR>
  <TD valign=top>&#8226;</TD>
        <TD colspan="3" valign=top>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">factors specific to HSBC:</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</td>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
<TD>&#8211;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the success of HSBC in adequately identifying the risks it faces, such as the</font></td>
</TR>
</TABLE>
</div>
<div style="float: right; width:48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">incidence
        of loan losses or delinquency, and managing those risks (through account
        management, hedging and other techniques). Effective risk management
        depends on, among other things, HSBC&#146;s ability through stress testing
        and other techniques to prepare for events that cannot be captured by
      the statistical models it uses.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>

<P>&nbsp;</P>
</div><br clear="all">
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><b>Information
    about the Enforceability of Judgements made in the United States </b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings is a public limited company incorporated in England and Wales. Most of HSBC Holdings&#146; Directors and executive officers live outside the US. As a result, it may not be
possible to serve process on such persons or HSBC Holdings in the US or to enforce judgements obtained in US courts against them or HSBC Holdings based on civil liability provisions of the securities laws of the US. There is doubt as to whether
English courts would enforce:</FONT></P>
</div>
<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="5%">&#8226;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">certain
          civil liabilities under US securities laws</font> <font face="TimesNewRoman,Times New Roman,Times,serif">in
    original actions; or</font></font> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">judgements
            of US courts based upon these civil</font> <font face="TimesNewRoman,Times New Roman,Times,serif">liability
    provisions.</font></font></td>
  </tr>
</table>
<P><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">In addition, awards of punitive damages in actions brought in the US or elsewhere may be unenforceable in the UK. The enforceability of any judgement in the
UK will depend on the particular facts of the case as well as the laws and treaties in effect at the time</FONT></font></P>
</div><br clear="all">
<P>&nbsp;</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><b>Exchange
          Controls and Other Limitations affecting Equity Security Holders</b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width:48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
There are currently no UK laws, decrees or regulations which would prevent the
import or export of capital or remittance of distributable profits by way of
dividends and other payments
to
holders of HSBC Holdings&#146; equity securities who are not residents of the
UK. There are also no</font></P>
</div>
<div style="float: right; width:48%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
restrictions under the laws of the UK or the terms of the Memorandum and Articles
of Association of HSBC Holdings concerning the right of non-resident or foreign
owners to hold
HSBC
Holdings&#146; equity securities or, when entitled to vote, to do so.
<p></P>
</font>
  <P>
</div>
<p align="center"><font size="2"><br clear="all">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">6</FONT></font></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p7"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">
  &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H O
  L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp;
  </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P L C</FONT></p>
<p> <B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Description
  of Business</FONT></B></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp; </p>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td> <b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Introduction</font></b></td>
    </tr>
    <tr>
      <td><hr size="2" noshade></td>
    </tr>
  </table>
  <P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is one
    of the largest banking and financial services organisations in the world,
    with a market capitalisation of US&#36;182 billion at 31 December 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Headquartered in London, HSBC operates through long-established businesses and has an international network of over 9,800 properties in 76 countries and
territories in five geographical regions: Europe; Hong Kong; Rest of Asia-Pacific, including the Middle East and Africa; North America and South America. Within these regions, a comprehensive range of financial services is offered to personal,
commercial, corporate, institutional, investment and private banking clients. Services are delivered primarily by domestic banks, typically with large retail deposit bases, and consumer finance operations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC manages its business through four customer groups: Personal Financial Services; Commercial Banking; Corporate, Investment Banking and Markets; and
Private Banking. Personal Financial Services incorporates the Group&#146;s consumer finance businesses, reflecting their increasing integration within mainstream financial services around the world. The largest of these is HSBC Finance Corporation,
one of the leading consumer finance companies in the US.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The establishment in 1999 of HSBC as a uniform, international brand name ensured that the Group&#146;s hexagon corporate symbol has become an increasingly
familiar sight across the world.</FONT></P>

  <table width="100%%" border="0" cellpadding="0" cellspacing="0">
    <tr>
      <td> <b> <FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">History
        and development</FONT></b></td>
    </tr>
    <tr>
      <td><hr size="2" noshade></td>
    </tr>
  </table>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The founding member of HSBC, The Hongkong and Shanghai Banking Corporation Limited (&#145;The Hongkong and Shanghai Banking Corporation&#146;), was established in both Hong Kong and
Shanghai in 1865. The bank expanded rapidly, with an emphasis on building up representation in mainland China and throughout the rest of Asia, while also establishing a presence in the major financial and trading centres in Europe and
America.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the mid-1950s, The Hongkong and Shanghai Banking Corporation embarked on a strategy of pursuing profitable growth through acquisition as well as organic
development &#150; a combination that has remained a key feature of HSBC&#146;s approach ever since.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">With each acquisition, HSBC focused on integrating its newly acquired operations with its existing businesses with the aim of maximising the</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">synergy between the various components. Key to this integration process is the blending of local and international expertise.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The most significant developments are described below. Other acquisitions in 2005 are discussed in the &#145;Financial Review&#146; on pages 26 to
177.</FONT></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"></FONT>The Hongkong
    and Shanghai Banking </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporation
    purchased The Mercantile Bank of India Limited and The British Bank of the
    Middle East, now HSBC Bank Middle East Limited (&#145;HSBC Bank Middle East&#146;)
    in 1959. In 1965, it acquired a 51 per cent interest (subsequently increased
    to 62.14 per cent) in Hang Seng Bank Limited (&#145;Hang Seng Bank&#146;),
    consolidating its leadership position in Hong Kong. Hang Seng Bank is the
    third-largest listed bank in Hong Kong by market capitalisation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking Corporation entered the US market in 1980 by acquiring a 51 per cent interest in Marine Midland Banks, Inc., now HSBC USA,
Inc. The remaining interest was acquired in 1987.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 1981, The Hongkong and Shanghai Banking Corporation incorporated its then existing Canadian operations. HSBC Bank Canada has since made numerous
acquisitions, expanding rapidly to become the largest foreign-owned bank in Canada and the seventh-largest overall at 31 December 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">From the early 1980s, The Hongkong and Shanghai Banking Corporation began to focus its acquisition strategy on the UK. In 1987, it purchased a 14.9 per cent
interest in Midland Bank plc, now HSBC Bank plc (&#145;HSBC Bank&#146;), one of the UK&#146;s principal clearing banks. In 1991, HSBC Holdings plc was established as the parent company of the HSBC Group and, in 1992, it purchased the remaining
interest in HSBC Bank. As a consequence of this acquisition, HSBC&#146;s head office was transferred from Hong Kong to London in January 1993.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 1997, HSBC assumed selected assets, liabilities and subsidiaries of Banco Bamerindus do Brasil S.A., now HSBC Bank Brasil S.A.-Banco M&uacute;ltiplo
(&#145;HSBC Bank Brazil&#146;), following the intervention of the Central Bank of Brazil, and in Argentina completed the acquisition of Grupo Roberts, now part of HSBC Bank Argentina S.A. (&#145;HSBC Bank Argentina&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In December 1999, HSBC acquired Republic New York Corporation, subsequently merged with HSBC USA, Inc., and Safra Republic Holdings S.A. In July 2004, HSBC
Bank USA, Inc. merged with</FONT></P>
</div><br clear="all">
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">7</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p8"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
  D I N G S &nbsp; P L C</FONT></p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Description of Business
  </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank &amp; Trust (Delaware) N.A. to form HSBC Bank USA, N.A. (&#145;HSBC Bank USA&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To expand its base in the euro zone, in 2000 HSBC completed its acquisition of 99.99 per cent of the issued share capital of Cr&eacute;dit Commercial de
France S.A., subsequently CCF S.A. (&#145;CCF&#146;) and now HSBC France, a major French banking group.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2002, HSBC took further steps in expanding its presence in the Americas, completing the acquisition of 99.59 per cent of Grupo Financiero Bital, S.A. de
C.V., the holding company of what is now HSBC M&eacute;xico, S.A. (&#145;HSBC Mexico&#146;), the fourth-largest banking group in Mexico measured by assets and the third by customer deposits.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mainland China remains a key long-term growth area for the Group. In 2002, HSBC completed the acquisition of a 10 per cent equity stake in Ping An Insurance
Company of China Limited (&#145;Ping An Insurance&#146;), reducing its holding to 9.99 per cent following an initial public offering (&#145;IPO&#146;) in 2004. In August 2005, HSBC acquired a further 9.91 per cent of Ping An Insurance at a cost of
US&#36;1,039 million, increasing its investment to 19.9 per cent. Ping An Insurance is the second-largest life insurer and the third-largest property and casualty insurer in mainland China.</FONT></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"></FONT>In 2003, HSBC
    acquired Household </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">International,
    Inc., now HSBC Finance Corporation (&#145;HSBC Finance&#146;). HSBC Finance
    brought to the Group national coverage in the US for consumer lending, credit
    cards and credit insurance through multiple distribution channels, as well
    as expertise in consumer finance for HSBC to roll out internationally.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Also in 2003, HSBC expanded in Brazil, acquiring Banco Lloyds TSB S.A.-Banco M&uacute;ltiplo and the country&#146;s leading consumer finance company, Losango
Promotora de Vendas Limitada (&#145;Losango&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2004, the acquisition of The Bank of Bermuda Limited (&#145;Bank of Bermuda&#146;) was completed.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the same year, HSBC acquired Marks and Spencer Retail Financial Services Holdings Limited, which trades as Marks and Spencer Money (&#145;M&amp;S
Money&#146;) in the UK.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In mainland China in 2004, HSBC acquired 19.9 per cent of Bank of Communications Limited (&#145;Bank of Communications&#146;), mainland China&#146;s fifth
largest bank by total assets. In the same year, Hang Seng Bank acquired 15.98 per cent of Industrial Bank Co.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Limited (&#145;Industrial Bank&#146;), one of only 13 national joint-stock banks.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
    December 2005, HSBC Finance completed the acquisition of Metris Companies
    Inc. (&#145;Metris&#146;) for US&#36;1.6 billion. HSBC is now the 5th largest
    issuer of MasterCard</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&reg;</FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
    and Visa</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">&reg;</FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
    cards</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif"> in the US.</FONT></P>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Outlook</font></b></td>
    </tr>
    <tr>
      <td><hr size="2" noshade></td>
    </tr>
  </table>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the near term, the outlook is encouraging. The world economy continues to grow steadily. The US economy is strong, the UK resilient, Japan and Germany are recovering and the emerging
markets are buoyant.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Longer term prospects are more uncertain. Apart from the possibility, albeit remote, of a sudden shock to the world&#146;s financial system, HSBC remains
concerned about the unprecedented level of trade imbalances. Similarly, the implications of demographic change and of ageing populations for financial markets and businesses will be profound. It is inevitable that at some stage a process of
adjustment will begin, but the timing is open to question. So far, the financial markets are taking a benign view of these potential sources of instability.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Progressively, globalisation is forcing countries and businesses operating within them to re-evaluate their comparative advantages and to adjust to a world
in which emerging markets compete not only in terms of cost but also in skills and technology. The globalisation of the services industry, spurred on by new technologies and the rapid fall in communication costs, will afford huge opportunities but
also pose significant challenges to many areas of economic activity, including financial services. Incipient protectionism, resulting from a reluctance to face up to the new competitive realities, remains a threat to the continuing growth of the
world economy.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
    certain mature markets, under-funded pension schemes threaten to become a
    drain on companies&#146; resources. Combined with the rising cost of long-term
    health care, they pose a considerable challenge to policy makers. Continuing
    productivity growth is, therefore, increasingly important. Only if it is achieved
    will financial markets be able to offer returns with a meaningful premium
    to the risk-free rate embodied in government debt. Without such productivity
    gains and associated financial returns, the affordability of pension and health
    care promises</FONT></P>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr align="left" valign="top">
      <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
      <td><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Visa
        is a registered trademark of VISA USA, Inc.and MasterCard is a registered
        trademark of MasterCard International, Incorporated.</font></i></td>
    </tr>
  </table>
  <p>
  <P>&nbsp;</P>
</div>
<div align="center"><br clear="all">
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">8</FONT> </div>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page><a name="p9"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">will become increasingly burdensome. The challenge to society of managing the equitable distribution of wealth created between competing generations may well become one of the most
pressing of the next decade.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In this environment HSBC, with its unique international footprint, is determined to continue to deliver profitable growth and value to its various
constituencies. Success ensures that the Group can offer good employment prospects to an ever more diverse workforce. It means that HSBC can afford to continue to invest in expanding the platforms by which it delivers services to its customers. It
enables the Group to contribute to the savings and retirement needs of those who invest in HSBC directly, or indirectly through pension plans and investment funds.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Building on its achievements, HSBC&#146;s priority for the rest of 2006 is to continue to implement its Managing for Growth strategy. It will achieve this by
being distinctive, reinforcing its brand values of trust and integrity in all its dealings with customers. The Group will make itself even more relevant by broadening the product, channel and geographical coverage it offers. Furthermore, HSBC will
ensure that the scale and complexity needed to compete successfully will be seamless from the perspective of its customers and manageable from that of its employees.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    businesses in Asia, Turkey, Mexico, Brazil and the Middle East see strong
    opportunities for growth on the back of investments already made. The Group
    also sees opportunities to strengthen its position in its franchises in the
    UK, Hong Kong, North America and France. HSBC believes there is growing momentum
    from the development of its new business streams within Corporate, Investment
    Banking and Markets businesses. Overall, HSBC is well positioned for further
    growth.</FONT></P>
  <table width="100%%" border="0" cellpadding="0" cellspacing="0">
    <tr>
      <td><b><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Strategy</FONT></b></td>
    </tr>
    <tr>
      <td><hr size="2" noshade></td>
    </tr>
  </table>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At the end of 2003, HSBC launched &#145;Managing for Growth&#146;, a strategic plan that provides HSBC with a blueprint for growth and development during the period to 2008. The strategy
is evolutionary, not revolutionary. It builds on HSBC&#146;s strengths and it addresses the areas where further improvement is considered both desirable and attainable.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management&#146;s vision for the Group remains consistent: HSBC aims to be the world&#146;s leading financial services company. In this context,
&#145;leading&#146; means preferred, admired and dynamic, and being recognised for giving the customer a fair deal. HSBC</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">will strive to secure and maintain a leading position within each of its customer groups in selected markets.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC will concentrate on growing earnings over the long term at a rate which will place it favourably when compared with its peer group. It will also focus
on investing in its delivery platforms, its technology, its people and its brand to support the future value of HSBC as reflected in its comparative stock market rating and TSR. HSBC remains committed to benchmarking its performance both absolutely
and by comparison with a peer group. For full details of the peer group benchmark, see page 220.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s core values are integral to its strategy, and communicating them to customers, shareholders and employees is intrinsic to the plan. These values
comprise an emphasis on long-term, ethical client relationships; high productivity through teamwork; a confident and ambitious sense of excellence; being international in outlook and character; prudence; creativity and customer-focused
marketing.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The plan also reaffirms HSBC&#146;s recognition of its corporate social responsibility (&#145;CSR&#146;). HSBC has always aspired to the highest standards of
conduct, recognises its wider obligations to society and believes there is a strong link between CSR, long-term success and value creation. Moreover, changing public expectations across a wide spectrum of social, ethical and environmental issues
require continuing attention to this area. The strategy therefore calls for a renewed emphasis on CSR and for increased external communication of the Group&#146;s CSR policies and performance, particularly on education and the environment, which
will remain the principal beneficiaries of HSBC&#146;s philanthropic activities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s growth ambitions centre on its four customer groups: Personal Financial Services; Commercial Banking; Corporate, Investment Banking and Markets;
and Private Banking; and specific strategies are being implemented for each of them. HSBC believes that by organising its internal and external reporting around customer groups, it reinforces to all its employees the Group&#146;s customer
focus.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within Personal Financial Services, the increasing integration, skills sharing and transfer of technology with the consumer finance business has augmented
and enhanced existing activities. In addition, the introduction of skills and practices from the world&#146;s leading retailing businesses is shaping HSBC&#146;s competitive positioning.</FONT></P>
</div><br clear="all">
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">9</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p10"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></P>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Description of Business
  </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Key elements in achieving HSBC&#146;s objectives for its customer groups will be accelerating the rate of growth of revenue; developing the brand strategy
further; improving productivity; and maintaining the Group&#146;s prudent risk management and strong financial position. Developing the skills of HSBC&#146;s staff will also be critical and it will be necessary to ensure that all employees
understand how they can contribute to the successful achievement of the Group&#146;s objectives. Employees who do make such a contribution will be rewarded accordingly.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operational
    management will continue to be organised geographically under four regional
    intermediate head offices, with business activities concentrated in locations
    where growth and critical mass are to be found.</FONT></P>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr align="left" valign="top">
      <td width="3%">&nbsp;</td>
      <td width="97%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        plan contains eight strategic imperatives:</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brand:
        make HSBC and its hexagon symbol one</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        the world&#146;s leading brands for customer</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">experience and corporate social
        responsibility;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
        Financial Services: drive growth in key</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">markets
        and through appropriate channels to</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">make HSBC the strongest global
        player in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">personal
        financial services;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consumer
        Finance: extend the reach of this</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        to existing customers through a wider</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">product range and penetrate new
        markets;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
        Banking: make the most of HSBC&#146;s</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">international
        customer base through effective</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">relationship management and improved
        product</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">offerings
        in all the Group&#146;s markets;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,
        Investment Banking and Markets:</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accelerate
        growth by enhancing capital markets</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and advisory capabilities focused
        on client</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">service
        in defined sectors where HSBC has</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">critical relevance and strength;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private
        Banking: serve the Group&#146;s highest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">value
        personal clients around the world;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">People:
        attract, develop and motivate HSBC&#146;s</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">people,
        rewarding success and rejecting</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">mediocrity; and</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">TSR: fulfil
        HSBC&#146;s TSR target by achieving</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">strong
        competitive performances in earnings per</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">share growth and efficiency.</font></td>
    </tr>
  </table>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Employees
        and management</font></b></td>
    </tr>
    <tr>
      <td><hr size="2" noshade></td>
    </tr>
  </table>
  <p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
    2005, HSBC&#146;s customers were served by 284,000 employees (including part-time
    employees) worldwide, compared with 253,000 at 31 December 2004 and 232,000
    at 31 December 2003. The main centres of employment are the UK</FONT></p>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">with 55,000 employees, the US 49,000, Brazil 28,000, Hong Kong 26,000, Mexico 22,000, India 20,000 and France 14,000. HSBC negotiates with recognised unions, and estimates that
approximately 40 per cent of its employees are unionised. The highest concentrations of union membership are in Brazil, France, India, Malaysia, Malta, Mexico, the Philippines, Singapore and the UK. As a result of well-developed communications and
consultation programmes, HSBC has not experienced any material disruptions to its operations from labour disputes during the past five years.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In support of its strategy, HSBC focuses on attracting, developing and motivating the very best individuals and on encouraging talent internally. Emphasis is
placed on performance management; differentiated rewards; succession planning; diversity; and learning and development, with priority accorded to enhancing sales and relationship management skills. HSBC continues to endeavour to ensure that
employees&#146; engagement with the business is maximised as this is beneficial to shareholders, colleagues and customers alike.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC recruits from a broad cross-section of society and encourages the sharing of individual perspectives and ideas through collective training and global
secondments. HSBC&#146;s diverse workforce represents a significant competitive advantage. The broad cultural mix and increasing cross-border mobility of its employees enables HSBC to resource operations with individuals who have detailed knowledge
of local markets and of HSBC globally. This strengthens international networks and facilitates the sharing of best practices. In addition, a continuing focus on policies that encourage an inclusive working environment and the availability of career
opportunities for all is critical to HSBC being an employer of choice. HSBC seeks to maintain an employee profile that reflects its customer base.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC operates in a highly competitive and international business environment. Through its network of international operations, it has the advantage of being
able to respond to the availability of talented employees wherever they are, in order to enhance customer service and improve productivity. As education levels improve globally and as investments in technology and telecommunications facilitate
access at competitive cost to hitherto untapped resources, the balance of employment continues to change, resulting in global resource centres of excellence. Job losses may arise in some countries, but HSBC has a good record of communicating openly
and sensitively in these circumstances, and of reassigning employees and</FONT></P>

</div><br clear="all">
<P>&nbsp;</P>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">10</FONT></P>

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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">minimising compulsory
  redundancies wherever</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">possible.</font></p>
  <p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HSBC
    seeks to promote and recruit the most able people and attaches great importance
    to cultivating its own talent. Resources have been set aside to ensure a
    supply of talented individuals to meet business succession needs, with support
    provided for these employees in the form of career enhancement and personal
    development programmes. In addition, HSBC recognises that there are lessons
    to be learned from other successful businesses, and will recruit from non-banking
    industries where appropriate.</font></p>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Customer
        groups</font></b></td>
    </tr>
    <tr>
      <td><hr size="2" noshade></td>
    </tr>
    <tr>
      <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Profit
        before tax by customer group</font></b></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Year ended
        31 December 2005</font></td>
    </tr>
  </table>
  <P align="center"> <IMG src="b822899-03x5x1.jpg" width="100%" border=0 align="bottom"></P>
  <P align="left"> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Total
    assets</font></b><b><sup><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">1</font></sup></b><b><font size=2
face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> by customer group</font></b></P>
  <P align="left"> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">As
    at 31 December 2005</font></P>
  <P align="center"> <IMG src="b822899-03x5x2.jpg" width="100%" border=0> </P>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr align="left" valign="top">
      <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
      <td> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excluding
        Hong Kong Government certificates of indebtedness.</font></i></td>
    </tr>
  </table>
  <P align="left"><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Personal
    Financial Services</FONT></B></P>
  <P align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
    Financial Services provides some 120 million individual and self-employed
    customers with a wide range of banking and related financial services. The
    precise nature of the products and services provided is, to some extent, driven
    by local regulations, market practices and the market positioning of HSBC&#146;s
    local businesses. Typically, products provided include</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">current and savings accounts, mortgages and personal loans, credit cards, and local and international payments services.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
customers prefer to conduct their financial business at times convenient to them,
using a range of delivery channels. This demand for flexibility is  met through
the increased provision of direct channels such as the internet and self-service
terminals, in addition to traditional and automated branches and service centres
accessed by telephone.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Delivering the right products and services for particular target markets is a fundamental requirement in any retail service business, and market research and
customer analysis is key to developing an in-depth understanding of significant customer segments and their needs. This understanding of the customer ensures that Customer Relationship Management (&#145;CRM&#146;) systems are effectively used to
identify and fulfil sales opportunities, and to manage the sales process.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier </FONT></I><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">is a premium banking service providing personalised relationship management, 24-hour priority telephone access, global travel assistance and cheque encashment facilities. There are now over 1.3 million HSBC </FONT><I><FONT size=2
face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> customers, who can use more than 250 specially designated </FONT><I><FONT size=2
face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier </FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">branches and centres in 35 countries and territories, either when visiting, or on a more permanent basis if they
require a banking relationship in more than one country.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance and investment products play an important part in meeting the needs of customers. Insurance products sold and distributed by HSBC through its
direct channels and branch networks include loan protection, life, property and health insurance, and pensions. Acting as both broker and underwriter, HSBC sees continuing opportunities to deliver insurance products to its personal customer
base.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC also makes available a wide range of investment products. A choice of third party and proprietary funds is offered, including traditional &#145;long
only&#146; equity and bond funds; structured funds that provide capital security and opportunities for an enhanced return; and &#145;fund of funds&#146; products which offer customers the ability to diversify their investments across a range of
best-in-class fund managers chosen after a rigorous and objective selection process. Comprehensive financial planning services covering customers&#146; investment, retirement, personal and asset protection needs are offered through specialist
financial planning managers.</FONT></P>
</div><br clear="all">
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">11</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p12"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C &nbsp; H O
L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp;
</FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P L C</FONT>
<P> <B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Description
  of Business </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High net worth individuals and their families who choose the differentiated services offered within Private Banking are not included in this customer
group.</FONT></P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Consumer Finance</FONT>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within Personal
    Financial Services, HSBC Finance&#146;s operations in the US, the UK and Canada
    make credit available to customer groups not well catered for by traditional
    banking operations, facilitate point-of-sale credit in support of retail purchases
    and support major affiliate credit card programmes. At 31 December 2005 HSBC
    Finance had over 60 million customers with total gross advances of US&#36;142.1
    billion. Consumer Finance products are offered through the following businesses
    of HSBC Finance: </FONT></P>
  <P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">consumer
    lending </FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">business is one of the largest sub-prime home equity originators
    in the US, marketed under the HFC and Beneficial brand names through a network
    of nearly 1,400 branches in 45 states, direct mail, telemarketing, strategic
    alliances and the internet. Consumer lending also acquires sub-prime loans
    on the secondary market. &#145;Sub-prime&#146; is a category used in the US
    which describes customers who have limited credit histories, modest incomes,
    high debt-to-income ratios, high loan-to-value ratios (for real estate secured
    products) or have experienced credit problems caused by occasional delinquencies,
    prior charge-offs, bankruptcy or other credit-related actions. Consumer lending
    products include secured and unsecured loans such as first and second lien
    closed-end mortgages, open-ended home equity loans, personal loans, loans
    secured on motor vehicles and retail finance contracts. Consumer lending also
    offers a near-prime mortgage product which was first introduced in 2003 to
    broaden the range of customers to which its products are relevant.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The</FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> mortgage services </FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">business purchases first and second lien residential mortgage loans, including open-end home equity loans, from a network of over 280 unaffiliated third-party lenders in the US. Purchases are primarily of pools of loans
(&#145;bulk acquisitions&#146;), but also include individual loan portfolios (&#145;flow acquisitions&#146;), made under predetermined underwriting guidelines. Forward commitments are offered to selected correspondents to strengthen relationships
and create a sustainable growth channel for this business. HSBC Finance, through its subsidiary, Decision One Mortgage Company (&#145;Decision One&#146;), also originates mortgage loans referred by mortgage brokers.</FONT></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">retail
    services </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
    is one of the</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">largest providers of third party private label credit cards (or store cards) in the US based on receivables outstanding, with over 70 merchant relationships and 15.8 million active
customer accounts.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition to originating and refinancing motor vehicle loans, HSBC Finance&#146;s </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New
Roman,Times,serif">motor vehicle finance </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business purchases retail instalment contracts of US customers who do not have access to traditional prime-based lending sources. The
loans are largely sourced from a network of approximately 10,000 motor dealers.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit card services</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif"> business is the fifth largest issuer of MasterCard</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&reg;</FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> and
Visa</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&reg; </FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit cards in the US, and also includes affiliation programmes such as the GM
Card</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&reg;</FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> and the AFL-CIO Union Plus</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">&reg;</FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> credit card. Also, credit cards issued in the name of Household Bank, Orchard Bank and Direct Merchants Bank brands are offered to customers
under-served by traditional providers, or are marketed primarily through merchant relationships established by the retail services business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A wide range of </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance services</FONT></B><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif"> is offered by HSBC Finance to customers in the US, the UK and Canada who are typically not well-served by traditional sources.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">taxpayer financial services</FONT></B><FONT size=2 face="TimesNewRoman,Times
New Roman,Times,serif"> business accelerates access to funds for US taxpayers who are entitled to tax refunds and offers financial services through more than 25,000 tax return preparers in the US. The business is seasonal with most revenues
generated in the first three months of the year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance&#146;s business in the UK (&#145;HFC Bank&#146;) provides mid-market consumers with mortgages, secured and unsecured loans, insurance products,
credit cards and retail finance products. It concentrates on customer service through its 187 HFC Bank and Beneficial branches, and finances consumer electronic goods through its retail finance operations. Its credit card business was sold to HSBC
Bank in December 2005. In Canada, similar products are offered through trust operations of HSBC Finance&#146;s subsidiary there.</FONT></P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Commercial Banking</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is one of the world&#146;s leading, and most international, banks in the provision of financial services and products to small, medium-sized and middle market businesses, with over
2.5 million customers including sole proprietors, partnerships, clubs and associations, incorporated businesses and publicly quoted companies.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">12</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p13"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, HSBC had total commercial customer account balances of US&#36;148.1 billion and total commercial customer loans and advances, net of
loan impairment allowances, of US&#36;142.0 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial Banking places particular emphasis on multi-disciplinary and geographical collaboration in meeting its commercial customers&#146; needs, thereby
differentiating, broadening and enhancing its offering. The range of products includes:</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Payments and cash management</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: HSBC is a leading provider of payments,
collections, liquidity management and account services worldwide, enabling commercial customers to manage their cash efficiently on a global basis. HSBC&#146;s extensive network of offices and strong domestic capabilities in many countries,
including direct access to local clearing systems, enhances its ability to provide high-quality competitive cash management services.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Treasury and capital markets</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: Commercial Banking customers have long been
volume users of the Group&#146;s foreign exchange capabilities. These are now being supplemented with more sophisticated currency and interest rate options.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: A small number of Commercial Banking customers need
occasional investment banking advisory support. Co-operation with Corporate, Investment Banking and Markets ensures that in most key markets such requirements are serviced internally.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Wealth management services</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: These include advice and products related to
savings and investments. They are provided to Commercial Banking customers and their employees through HSBC&#146;s worldwide network of branches and business banking centres.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Insurance</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: HSBC offers insurance protection, employee benefits programmes
and pension schemes designed to meet the needs of businesses and their employees, and to help fulfil the applicable statutory obligations of client companies. These products are provided by HSBC either as an intermediary (broker, agent or
consultant) or as a supplier of in-house or third party offerings. Products and services include a full range of commercial insurance, including pension schemes; healthcare schemes; &#145;key man&#146; life insurance; car fleet; goods in transit;
trade credit protection; risk management and insurance due diligence reviews; and actuarial/employee benefit consultancy.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trade services</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: HSBC has more than 140 years of experience in trade
services. A complete range of traditional documentary credit, collections and</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financing products is offered, as well as specialised services such as insured export finance, international factoring and forfaiting. HSBC&#146;s expertise is supported by highly
automated systems.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Leasing, finance and factoring</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: HSBC has established specialised divisions
to provide leasing and instalment finance for vehicles, plant and equipment, machinery and materials handling, and large complex leases. HSBC also provides domestic and international factoring and receivables finance services through a network of 11
businesses worldwide.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Credit cards</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: HSBC offers commercial credit card services in 18 countries.
Commercial card issuing provides small to middle market businesses with services, including corporate and purchasing cards, which variously enhance cash management, improve cost control and streamline purchasing processes. Commercial card acquiring
enables merchants to accept credit card payments either in-store or on the internet.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Corporate, Investment Banking and Markets</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s Corporate, Investment Banking and Markets business provides tailored financial solutions to major government, corporate and institutional clients worldwide. Managed as a
global business, this customer group operates a long-term relationship management approach to build a full understanding of clients&#146; financial requirements. Sectoral client service teams comprising relationship managers and product specialists
develop financial solutions to meet individual client needs. With dedicated offices in over 60 countries and with access to HSBC&#146;s worldwide presence and capabilities, this business serves subsidiaries and offices of its clients on a global
basis.</FONT></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Products
    and services offered include:</FONT></P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Global Markets</FONT>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    operations in Global Markets consist of treasury and capital markets services
    for supranationals, central banks, corporations, institutional and private
    investors, financial institutions and other market participants. Products
    include:</FONT></P>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr align="left" valign="top">
      <td width="3%">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">foreign
        exchange;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">currency,
        interest rate, bond, credit, equity and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
        specialised derivatives;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">government
        and non-government fixed income</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        money market instruments;</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">precious
        metals and exchange traded futures;</font></td>
    </tr>
  </table>

</div>
<br clear="all">
<p>&nbsp;</p>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">13</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p14"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C &nbsp; H O
L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp;
</FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P L C</FONT>
<P> <B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Description
  of Business </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">equity
      services, including research, sales and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">trading
      for institutional, corporate and private</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">clients and asset management
      services,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">including
      global investment advisory and fund</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">management services; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">distribution
      of capital markets instruments,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">including
      debt, equity and structured products,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">utilising links with HSBC&#146;s
      global networks.</font></td>
  </tr>
</table>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Corporate and Investment Banking</FONT></P>
<P> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Global
  Investment Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
  comprises:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">capital
      raising, both publicly and privately,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">including
      debt and equity capital, structured</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">finance and syndicated finance;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">corporate
      finance and advisory services for</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">mergers
      and acquisitions, asset disposals, stock</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">exchange listings, privatisations
      and capital</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">restructurings;
      and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">project
      and export finance services providing</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">non-recourse
      finance to exporters, importers and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">financial institutions, and working
      closely with</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">all
      major export credit agencies.</font></td>
  </tr>
</table>
<P align="left"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate
  and Institutional Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
  includes:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">direct
      lending, including structured finance for</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">complex
      investment facilities;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">leasing
      finance with an emphasis on &#145;large</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ticket&#146;
      transactions; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">deposit-taking.</font></td>
  </tr>
</table>
<P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Global Transaction Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> includes international, regional and &#145;in-country&#146; payments and cash
management services; trade services, particularly the specialised &#145;supply chain&#146; product; and securities services, where HSBC is one of the world&#146;s leading custodians providing custody and clearing services and funds administration to
both domestic and cross-border investors. Factoring and banknotes services are also provided by specialist units.</FONT></P>
<P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Equity </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">comprises HSBC&#146;s captive private equity fund management activities, strategic
relationships with certain third party private equity managers together with direct listed and unlisted equity investments and fund commitments.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Group Investment Businesses</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">These comprise asset management products and services for institutional investors, intermediaries and individual investors and their advisers.</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Management structure</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">During February 2006, the management structure of Global Markets and Corporate and Investment Banking was restructured. Under the new structure, there are three principal business lines:
Global Banking, Global Markets and Global Transaction Banking. This new structure will allow Corporate, Investment Banking and Markets to focus on the relationships and sectors that best fit the Group&#146;s footprint and ensure seamless delivery of
HSBC&#146;s enhanced product capabilities to clients.</FONT></P>
  <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Private
  Banking</FONT></B>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s presence in all the major wealth-creating regions has enabled it to build one of the world&#146;s leading private banking groups, providing financial services to high net
worth individuals and their families in 74 locations in 35 countries, with total assets under management of US&#36;282 billion at 31 December 2005. HSBC Private Bank is the principal marketing name of the HSBC Group&#146;s international private
banking business which, together with HSBC Guyerzeller and HSBC Trinkaus &amp; Burkhardt, provides private banking services.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Utilising the most suitable products from the marketplace, Private Banking works with its clients to offer both traditional and innovative ways to manage and
preserve wealth whilst optimising returns. Products and services offered include: </FONT></P>
<P><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"></FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"></FONT>Investment services</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">: These comprise both advisory and discretionary investment services. A wide range of investment vehicles is covered, including bonds, equities, derivatives, options, futures, structured products and alternative products, mutual
  funds, hedge funds and fund of funds. Supported by six major advisory centres in Hong Kong, Singapore, Geneva, New York, Paris and London, Private Banking seeks to select the most suitable investments for clients&#146; needs and investment
  strategies.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Global wealth solutions</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">: These comprise inheritance planning, trustee and
other fiduciary services designed to protect existing wealth and create tailored structures to preserve wealth for future generations. Areas of expertise include trusts, foundation and company administration, charitable trusts and foundations,
insurance and offshore structures.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Specialist
  advisory services</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">:
  Private Banking offers expertise in several specialist areas of wealth management
  including tax advisory and financial planning, family office advisory, corporate
  finance,</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">14</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p15"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">consolidated
  reporting, industry services such as</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">charities
  and foundations, media, shipping, diamond</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
  jewellery, and real estate planning. Specialist</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">advisers
  are available to deliver products and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">services
  that are tailored to meet the full range of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">high
  net worth clients&#146; individual financial needs.</font></p>
  <p><b><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General
    banking services</font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">:
    These comprise</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">treasury
    and foreign exchange, offshore and onshore</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">deposits,
    credit and specialised lending, tailor-made</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans
    and internet banking. Private Banking works to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ensure
    its clients have full access to relevant skills and products available throughout
    HSBC, such as corporate banking, investment banking and insurance.</font></p>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr align="left" valign="top">
      <td> <b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Geographical
        regions</font></b>&nbsp; </td>
    </tr>
    <tr align="left" valign="top">
      <td><hr size="2" noshade></td>
    </tr>
  </table>
 <p> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Profit
    before tax split by geographical region</font></b></p>
  <p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Year ended 31
    December 2005</font></p>
  <P align="center"> <IMG src="b822899-03x9x1.jpg" width="100%" border=0> </P>
<P align="left"> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Total
  assets</FONT></B><B><SUP><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">1</FONT></SUP></B><B><FONT size=2
face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> split by geographical
  region</FONT></B></P>
<P align="left"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">As
  at 31 December 2005</FONT></P>
  <P align="center"> <IMG src="b822899-03x9x2.jpg" width="100%" border=0> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excluding
      Hong Kong Government certificates of indebtedness.</font></i></td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additional information regarding business developments in 2005 may be found in the &#145;Financial Review&#146; on pages 26 to 177.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Europe</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s principal banking operations in Europe are HSBC Bank in the UK, HSBC France, HSBC Bank</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.S. in Turkey, HSBC Bank Malta, HSBC Private Bank (Suisse), HSBC Trinkaus &amp; Burkhardt KGaA and HSBC Guyerzeller Bank AG. Through these operations HSBC provides a wide range of
banking, treasury and financial services to personal, commercial and corporate customers across Europe.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Hong Kong</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s principal banking subsidiaries in Hong Kong are The Hongkong and Shanghai Banking Corporation and Hang Seng Bank. The former is the largest bank incorporated in Hong Kong and
is HSBC&#146;s flagship bank in the Asia-Pacific region. It is one of Hong Kong&#146;s three note-issuing banks, accounting for more than 65 per cent by value of banknotes in circulation in 2005.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Rest of Asia-Pacific (including the Middle East)</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking Corporation offers personal, commercial, corporate and investment banking and markets services in mainland China. The bank&#146;s network spans 12 major
cities, comprising 12 branches and eight sub-branches. Hang Seng Bank offers personal and commercial banking services and operates six branches, four sub-branches, and two representative offices in eight cities in mainland China. HSBC also
participates indirectly in mainland China through its three associates, Bank of Communications (19.9 per cent owned), Ping An Insurance (19.9 per cent) and Industrial Bank (15.98 per cent).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outside Hong Kong and mainland China, the HSBC Group conducts business in the Asia-Pacific region primarily through branches and subsidiaries of The Hongkong
and Shanghai Banking Corporation in 22 countries, with particularly strong coverage in India, Indonesia, South Korea, Singapore and Taiwan. HSBC&#146;s presence in the Middle East is led by HSBC Bank Middle East in a network of branches and
subsidiaries with the widest coverage in the region; in Australia by HSBC Bank Australia Limited; and in Malaysia by HSBC Bank Malaysia Berhad, which has the second largest presence of any foreign-owned bank in the country. HSBC&#146;s associate in
Saudi Arabia, The Saudi British Bank (40 per cent owned), is the Kingdom&#146;s sixth largest bank.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">North America</FONT></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    North American businesses cover the US, Canada, Mexico, Bermuda and Panama.
    Operations in the US are primarily conducted through HSBC Bank USA, N.A. which
    is concentrated in New York State, and HSBC Finance, a national consumer</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">15</FONT></P>

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<FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C &nbsp; H O
L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp;
</FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P L C</FONT>
<P> <B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Description
  of Business </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">finance company
    based in Chicago. HSBC&#146;s businesses in Mexico and Panama are run through
    HSBC Mexico, with HSBC Bank Canada and Bank of Bermuda responsible for operations
    in their respective countries.</FONT></P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">South America</FONT>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    operations in South America principally comprise HSBC Bank Brazil and HSBC
    Bank Argentina, although HSBC is also represented in Venezuela, Chile and
    Uruguay. In addition to banking services, HSBC operates large insurance businesses
    in Argentina and Brazil. In Argentina, HSBC&#146;s main insurance business
    is HSBC La Buenos Aires and, through M&aacute;xima and HSBC New York Life,
    HSBC offers pensions and life assurance products. In Brazil, HSBC also offers
    consumer finance products through its subsidiary, Losango.</FONT></P>
  <table width="100%" border="0" cellpadding="0" cellspacing="0">
    <tr>
      <td><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Competitive
        environment</FONT></B></td>
    </tr>
    <tr>
      <td><hr width="100%" size="2" noshade></td>
    </tr>
  </table>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC believes that open and competitive markets are good for both local economies and their participants, and the Group faces very strong competition in the markets it serves. In personal
and commercial banking, it competes with a wide range of institutions including commercial banks, consumer finance companies, retail financial service companies, savings and loan associations, credit unions, general retailers, brokerage firms and
investment companies. In investment banking, HSBC faces competition from specialist providers and the investment banking operations of other commercial banks.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Regulators routinely monitor and investigate the competitiveness of the financial services industry (of which HSBC is a part) in a number of areas,
particularly in the UK and Europe.</FONT></P>
  <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Global
  factors</FONT></B>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Consolidation in the banking industry</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Over the past few decades there has been a trend towards consolidation in banking and financial services, both nationally and internationally. This development has created a large and
growing number of institutions which are capable of competing with HSBC across a wide range of services.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Limited market growth</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The majority of HSBC&#146;s business is conducted in the US, the UK and Hong Kong. Penetration of standard banking services in these markets is nearing saturation, with little scope for further market</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">growth. Greater potential for expansion lies in the provision of a wider range of financial services, including consumer finance, to new
and existing customers. HSBC has also identified emerging economies in Asia-Pacific, Mexico, the Middle East, Turkey and Latin America as a source of current and future growth.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Advances in technology</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Over the last decade, new technologies such as the internet and related innovations have matured, and financial institutions have not been alone in recognising the potential of these
developments. Financial services and other market participants can now deliver a large and expanding range of products and services through these channels and competition is, as a result, fierce. However, with competition come opportunities. HSBC
will continue to offer a full range of services via the channels preferred by its customers. These currently include the internet, interactive TV, mobile phone, WAP and telephone banking as well as the traditional branch network.</FONT></P>
  <p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Regional
    factors</FONT></B></p>
  <p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Europe</FONT>
  </p>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The European Commission has commenced inquiries into retail banking and business insurance across all member states. All HSBC entities affected have responded to the initial
questionnaires.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The 65 member banks of the European Payments Council have signed an agreement to create a Single European Payments Area by 2008 which aims to harmonise
transfers, banker&#146;s orders and cards transactions. This should offer strong growth opportunities for some banks but will also lead to more competition.</FONT></P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">UK</FONT></B>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">After several
    very positive years, UK growth slowed in 2005. Although corporate earnings
    rose and the UK stock market was healthy, strong commodity and oil prices
    adversely affected several sectors. </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retailers
    are suffering from declining levels of consumer confidence and disposable
    income, mainly caused by high levels of indebtedness and rising tax and utility
    burdens.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A stable interest rate environment, strong employment levels and a solid housing market helped to keep demand for consumer finance strong but could not
prevent a rise in default and arrears rates in all forms of unsecured personal lending.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">16</FONT></P>

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<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Despite these developments, competition in the retail banking sector for the best customers remained intense, with pressure on credit products, interest
margins and, in particular, deposit rates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The high level of personal indebtedness and strong competition within the retail banking and consumer finance sectors led regulatory authorities to continue
to monitor closely the financial services sector.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In December, the UK Competition Commission released its provisional remedies to improve competition following its investigation into the US&#36;8.3 billion
store card industry. HSBC continues to co-operate with the Commission as the inquiry draws to a conclusion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Also in 2005, the Office of Fair Trading (&#145;OFT&#146;) continued with its inquiry into credit card terms under the Unfair Terms in Consumer Contracts
regulations. HSBC has made various submissions to the OFT and discussions continue.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The OFT also published its decision on the multilateral interchange agreement between MasterCard members in October. MasterCard has appealed against the
decision to the Competition Appeals Tribunal. Visa is also subject to investigation but the case is suspended pending resolution of the MasterCard case.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In November, the Financial Services Authority published the results of its themed review of the sale of Payment Protection Insurance. It has expressed
concerns regarding some practices which were common within the industry. HSBC has not received a negative response in respect of its own procedures, but will be considering its products and sales practices in the light of the findings. The OFT will
be undertaking a market investigation into Payment Protection Insurance following a super-complaint from the Citizens&#146; Advice Bureau.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Throughout 2005, a Payments Task Force chaired by the OFT has brought together representatives of the banking industry, consumer bodies and business with the
Bank of England and HM Treasury to look at various aspects of the payments system. Its first report recommended that the payment industry implement a faster means of making low cost electronic payments. HSBC agrees that this is in the
consumer&#146;s interest and favours its early implementation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Consumer Credit Bill, currently in its second reading in Parliament, updates existing consumer legislation in order to provide better consumer
protection, and is likely to come into force during 2006.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
policy is to co-operate and work positively with all its regulators, inputting
data and perspective on those issues which affect all financial service  providers
via industry bodies.</FONT></P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">France</FONT></B>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Stable interest rates in the euro zone contributed to a strong growth in real estate investment in France. Competition between French banks was concentrated on the promotion of real
estate mortgage loans, which are the principal means by which new customers in France are acquired. Market activity increased and consumers enjoyed improved pricing to the detriment of bank margins throughout 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The payment of interest on sight deposits, which has only been permitted since the beginning of 2005, was introduced by one major mutual French bank. This
move did not provoke a widespread reaction in the domestic market and, to date, no other leading French bank has followed suit.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In December 2005, Banque Postale (a subsidiary of the French Postal service) received the necessary regulatory approvals and with effect from January 2006
will be able to offer real estate mortgages and financial services, including the sale of investment products manufactured by third party providers. Given the scale of Banque Postale&#146;s geographical coverage, this will increase competition in an
already competitive market.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The French government has reformed tax law for 2006/2007 with two measures which will increase disposable income for high income individuals: a tax exemption
on capital gains on equities held for more than eight years, which brings the French taxation regime into line with practices in many other European countries, and a cap on total household taxes at 60 per cent of income. This will boost one of the
market segments on which HSBC France focuses.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
the end of December, French banks were granted approval, as in the UK, to provide
equity release mortgages. This will assist customers to invest in real estate
and finance consumption.</FONT></P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b>Hong Kong</b></FONT>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">While fierce competition
in traditional core banking products remained evident in Hong Kong, the rising
cost of funds in the second half of 2005 from increasing interbank rates made
banks with smaller deposit bases more cautious in price competition. A decline
in property
loan demand also added pressure on banks to look for new outlets for lending.
Personal loans, including credit card advances, attracted</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">17</FONT></P>

<hr noshade align="center" width="100%" size="2">

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<P><FONT size=1 face="Univers,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
  D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Description
  of Business </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT>
</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">banks&#146; attention as consumer spending revived strongly.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Chinese currency regime was reformed in July 2005 and the second phase of Hong Kong&#146;s renminbi business introduced late in the year. While
developments in these areas remain at an early stage, they are expected, along with the benefits flowing from the liberalisation of China&#146;s financial sector under the World Trade Organisation agreement, to be a continued source of growth in the
future.</FONT></P>
  <P> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Rest of Asia-Pacific<br>
    (including the Middle East)</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The competitive environment in the Rest of Asia-Pacific continues to intensify as international banks focus on targeted sectors in emerging markets in pursuit of higher returns. Local
banks are also actively expanding their reach and business, both within countries and across borders. Competition remains intense throughout the region in all the customer groups served by HSBC. However, in many countries the growing sophistication
of the relatively young population and increasing affluence of the middle class continue to provide HSBC with further opportunities for growth.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banks and non-banks, both local and international, are rapidly building consumer finance and direct banking businesses in a number of countries in the
region.</FONT></P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">North America</FONT>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In an already highly competitive US financial services industry, institutions involved in a broad range of financial products and services continued to consolidate. Within the banking
sector, consolidation continued into 2006, with a greater focus on national networks and retail branch banking.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Group&#146;s principal US subsidiaries, HSBC Bank USA and HSBC Finance, face vigorous competition from a wide array of financial institutions. These
include banks, thrifts, insurance companies, credit unions, mortgage lenders and brokers, and non-bank suppliers of consumer credit and other financial services. Many of these institutions are not subject to US banking industry regulation, unlike
HSBC. This gives some of them cost and product advantages and will further increase competitive pressures. HSBC competes by expanding its customer base through portfolio acquisitions or alliances, co-branding opportunities and direct sales channels,
by offering a very wide variety of consumer loan products and by maintaining a strong service orientation.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The five largest banks in Canada dominate the country&#146;s financial services industry. Despite this, the market remains very competitive with comparable
financial products and services offered by other banks, insurance companies and other institutions. Merger activity among the largest banks in Canada remains possible, but without such consolidation major financial institutions will continue to look
elsewhere for growth.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico&#146;s banking industry is highly concentrated. Five large foreign-owned banks, including HSBC, control 75 per cent of banking assets and 78 per cent
of deposits through their local subsidiaries. The majority of Mexico&#146;s 105 million people neither have access to nor use the banking system. Thus there are favourable growth opportunities for retail banking over the medium to long term. HSBC is
well placed in this environment, with an extensive branch network and an expanding base of young customers from which to develop growth opportunities. Currently, there is strong regulatory and consumer pressure to reduce banking and pension
management fees and commissions as volumes increase, constraining growth in non-funds income. Mexico&#146;s economy is very closely linked to the US and 88 per cent of its exports are sent there.</FONT></P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">South America</FONT>
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The composition of the Brazilian financial system saw relatively little change in 2005. The top ten banking groups, which account for 68 per cent of assets and 86 per cent of branches,
remained dominated by a combination of large state-owned banks, privately-owned local banks and subsidiaries of foreign banks such as HSBC. In 2005, HSBC was the sixth largest non-state owned bank in the country, ranked by assets.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Notwithstanding the persistence of high interest rates in Brazil and an uncertain outlook for the economy, 2005 saw strong growth in lending to individuals.
Central Bank statistics indicate that personal lending increased by an estimated 37 per cent during the year, following growth of 28.6 per cent in 2004. However, total lending as a percentage of GDP remained low in international terms at 31.3 per
cent. This, together with the fact that within the economically active population an estimated 40 million people have limited access to financial services, indicates that the outlook for further growth is positive.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Against this background, banks continued to develop their consumer finance businesses, with particular emphasis on partnerships with large retailers and
&#145;green field&#146; ventures. In the retail</FONT></P></div><br clear="all">
<P>&nbsp;</P>
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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment, payroll and pension-linked advances emerged in 2005 as a significant source of lending. Banks also developed &#145;virtual&#146; banking networks known as </FONT><I><FONT size=2
face="TimesNewRoman,Italic,Times New Roman,Times,serif">correspondentes banc&aacute;rios. </FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">These</FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">
</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">are typically small retail establishments offering basic payment and banking services on behalf of established banks on a commission basis. By the end of 2005, HSBC had
developed a network of 1,824 </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">correspondentes</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> generating close to one million monthly
transactions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Argentina, HSBC&#146;s competition comes from international financial groups which, in most cases, provide an equivalent range of banking, insurance,
pension and annuity products and services.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The completion of Argentina&#146;s international debt swap negotiation eliminated a major concern that had overshadowed the country and the financial system.
This had a significantly favourable impact</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">upon the pensions and life insurance business, which also benefited from increasing contributions as more people returned to employment in the formal economy.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consequently, the banking industry showed improved profitability with many of the larger foreign-owned banks re-capitalising their domestic operations.
Continued growth and increased confidence in the economy were reflected in increased deposit levels and a 38 per cent growth in demand for loan products compared with 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC sees the return to a more normal business environment continuing and intends to monitor opportunities within the financial services industry in
Argentina with a view to growing core retail and commercial banking franchises.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">19</FONT></P>

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<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Governance,
  Regulation and Supervision</font></b></font>
</p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Governance</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">With listings
        of its ordinary shares in London, Hong Kong, New York, Paris and Bermuda,
        HSBC Holdings complies with the relevant requirements for listing and
        trading on each of these exchanges. In the UK, these are the Listing
        Rules of the Financial Services Authority; in Hong Kong, The Rules Governing
        the Listing of Securities on The Stock Exchange of Hong Kong Limited;
        in the US, where the shares are traded in the form of
ADSs, HSBC Holdings&#146; shares are registered with the US Securities
        and Exchange Commission. As a consequence of its US listing, HSBC Holdings
        is also subject to the reporting and other requirements of the US Securities
        Act of 1933, as amended, the Securities Exchange Act of 1934, as amended,
        and the New York Stock Exchange&#146;s Listed Company Manual, in each
        case as applied to foreign private issuers. In France and Bermuda, HSBC
        Holdings is subject to the listing rules of Euronext, Paris and the Bermuda
      Stock Exchange applicable to companies with secondary listings.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
        statement of HSBC&#146;s compliance with the code provisions of the Combined
        Code on Corporate Governance issued by the Financial Reporting Council
        and with the Code on Corporate Governance Practices in Appendix 14 to
        the Rules Governing the Listing of Securities on The Stock Exchange of
      Hong Kong Limited is set out in the &#145;Report of the Directors&#146;.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Regulation
      and supervision</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        operations throughout the world are regulated and supervised by approximately
        490 different central banks and regulatory authorities in those jurisdictions
        in which HSBC has offices, branches or subsidiaries. HSBC estimates the
        cost of this regulation and supervision to be approximately US&#36;635
        million in 2005. These authorities impose a variety of requirements and
        controls
covering, </FONT><I><FONT size=2
face="TimesNewRoman,Italic,Times New Roman,Times,serif">inter alia</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">,
capital adequacy, depositor protection, market liquidity, governance standards,
customer protection (for example, fair lending practices, product design, and
marketing and documentation standards), and social responsibility obligations
(for example, anti-money laundering and anti-terrorist financing measures). In
addition, a number of countries in which HSBC operates impose rules that affect,
or place limitations on, foreign or foreign-owned or controlled banks and financial
institutions. The rules include restrictions on the opening of local offices,
branches or subsidiaries and the types of banking and non-banking activities
that may be conducted by those local offices, branches or subsidiaries; restrictions
on the acquisition of local banks or</FONT></td>
  </tr>

</table>
</div>

<div style="float: right; width: 48%">
<P>&nbsp;</P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">regulations
    requiring a specified percentage of local ownership; and restrictions on
    investment and other financial flows entering or leaving the country. The
    supervisory and regulatory regimes of the countries where HSBC operates will
    determine to some degree HSBC&#146;s ability to expand into new markets,
    the services and products that HSBC will be able to offer in those markets
    and how HSBC structures specific operations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Financial Services Authority (&#145;FSA&#146;) supervises HSBC on a consolidated basis. In addition, each operating bank, finance company or insurance
operation within HSBC is regulated by local supervisors. The primary regulatory authorities are those in the UK, Hong Kong and the US, the Group&#146;s principal areas of operation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In June 2004, the Basel Committee on Banking Supervision introduced a new capital adequacy framework to replace the 1988 Basel Capital Accord in the form of
a final Accord (commonly known as &#145;Basel II&#146;). Details of the European Union&#146;s implementation of Basel II and how this will affect HSBC are set out on page 174.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">United Kingdom regulation and supervision</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK banking and financial services institutions are subject to multiple regulations. The primary UK statute is the Financial Services and Markets Act 2000 (&#145;FSMA&#146;). Other UK
primary and secondary banking legislation is derived from European Union (&#145;EU&#146;) directives relating to banking, securities, investment and sales of personal financial services.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The FSA is responsible for authorising and supervising UK financial services institutions and regulates all HSBC&#146;s businesses in the UK which require
authorisation under the FSMA. These include retail banking, life and general insurance, pensions, mortgages, custody and branch share-dealing businesses, and treasury and capital markets activity. HSBC Bank is HSBC&#146;s principal authorised
institution in the UK.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FSA rules establish the minimum criteria for authorisation for banks and financial services businesses in the UK. They also set out reporting (and, as
applicable, consent) requirements with regard to large individual exposures and large exposures to related borrowers. In its capacity as supervisor of HSBC on a consolidated basis, the FSA receives information on the capital adequacy of, and sets
requirements for, HSBC as a whole. Further details on capital measurement are included in &#145;Capital Management&#146; on pages 176 to 177. The FSA has the right to object, on prudential grounds, to</FONT></P>
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<p>&nbsp;</p>
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<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">20</FONT></P>

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<P>&nbsp;</P>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">persons who hold, or intend to hold, 10 per cent or more of the voting power of a financial institution.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The regulatory framework of the UK financial services system has traditionally been based on co-operation between the FSA and authorised institutions. The
FSA monitors authorised institutions through ongoing supervision and the review of routine and </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">ad hoc</FONT></I><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif"> reports relating to financial and prudential matters. The FSA may periodically obtain independent reports, usually from the auditors of the authorised institution, as to the adequacy of internal control procedures and systems as
well as procedures and systems governing records and accounting. The FSA meets regularly with HSBC&#146;s senior executives to discuss HSBC&#146;s adherence to the FSA&#146;s prudential guidelines. They also regularly discuss fundamental matters
relating to HSBC&#146;s business in the UK and internationally, including areas such as strategic and operating plans, risk control, loan portfolio composition and organisational changes, including succession planning.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK depositors and investors are covered by the Financial Services Compensation Scheme which deals with deposits with authorised institutions in the UK,
investment business and contracts of insurance. Institutions authorised to accept deposits and conduct investment business are required to contribute to the funding of the scheme. In the event of the insolvency of an authorised institution,
depositors are entitled to receive 100 per cent of the first &#163;2,000 (US&#36;3,442) of a claim plus 90 per cent of any further amount up to &#163;33,000 (US&#36;56,798) (the maximum amount payable being &#163;31,700 (US&#36;54,560)). Payments
under the scheme in respect of investment business compensation are limited to 100 per cent of the first &#163;30,000 (US&#36;51,634) of a claim plus 90 per cent of any further amount up to &#163;20,000 (US&#36;34,423) (the maximum amount payable
being &#163;48,000 (US&#36;82,615)). In addition, the Financial Services Compensation Scheme has been extended to cover mortgage advice and arranging, certain long term and general insurance products, and the provision of general advice and
arranging services. Differing levels of compensation limits apply to each of these additional areas.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The EU Savings Directive took effect on 1 July 2005. Under the directive, each member state other than Austria, Belgium, and Luxembourg is required to
provide the tax authorities of each other member state with details of payments of interest or other similar income paid by a person within its jurisdiction to individuals resident in such other member state. For a transitional period beginning on
the same date, Austria, Belgium, and Luxembourg</FONT></P></div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">have imposed a
withholding tax on such income. The withholding tax rate is 15 per cent, increasing
to 20 per cent from 2008 and 35 per cent from 2011. Subject to future conditions
being  met, Austria, Belgium, and Luxembourg may cease to apply the withholding
tax and instead comply with the automatic exchange of information rules applicable
to the other member states. These future conditions will depend on other key
financial
centres &#150; Switzerland, Liechtenstein, San Marino, Andorra and the US &#150; not
exchanging information. These financial centres and several other European countries
and related offshore territories have also entered into similar agreements to

the Savings Directive with the EU states.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Hong Kong regulation and supervision</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking in Hong Kong is subject to the provisions of the Banking Ordinance of Hong Kong (Chapter 155) (the &#145;Banking Ordinance&#146;), and to the powers, functions and duties ascribed
by the Banking Ordinance to the Hong Kong Monetary Authority (the &#145;HKMA&#146;). The principal function of the HKMA is to promote the general stability and effective working of the banking system in Hong Kong. The HKMA is responsible for
supervising compliance with the provisions of the Banking Ordinance. The Banking Ordinance gives power to the Chief Executive of Hong Kong to give directions to the HKMA and the Financial Secretary with respect to the exercise of their respective
functions under the Banking Ordinance.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HKMA has responsibility for authorising banks, and has discretion to attach conditions to its authorisation. The HKMA requires that banks or their
holding companies file regular prudential returns, and holds regular discussions with the management of the banks to review their operations. The HKMA may also conduct &#145;on site&#146; examinations of banks, and in the case of banks incorporated
in Hong Kong, of any local and overseas branches and subsidiaries. The HKMA requires all authorised institutions to have adequate systems of internal control and requires the institutions&#146; external auditors, upon request, to report on those
systems and other matters such as the accuracy of information provided to the HKMA. In addition, the HKMA may from time to time conduct tripartite discussions with banks and their external auditors.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HKMA, which may deny the acquisition of voting power of over 10 per cent in a bank, and may attach conditions to its approval thereof, can effectively
control changes in the ownership and control of Hong Kong-incorporated financial institutions. In addition, the HKMA has the power to</FONT></P>
<P>&nbsp;</P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">21</FONT></P>

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<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
      S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Governance,
  Regulation and Supervision</font></b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"> </font></b>(continued)</font>
</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#999999"><font size="2"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="2"> &nbsp;</font></td>
  </tr>
</table>
<div style="float: left; width: 48%">
<P>&nbsp;</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">divest
        controlling interests in a bank from persons if they are no longer deemed
        to be fit and proper, if they may otherwise threaten the interests of
        depositors or potential depositors, or if they have contravened any conditions
      specified by the HKMA.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The HKMA
        may revoke authorisation in the event of an institution&#146;s non-compliance
        with the provisions of the Banking Ordinance. These provisions require,
      among other things, the furnishing of accurate reports.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        Banking Ordinance requires that banks submit to the HKMA certain returns
        and other information and establishes certain minimum standards and ratios
        relating to capital adequacy (see below), liquidity, capitalisation,
        limitations on shareholdings, exposure to any one customer, unsecured
        advances to persons affiliated with the bank and holdings of interests
        in land, with which banks must
comply.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
          Kong fully implemented the capital adequacy standards established by
          the 1988 Basel Capital Accord. The Banking Ordinance currently provides
          that banks incorporated in Hong Kong maintain a capital adequacy ratio
          (calculated as the ratio, expressed as a percentage, of the bank's
          capital base to its risk-weighted exposure) of at least 8 per cent.
          For banks with subsidiaries, the HKMA is empowered to require that
          the ratio be calculated on a consolidated basis, or on both consolidated
          and unconsolidated bases. If circumstances require, the HKMA is empowered
          to increase the minimum capital adequacy ratio (to up to 16 per cent),
          after consultation with the bank.</FONT></P>
      </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        HKMA is in the process of establishing a Deposit Protection Scheme for
      banks in Hong Kong. It is expected that this will be launched in 2006.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
          marketing of, dealing in and provision of advice and asset management
          services in relation to securities in Hong Kong are subject to the
          provisions of the Securities and Futures Ordinance of Hong Kong (Chapter
          571) (the &#145;Securities and Futures Ordinance&#146;). Entities engaging
          in activities regulated by the Securities and Futures Ordinance are
          required to be licensed. The HKMA is the primary regulator for banks
          involved in the securities business, while the Securities and Futures
          Commission is the regulator for non-banking entities.</FONT></P>
      </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">US
      regulation and supervision</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is
        subject to extensive federal and state supervision and regulation in
        the US. Banking laws and regulations of the Federal Reserve Board, the
        Federal Deposit Insurance Corporation
(&#145;FDIC&#146;) and</FONT></td>
  </tr>
</table>
</div>

<div style="float: right; width: 48%">
<P>&nbsp;</P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the Office of
    the Comptroller of the Currency (&#145;OCC&#146;) govern many aspects of HSBC&#146;s
    US business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC and its US operations are subject to supervision, regulation and examination by the Federal Reserve Board because HSBC is a &#145;bank holding
company&#146; under the US Bank Holding Company Act of 1956 (the &#145;BHCA&#146;) as a result of its ownership of HSBC Bank USA. HSBC Bank USA is a nationally chartered commercial bank and a member of the Federal Reserve System. HSBC Bank USA is
the surviving institution of the 1 July 2004 merger of HSBC Bank USA and HSBC Bank &amp; Trust (Delaware) N.A. HSBC also owns HSBC Bank Nevada, N.A. (&#145;HSBC Bank Nevada&#146;), a nationally chartered &#145;credit card bank&#146; and HSBC Trust
Company (Delaware) NA (&#145;HSBC Bank Delaware&#146;), a nationally chartered bank limited to trust activities, each of which is also a member of the Federal Reserve System. Each of HSBC Bank USA, HSBC Bank Nevada and HSBC Bank Delaware is subject
to regulation, supervision and examination by the OCC. The deposits of HSBC Bank USA and HSBC Bank Nevada are insured by the FDIC and both banks are subject to relevant FDIC regulation. On 1 January 2004, HSBC formed a new company to hold all of its
North American operations, including these two banks. This company, called HSBC North America Holdings Inc. (&#145;HNAH&#146;) is also a &#145;bank holding company&#146; under the BHCA, by virtue of its ownership and control of HSBC Bank
USA.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The BHCA and the International Banking Act of 1978 impose certain limits and requirements on the US activities and investments of HSBC, HNAH, and certain
companies in which they hold direct or indirect investments. HSBC is also a &#145;qualifying foreign banking organisation&#146; under Federal Reserve Board regulations and, as such, may engage within the United States in certain limited non-banking
activities and hold certain investments that would otherwise not be permissible under US law. Prior to 13 March 2000, the BHCA generally prohibited HSBC from acquiring, directly or indirectly, ownership or control of more than 5 per cent of the
voting shares of any company engaged in the US in activities other than banking and certain activities closely related to banking. On that date HSBC became a financial holding company (&#145;FHC&#146;) under the Gramm-Leach-Bliley Act amendments to
the BHCA, enabling it to offer a more complete line of financial products and services. Upon its formation, HNAH also registered as an FHC. HSBC and HNAH&#146;s ability to engage in expanded financial activities as FHCs depend upon HSBC and HNAH
continuing to meet certain criteria set forth in the</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">22</FONT></P>

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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">BHCA, including requirements that its US depository institution subsidiaries, HSBC Bank USA, HSBC Bank Nevada and HSBC Bank Delaware, be &#145;well-capitalised&#146; and
&#145;well-managed&#146;, and that such institutions have achieved at least a satisfactory record in meeting community credit needs during their most recent examinations pursuant to the Community Reinvestment Act. These requirements also apply to
Wells Fargo HSBC Trade Bank, N.A., in which HSBC and HNAH have a 20 per cent voting interest in equity capital and a 40 per cent economic interest. Each of these depository institutions achieved at least the required rating during their most recent
examinations. At 31 December 2005, HSBC Bank USA, HSBC Bank Nevada, HSBC Bank Delaware and Wells Fargo HSBC Trade Bank, N.A. were each well capitalised and well managed under Federal Reserve Board regulations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In general under the BHCA, an FHC would be required, upon notice by the Federal Reserve Board, to enter into an agreement with the Federal Reserve Board to
correct any failure to comply with the requirements to maintain FHC status. Until such deficiencies are corrected, the Federal Reserve Board may impose limitations on the US activities of an FHC and depository institutions under its control. If such
deficiencies are not corrected, the Federal Reserve Board may require an FHC to divest its control of any subsidiary depository institution or to desist from certain financial activities in the US.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC and HNAH are generally prohibited under the BHCA from acquiring, directly or indirectly, ownership or control of more than 5 per cent of any class of
voting shares of, or substantially all the assets of, or exercising control over, any US bank or bank holding company without the prior approval of the Federal Reserve Board.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The US is party to the 1988 Basel Capital Accord and US banking regulatory authorities have adopted risk-based capital requirements for US banks and bank
holding companies that are generally consistent with the Accord. In addition, US regulatory authorities have adopted &#145;leverage&#146; capital requirements that generally require US banks and bank holding companies to maintain a minimum amount of
capital in relation to their balance sheet assets (measured on a non-risk-weighted basis).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Federal Deposit Insurance Corporation Improvement Act of 1991 provides for extensive regulation of insured depository institutions (such as HSBC Bank
USA, HSBC Bank Nevada and Wells Fargo HSBC Trade Bank, N.A.), including requiring federal banking regulators to take &#145;prompt corrective</FONT></P></div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">action&#146; with respect to FDIC-insured banks that do not meet minimum capital requirements.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA, HSBC Bank Nevada and Wells Fargo HSBC Trade Bank, N.A., like other FDIC-insured banks, may be required to pay assessments to the FDIC for
deposit insurance under the FDIC&#146;s Bank Insurance Fund. Under the FDIC&#146;s risk-based system for setting deposit insurance assessments, an institution&#146;s assessments vary according to the level of capital an institution holds, its
deposit levels and other factors.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The USA Patriot Act (&#145;Patriot Act&#146;) imposes significant record keeping and customer identity requirements, expands the US federal government&#146;s
powers to freeze or confiscate assets and increases the available penalties that may be assessed against financial institutions for failure to comply with obligations imposed on such institutions to detect, prevent and report money laundering and
terrorist financing. Among other things, the Patriot Act requires the US Treasury Secretary to develop and adopt final regulations with regard to the anti-money laundering compliance obligations of financial institutions (a term which, for this
purpose, includes insured US depository institutions, US branches and agencies of foreign banks, US broker-dealers and numerous other entities). The US Treasury Secretary delegated certain authority to a bureau of the US Treasury Department known as
the Financial Crimes Enforcement Network (&#145;FinCEN&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Many of the anti-money laundering compliance requirements of the Patriot Act, as implemented by FinCEN, are generally consistent with the anti-money
laundering compliance obligations previously imposed on the then HSBC Bank USA and Household Bank (now HSBC Bank Nevada) under the Bank Secrecy Act (which was amended in certain respects by the Patriot Act) and applicable regulations. These include
requirements to adopt and implement an anti-money laundering programme, report suspicious transactions and implement due diligence procedures for certain correspondent and private banking accounts. Certain other specific requirements under the
Patriot Act involve new compliance obligations. The passage of the Patriot Act and other recent events have resulted in heightened scrutiny of the Bank Secrecy Act and anti-money laundering compliance by federal and state bank examiners. On 30 April
2003 the then HSBC Bank USA entered into a written agreement with the Federal Reserve Bank of New York and the New York State Banking Department to enhance its compliance with anti-money laundering requirements. HSBC Bank USA implemented certain
improvements in its compliance, reporting, and review systems and procedures to</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">23</FONT></P>

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<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
      S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Governance,
  Regulation and Supervision</font> </b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font>
</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#999999"><font size="2"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="2"> &nbsp;</font></td>
  </tr>
</table>
<div style="float: left; width: 48%">
  <P>&nbsp;</P>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="3%">&nbsp;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">comply
          with this agreement. When HSBC Bank USA merged with HSBC Bank &amp; Trust
          (Delaware) N.A. on 1 July 2004, the OCC made the merger conditional
          on HSBC Bank USA&#146;s continuing compliance with the requirements
          of the written agreement. On 6 February 2006, the OCC determined that
          HSBC Bank USA had satisfied the requirements of the written agreement,
      and it terminated the agreement.</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
          US consumer finance operations are subject to extensive state-by-state
          regulation in the US, and to laws relating to consumer protection;
          (both
in general, and in respect of &#145;sub-prime&#146; lending operations, which
have been subject to enhanced regulatory scrutiny); discrimination in extending
credit; use of credit reports; privacy matters; disclosure of credit terms; and
correction of billing errors. They also are subject to regulations and legislation
that limit operations in certain jurisdictions. For example, limitations may
be placed on the amount of interest or fees that a loan may bear, the amount
that may be borrowed, the types of actions that may be taken to collect or foreclose
upon delinquent loans or the information about a customer that may be shared.
HSBC&#146;s US consumer finance branch lending offices are generally licensed</FONT></td>
    </tr>
  </table>

</div>

<div style="float: right; width: 48%">
<P>&nbsp;</P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in those jurisdictions in which they operate. Such licences have limited terms but are renewable, and are revocable for cause. Failure to comply with applicable laws and regulations may
  limit the ability of these licensed lenders to collect or enforce loan agreements made with consumers and may cause the consumer finance lending subsidiary to be liable for damages and penalties.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s US credit insurance operations are subject to regulatory supervision under the laws of the states in which they operate. Regulations vary from
state to state but generally cover licensing of insurance companies; premiums and loss rates; dividend restrictions; types of insurance that may be sold; permissible investments; policy reserve requirements; and insurance marketing
practices.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain US source payments to foreign persons may be subject to US withholding tax unless the foreign person is a qualified intermediary. A qualified
intermediary is a financial intermediary which is qualified under the Internal Revenue Code and has completed the Qualified Intermediary Withholding Agreement with the Internal Revenue Service. Various HSBC operations outside the US are qualified
intermediaries.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">24</FONT></P>

<hr noshade align="center" width="100%" size="2">


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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><b>Description
          of Property</b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, HSBC operated from some 9,800 operational properties worldwide, of which approximately 3,300 were located in Europe, 600 in Hong Kong and the Rest of Asia-Pacific,
  4,000 in North America (including 1,600 in Mexico) and 1,900 in South America. These properties had an area of approximately 63.8 million square feet (2004: 62.2 million square feet).</FONT></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition, properties with a net book value of US&#36;2,170 million were held for investment purposes. Of the total net book value of HSBC properties, more than 80 per cent were owned or held under long-term leases. Further details are included in Note 23 on the Financial
Statements.</FONT></P>
</div>
<div style="float: left; width: 4%">
</div>
<div style="float: right; width: 48%">
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s properties are stated at cost, being historical cost or fair value at the date of transition to IFRSs (their deemed cost) less any impairment
losses, and are depreciated on a basis calculated to write off the assets over their estimated useful lives.</FONT></P>
</div><br clear="all">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><b>Legal
          Proceedings</b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is named in and is defending legal actions in various jurisdictions arising out of its normal business operations. None of the above proceedings is regarded as material litigation.</FONT></P>
</div><br clear="all">
<P align="left">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">25</FONT></P>
<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p26"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </P>
<P><b><font face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</font><font color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </font></b><b><font face="Univers,Bold,Arial,Helvetica,sans-serif">Review</font></b> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p> <b><font size="2" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Summary</font></b></p>
<hr width="100%" size="1" noshade>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=4 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
        <TD width=2% align=left>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest income</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,094</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,471</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest expense</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(28,760</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,372</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,486</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,902</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee expense</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,030</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,954</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income excluding net interest income</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,656</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income on trading activities</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net trading income<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income from financial instruments designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment income on assets backing policyholders&#146; liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses from financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,704</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,067</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income before loan impairment charges and other credit risk provisions</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,637</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,353</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,801</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,836</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,162</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employee compensation and benefits</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16,145</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14,523</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General and administrative expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11,183</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,739</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation of property, plant and equipment</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,632</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,731</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation of intangible assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(554</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(494</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating expenses</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,514</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,322</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of profit in associates and joint ventures</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">644</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax expense</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,093</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,685</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit for the year</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,873</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,258</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp; </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit attributable to shareholders of the parent company</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,081</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit attributable to minority interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">792</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,340</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width="3%">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#145;</FONT><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
trading income</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;</FONT><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif"> comprises
all gains and losses from changes in the fair value of financial assets and financial
liabilities held for trading, together with related external interest income,
interest expense and dividend income. The 2004 comparative figure does not
include interest income and interest expense on trading assets and liabilities
except for trading derivatives, nor does it include dividend income on
trading assets.</FONT></I></TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR>
</TABLE>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC made a profit before tax of US&#36;20,966 million, a rise of US&#36;2,023 million or 11 per cent compared with 2004. Of this increase, US&#36;267 million was attributable to additional contributions of ten and two
  months from M&amp;S Money and Bank of Bermuda respectively, one month&#146;s contribution from Metris, and the first full year effect of HSBC&#146;s
  investments in Bank of Communications and Industrial Bank.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As a result of the transition to full IFRSs, the format of the income statement has changed. In</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">particular, US&#36;685 million of what would, in the past, have been included in non-equity minority interest, has moved within the income statement and is classified as &#145;Interest
expense&#146; in 2005, rather than &#145;Profit attributable to minority interests&#146;. As the applicable IFRSs requiring these changes only came into effect from 1 January 2005, the comparative 2004 figures are presented on the previous
basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On an underlying basis, which is described on page 4, profit before tax increased by 13 per cent.</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">26</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p27"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
operating income of US&#36;61,704 million was US&#36;5,716 million or 10 per
cent higher than in 2004. On an underlying basis, total operating income  also
rose by 10 per cent. This reflected organic lending growth in all regions and
expansion in transactional banking revenues from increased trade, funds under
management, administration and custody activities. Strong growth was also seen
in fixed income

and credit trading. Operating income performance was well spread geographically
with particularly strong growth in HSBC&#146;s operations in South America, the
Middle East and the Rest of Asia-Pacific.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment and other credit risk provisions as a percentage of gross average advances to customers was moderately higher in 2005 at 1.16 per cent than
in 2004, 0.99 per cent. There was also a small rise in the percentage ratio of new loan impairment charges to gross average advances to customers from 1.41 in 2004 to 1.50 in 2005. The charge of US&#36;7,801 million was US&#36;1,610 million or 26
per cent higher than in 2004 and on an underlying basis 23 per cent higher. Of this increase, approximately half was driven by growth in lending, with the remainder attributable to the higher rate of new provisions and the non-recurrence of general
provision releases benefiting 2004. Underlying credit conditions in the UK were adversely affected by slower economic growth and changes in bankruptcy legislation. This was offset by improved credit experience in the US, notwithstanding the impact
of Hurricane Katrina and an acceleration of bankruptcy filings ahead of legislative changes in the fourth quarter of 2005. In Brazil, HSBC also experienced higher charges as increased credit availability, particularly in the consumer segment, led to
over-indebtedness.</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
operating expenses of US&#36;29,514 million were US&#36;3,027 million or 11 per
cent </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">higher
than in 2004, 9 per cent higher on an underlying basis. Much of the growth reflected
    investment to expand the Group&#146;s geographic presence and adding product
    expertise and sales support. This expansion was most marked in Personal Financial
    Services in the Rest of Asia-Pacific and in Corporate, Investment Banking
    and Markets, where investment spend peaked during 2005. In addition, business
    expansion in Mexico, the Middle East and South America contributed to cost
  growth.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Productivity improvements achieved in the UK and Hong Kong allowed the Group to continue building its Personal Financial Services and Commercial Banking
businesses in the Rest of Asia-Pacific, and expanding its capabilities in Corporate, Investment Banking and Markets, without deterioration in the Group&#146;s cost efficiency ratio. In the UK, the focus on improving utilisation of the existing
infrastructure led to broadly flat costs in Personal Financial Services and Commercial Banking compared with underlying combined revenue growth of 10 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s cost efficiency ratio, which is calculated as total operating expenses divided by net operating income before loan impairment charges and other
credit risk provisions, improved slightly to 51.2 per cent in 2005 from 51.6 per cent in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s share of profit in associates and joint ventures increased by US&#36;376 million, boosted by full year contributions from Bank of Communications
and Industrial Bank in mainland China, and increased income from The Saudi British Bank, which reported a record performance on the back of a vibrant economy and a strong oil price.</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">27</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p28"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Net interest
income</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font>   </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,221</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,098</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,064</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,638</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,412</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,060</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,887</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,993</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,750</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,310</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net interest income<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net interest income<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average interest-earning assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">999,421</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">976,387</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Gross interest yield (per cent)<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.01</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.17</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net interest spread (per cent)<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.84</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.97</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net interest margin (per cent)<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.14</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.19</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#145;Net
interest income&#146; in
2005 comprises interest income less interest expense on financial assets and
liabilities which is not recognised as part of &#145;Net trading
income&#146; or &#145;Net income earned from financial instruments designated
at fair value&#146;. In 2004, all interest income and expense was included within &#145;Net
interest income&#146; so these figures  are not strictly
comparable.</FONT></I>  </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Gross interest yield is the average annualised interest rate earned on average interest-earning assets (&#145;AIEA&#146;).</FONT></I>   </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest
rate paid on average interest-bearing funds.</FONT></I> </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>  </TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net interest margin is net interest income expressed as an annualised percentage of AIEA.</FONT></I>    </TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest
    income of US&#36;31,334 million was US&#36;235 million, or 1 per cent, higher
  than in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under IFRSs, HSBC&#146;s presentation of net interest income in 2005 was particularly affected by:</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the reclassification
        of certain preference</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">dividends
      within non-equity minority interests</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">as interest expense;</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the inclusion
        of certain loan origination fees and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">expenses
        as part of an effective interest rate</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">calculation instead of being
        recognised in full on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">inception
      of the loan; and</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">external
        interest income and expense on trading</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">assets
      and liabilities now included within &#145;Net</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">trading income&#146;.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjusting for these changes and on an underlying basis, net interest income increased by 12 per cent. The commentary that follows is on
this basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The benefit of strong growth in interest-earning assets globally more than offset the effect of spread compression from flattening yield curves in the major
currencies. This latter phenomenon reduced opportunities for HSBC&#146;s treasury operations to enhance margin by placing the Group&#146;s surplus liquidity longer term than the behaviouralised deposit funding base. In addition, short-term interest
rate rises in the US reduced spreads on consumer finance loans.</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Europe, higher personal and commercial lending and increased deposit balances led to a 12 per cent increase in net interest income.
UK </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
Financial Services balances grew strongly in mortgages, unsecured lending and
cards, mainly funded by a 12 per cent increase in deposit and savings balances.
In Turkey, card
balances grew from increased marketing and working with HSBC&#146;s retail partners.
Spreads tightened on UK personal lending, reflecting the introduction of preferential
pricing for lower-risk and higher-value customers, and on savings, due to better
pricing for customers. In Commercial Banking in the UK, lending and overdraft
balances increased by 23 per cent, with growth particularly strong in the property,
distribution and services sectors. Deposit balances grew by 11 per cent, partly
from keen pricing, though this reduced deposit spreads. Yields on UK corporate
lending, which were lower largely as a result of competitive pressure, were only
partly offset by higher loan balances, while lower treasury income reflected
the effect
of rising short-term rates and flattening yield curves on balance sheet management
revenues.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In North America, net interest income increased by 6 per cent. Growth in mortgage, card and unsecured personal lending balances was strong, offsetting spread
contraction as the cost of funds rose with progressive interest rate rises. Core deposit growth benefited from expansion of the branch</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">28</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p29"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">network and the launch of new savings products, including an online savings product which attracted a significant number of new customers. Treasury income from balance sheet management
within Corporate, Investment Banking and Markets diminished as the rise in short-term interest rates limited opportunities to profit from placing the liquidity generated from core banking operations over extended periods.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Hong Kong, net interest income rose by 17 per cent. Rising interest rates reinvigorated demand for traditional savings products, driving increases in
personal and commercial savings balances. Coupled with the rise in deposit spreads, which increased in line with interest rates, this led to a sharp rise in net interest income. Mortgage spreads, however, contracted, as the gradual increase in
yields during the year, in line with higher rates, was more than offset by rising funding costs. There was little net new lending for residential mortgages as interest rate rises cooled the residential property market in the second half of 2005.
Economic growth in mainland China boosted commercial lending to the trade and manufacturing sectors, and property lending also increased. Treasury income remained under pressure, with rising short-term interest rates and a flat yield curve providing
limited opportunities to profitably deploy surplus liquidity and increasing funding costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the Rest of Asia-Pacific, net interest income increased by 24 per cent, reflecting business expansion and favourable economic conditions</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">throughout the region. In the Middle East, buoyant oil-based economies stimulated demand for credit for property and infrastructure projects. Increasing personal and corporate wealth
contributed to growth in deposit balances, while interest rate rises led to higher deposit spreads. General economic expansion created demand for consumption credit which boosted credit card lending. For the reasons noted above, treasury income from
balance sheet management was weaker.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In South America, the positive economic environment encouraged growth in personal and commercial lending, particularly in credit cards and vehicle finance,
which led to a 35 per cent increase in net interest income. A significant rise in customer acquisition and the development of the Losango customer base in Brazil also contributed.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average interest-earning assets increased by US&#36;23 billion, or 2 per cent, compared with 2004. At constant exchange rates, and excluding the US&#36;84.7
billion of trading assets in 2004, average interest-earning assets increased by 11 per cent, reflecting strong growth in mortgages, personal lending and cards globally, and increased lending in Commercial Banking.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s net interest margin was 3.14 per cent in 2005 compared with 3.19 in 2004. For the reasons set out in the opening paragraphs, these figures are
not strictly comparable as a result of presentation changes under IFRSs from 1 January 2005.</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">29</FONT></P>
<hr noshade align="center" width="100%" size="2">

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<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Net fee
income</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font>       </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,299</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43.6</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,980</FONT></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.2</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,674</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.6</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,703</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,340</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.2</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,041</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,606</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31.9</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,765</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.7</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">459</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Account services</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,132</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,779</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Credit facilities<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">880</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,179</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Remittances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">396</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">353</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cards</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,699</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,987</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Imports/exports</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">722</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">692</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Underwriting</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">274</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,082</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,001</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mortgage servicing</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trust income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">199</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Broking income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,104</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">943</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Global custody</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">656</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">564</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maintenance income on operating leases</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">180</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">190</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Funds under management</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,831</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,479</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unit trusts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">388</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">498</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">193</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,656</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,527</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,486</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,902</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Less: fee expense</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,030</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,954</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Under
IFRSs from 2005, a higher proportion of fees on credit facilities is dealt with
as part of an effective interest rate calculation than previously. This
change in accounting affects both the timing of fee income recognition and its
presentation in the accounts. In accordance with the transition arrangements
to IFRSs, the 2004 comparative figure is presented on the old accounting
basis.</FONT></I>       </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income
of US&#36;14,456 million was </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;1,508
million or 12 per cent higher than in 2004. Under IFRSs, a greater
proportion of fees related to the provision of credit facilities is now amortised
and accounted for in net interest income as part of an effective interest rate
calculation than was the case before 1 January 2005. This resulted in a reduction
in reported net fee income of approximately 4 per cent. Excluding this effect
and
on an underlying
basis, growth in
net fee income was 14 per cent and the comments that follow are presented on
this basis. The principal drivers of this growth were:</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the increase
        in card fee income, reflecting</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">strong
        growth in personal credit card sales</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">across the Group and increased
      transaction</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">volumes;</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">increased
        customer numbers, higher transaction</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">volumes,
      an increase in packaged accounts and</FONT></td>
  </tr>
</table>
</div>

<div style="float: right; width: 48%">
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the selective
        management of tariffs led to an</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">11
      per cent increase in account services fees;</font> </td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in Private
        Banking, the introduction of a wider</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">range
        of alternative investment products and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">services generated higher fee
      income;</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">increased
        demand for credit among personal</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        commercial customers drove mortgage and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">lending fees up by 11 per cent;
      and</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">rising
        equity markets and renewed interest in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">emerging
        markets led to higher global custody,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">broking and asset management
      fees.</font></td>
  </tr>
</table>

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Offsetting these positive trends, after a strong run of growth, fee income from unit trust sales in Hong Kong fell as rising interest rates made traditional
deposit products more attractive.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Europe, fee income increased by 9 per cent. Higher personal and commercial lending volumes led to a 19 per cent increase in credit fees. Card
fee</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">30</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p31"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income rose by 22 per cent, principally in the UK which benefited from higher customer numbers and greater card utilisation. Account service fees increased by 9 per cent, reflecting
increased customer numbers, the launch of a new packaged product in the UK and the introduction of a Small Business Tariff in Commercial Banking. Buoyant equity markets benefited custody fees, which grew as a result of both increased asset values
and strong new business volumes. Private Banking fee income was 12 per cent higher than in 2004 following increases in client assets under management and transaction volumes.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Hong Kong, net fee income was in line with 2004. Unit trust fees decreased by 42 per cent as Personal Financial Services customers switched to traditional
deposit savings and shorter-term investment products. The launch of 173 new open-ended funds established HSBC as the leading investment service provider in Hong Kong. This, together with the successful attraction of client assets in Private Banking,
contributed to a rise in income from funds under management. Credit card fee income increased by 18 per cent, reflecting growth in cardholder spending as HSBC strengthened its position as the largest credit card issuer in Hong Kong. In Commercial
Banking, net fees increased as trade services, insurance and lending income rose. However, lower Structured Finance revenues led to reduced Corporate, Investment Banking and Markets fees.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
fee income in the Rest of Asia-Pacific rose by 28 per cent from higher card transaction
volumes and increased account service fees in response to the  expansion of the
Personal Financial Services</FONT></P>
</div>

<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business in the region. Rising equity markets, buoyant regional economies and an increase in personal wealth combined with the launch of new products to increase sales of investment
products to personal customers. Client assets in Private Banking also grew. Global Transaction Banking revenues increased in line with transaction volumes following investment in 2004 to expand capabilities. Custody fees grew by 29 per cent as a
result of improved investor sentiment and rising local equity markets. Trade services income rose by 13 per cent, reflecting strong trade flows.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In North America, net fee income grew by 21 per cent. Card fee income grew as a result of higher transactions, increased receivables and improvements in the
interchange rate, while US mortgage lending fees benefited from lower refinancing prepayments and the consequent release of impairment provisions on mortgage servicing rights. In Mexico, strong growth in the cards base drove higher net fee income
and increased transaction volumes delivered higher ATM fees and increased remittance income. Investment banking fees increased in response to HSBC&#146;s success in attracting customers with an expanded range of products.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income in South America increased by 23 per cent, principally due to higher card, lending and current account servicing fees. Current account fees
benefited from increased customer numbers and tariff increases, while lending fee growth was principally related to higher lending volumes. Card fees increased as a result of higher spending in both Brazil and Argentina.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">31</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p32"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Net trading
income</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font>       </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,036</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.7</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">997</FONT></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35.8</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">546</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.3</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">659</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">860</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14.7</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">494</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,013</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.3</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">582</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">409</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net trading income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading activities</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,884</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income on trading activities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other trading income</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Hedge
    ineffectiveness:</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#150; on
    cash flow hedges</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(96</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#150; on
    fair value hedges</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-qualifying hedges</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(146</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net trading income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
    </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net trading income of US&#36;5,864 million rose by 110 per cent against 2004. Under IFRSs, HSBC&#146;s presentation of trading income for 2005 reclassified into trading income external
interest income and dividend income on trading assets and interest expense on trading liabilities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The external funding of long trading positions is reported separately within &#145;Net interest income on trading activities&#146;; in the 2004 comparatives
this was included within &#145;Interest expense&#146;. The net effect of these adjustments added approximately US&#36;2.9 billion to net trading income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the segmental analysis, both net internal funding and net external interest income on trading activities are reported as &#145;Net interest income on
trading activities&#146;. The offset on the net internal funding is reported as &#145;Net interest income&#146; within the lending customer group. The resulting &#145;Net trading income&#146; line comprises all gains and losses from changes in the
fair value of financial assets and financial liabilities classified as held for trading, together with related external interest income and interest expense and dividends received.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from trading activities rose, reflecting positive revenue trends on core products within Global Markets following the investment made in client-facing
trading capabilities. In Europe, revenues were boosted from higher volumes through electronic trading platforms and from the expansion of primary dealing activity in European government bond markets. In the US, the benefit of favourable movements on
credit spreads was compounded by</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the non-recurrence of losses experienced in the industrial sector in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Asia, volatility in the value of the Korean won against the US dollar, the introduction of a managed float for Malaysian ringgit and the enhancement of
capabilities coupled with greater focus on trading regional currencies in the Middle East all contributed to higher foreign exchange revenues. In Europe, the weakening euro and market volatility following the general election in the UK and the
French referendum on the EU constitutional treaty afforded opportunities to increase foreign exchange revenues.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives activity grew strongly as structured product capabilities were added in the credit, equity, and interest rate and foreign exchange areas. Further
benefit was derived from the greater focus put on client-driven risk management and the investment made in sales and execution expertise in previous years. In accordance with IFRSs, the inception profits on certain derivative transactions are
deferred as described in Note 17 on the Financial Statements.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further analysis on the trading performance of the Global Markets business is provided in the regional business commentaries on Corporate, Investment Banking
and Markets.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">32</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p33"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Net income from financial instruments designated at fair value</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year ended 31 December 2005</FONT></B>
        </TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Net
    income</B></font>   </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">362</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35.0</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,077</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,442</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.6</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,909</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,999</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.6</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">872</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">300</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">434</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.0</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,934</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">186</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18.0</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,188</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">154</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    income from financial instruments</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">designated at fair value</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR align="center" valign="bottom">
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from assets held to meet liabilities under insurance and investment contracts</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,760</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in fair value of liabilities to customers under investment contracts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,126</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Movement in fair value of HSBC&#146;s long-term debt issued and related derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">403</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#150; change
    in own credit spread on long-term debt</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(70</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#150; other
    changes in fair value</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">473</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from other instruments designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income from financial instruments designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has utilised the &#145;Amendment to IAS 39 Financial Instruments: Recognition and Measurement: the Fair Value Option&#146; with effect from 1 January 2005. HSBC may designate
financial instruments at fair value under the option in order to remove or reduce accounting mismatches in measurement or presentation, or where financial instruments are managed and their performance is evaluated on a fair value basis. All income
and expense on financial instruments for which the fair value option has been taken is included in this line except for debt securities in issue and related derivatives, where the interest components are shown in interest income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has principally used the fair value designation in the following cases:</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for certain
        fixed rate long-term debt issues</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">whose
        interest rate characteristic has been</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">changed to floating through
        interest rate swaps</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">as
        part of a documented interest rate</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">management strategy. Approximately</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;51
        billion of the Group&#146;s debt issues have</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">been accounted for using the option. The</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">movement
        in fair value of these debt issues</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">includes the effect of changes in own credit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">spread
        and any ineffectiveness in the economic</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">relationship between the related swaps and own</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">debt.
        Such ineffectiveness arises from the</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">different credit characteristics of the swap and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">own
        debt coupled with the sensitivity of the</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">floating leg of the swap to changes in short-term</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">interest
        rates. In addition, the economic</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">relationship between the swap and own debt can</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td align="left" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">be affected
        by relative movements in market</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">factors,
        such as bond and swap rates, and the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">relative bond and swap rates
        at inception. The</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">size
        and direction of the accounting</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">consequences of changes in own credit spread</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        ineffectiveness can be volatile from period</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">to period, but do not alter the cash flows</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">envisaged
      as part of the documented interest rate</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">management strategy;</font> </td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td align="left" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">certain
        financial assets held by insurance</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">operations
        and managed at fair value to meet</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">liabilities under insurance
        contracts</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(approximately
      US&#36;4 billion of assets); and</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td align="left" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
          liabilities under investment contracts</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
          the related financial assets, when the change</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">in value of the assets is correlated
          with the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">change
          in value of the liabilities to policyholders</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">(approximately US&#36;8 billion
          of liabilities and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">related
      assets).</font></td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The introduction of the new categories of financial instruments under IAS 39 on 1 January 2005 has led to a change in income statement presentation for the
results of HSBC&#146;s life insurance business. In 2005, income from assets designated at fair value and held to meet liabilities under insurance and investment contracts of US&#36;1,760 million is reported under &#145;Net income from financial
instruments designated at fair value&#146;. In 2004, the corresponding amounts were reported within &#145;Net investment income on assets backing policyholders&#146; liabilities&#146;.</FONT></P>
</div><br clear="all">
<P align="right">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">33</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p34"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from assets designated at fair value and held to meet liabilities under insurance and investment contracts during 2005 is correlated with increases in
liabilities under the related investment and insurance contracts. Under IFRSs, only investment contracts can be designated as financial instruments. Changes in the liability under these contracts, therefore, like the related assets, are included
within the heading &#145;Net income from financial instruments designated at fair value&#146;. The</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">element of the increase in liabilities under insurance contracts that reflects investment performance is reported separately within &#145;Net insurance claims incurred and movements in
policyholders&#146; liabilities&#146;. In 2004, investment income on assets backing policyholder liabilities was offset against the movement in policyholders&#146; liabilities without distinction between insurance and investment
contracts.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Gains less losses from financial investments</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font>   </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">439</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63.4</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28.5</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses from financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net gain from disposal of:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; debt securities</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">138</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">202</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; equity securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">505</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">296</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; other financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">650</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recovery of impairment losses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total gains from financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The net gain of US&#36;692 million from the disposal of available-for-sale financial investments was 28 per cent higher than in 2004. Lower income from the disposal of debt securities was
more than</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">compensated for by an increase in gains from the disposal of private equity investments, particularly in HSBC&#146;s European operations.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">34</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p35"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Net earned insurance premiums</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font>   </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,599</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29.4</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,875</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34.9</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,334</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,247</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">602</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">553</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">746</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">596</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross insurance premium income</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,152</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,022</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(716</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(654</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> earned
    insurance premiums of US&#36;5,436 million increased by US&#36;68 million compared with
    2004. On an underlying basis, net earned insurance premiums were in line with
    2004.</FONT>
</p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under IFRSs, in 2005 there were changes in the presentation of certain aspects of HSBC&#146;s insurance business, which are now treated as liabilities under
investment contracts. Investment income from these products is now reported as &#145;Net income from financial investments designated at fair value&#146;. Income that was previously reported as &#145;Net earned insurance premiums&#146; is now taken
directly to the balance sheet as customer liabilities, with a corresponding movement in net insurance claims. Net insurance claims have fallen to a greater extent than premium income, due to the additional impact of the reclassification of the fair
value movement in respect of liabilities under investment contracts.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows excludes the presentational changes discussed above, and is on an underlying basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Higher premium income in Europe was due to an increased uptake of creditor protection products in the UK.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The increase in premiums in Hong Kong reflected HSBC&#146;s continued emphasis on the growth and development</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of its insurance proposition. Higher volumes of life assurance new business were directly driven by the launch of new endowment products, augmented by HSBC&#146;s leading position in
online personal insurance provision. In addition, greater demand for private medical insurance products was driven by the public response to government deliberation over reforms to healthcare financing. Investment in HSBC&#146;s insurance business
included the establishment of a new Commercial Banking insurance division in October, which positively contributed to higher volumes of new business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
the Rest of Asia-Pacific, the increase in premiums was mainly attributable to
growth in the number of personal insurance policies, resulting from an expansion
of

HSBC&#146;s insurance operations in the region.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In North America, increased cross-sales of insurance products through the branch network, combined with strong sales of other personal insurance-related
products, resulted in an increase in net earned insurance premiums.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On an underlying basis, net earned insurance premiums in South America were broadly in line with 2004.</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">35</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p36"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other operating income</FONT></B><BR>
</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,603</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43.7</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,175</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52.4</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">805</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.9</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">536</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.9</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">335</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">146</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.5</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20.2</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,671</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,244</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intra-HSBC elimination</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(938</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(631</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rent received</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">859</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">793</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gain/(loss) on disposal of assets held for resale</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(93</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Valuation gains on investment properties</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">201</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gain on disposal of property, plant and equipment, and non-financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">703</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">267</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gain on disposal of operating leases</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in present value of in-force long-term insurance business</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">71</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">893</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">476</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income of US&#36;2,733 million was US&#36;1,120 million higher than in 2004. On an underlying basis, other operating income grew by 69 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is on an underlying basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
Europe, the increase in other operating income was largely driven by increased
rental income on the leasing of train rolling stock, higher disposals of assets
and a number of private equity realisations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Hong Kong, higher other operating income was driven mainly by an increase in market value of the investment property portfolio and the disposal of a
leasehold residential property. HSBC&#146;s investment properties are located principally in Hong Kong. Under IFRSs, valuation movements on investment properties are reflected in the income statement rather than through revaluation reserves. Within
Hong Kong, the commercial property sector enjoyed good growth as the economy grew and vacant space fell markedly with a corresponding rise in rents.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The increase in other operating income in the Rest of Asia-Pacific was, in part, due to gains</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">realised on the sale of the Group&#146;s asset management operations in Australia.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income in North America doubled, in part due to improved revenues from the sale of consumer real estate owned assets, higher rental income
and disposals of property, plant and equipment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In South America, other operating income increased by US&#36;160 million, primarily as a result of the sale of the insurance underwriter HSBC Seguros de
Automoveis e Bens Limitada in Brazil, and the receipt of compensation and coverage bonds in Argentina.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s rental income mainly arose from leasing in the UK. Europe accounted for 80 per cent of total rental income; the remainder was attributable to
North America and Hong Kong.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
increase in the &#145;Other&#146; caption
was partly due to the receipt of non-core income in Mexico from the distribution
of
third-party
products
through the HSBC network. Higher &#145;Other&#146; income in South America reflected
the receipt of compensation and coverage bonds in Argentina and increased revenues
from &#145;capitalisation&#146; products in Brazil.</FONT></P>
</div><br clear="all">
<P align="left">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">36</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p37"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Net insurance claims incurred and movement in policyholders&#146; liabilities</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
            ended 31 December</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">818</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20.1</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,628</FONT></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35.1</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,059</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50.6</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,154</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.5</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">166</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">333</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.2</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">312</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.7</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">691</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">459</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.9</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,067</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,635</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD width=80% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross insurance claims and movement in policyholders&#146; liabilities</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,153</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,220</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurers&#146; share of claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(86</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(585</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,067</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,635</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities of US&#36;4,067 million decreased by 12 per cent compared with 2004. On an underlying basis, net insurance
claims incurred decreased by 13 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As
with net earned insurance premiums, the primary reason for the reduction was
the required reclassification under IFRSs in 2005 of policyholders&#146;
liabilities in respect of long term insurance contracts which were reclassified
as &#145;Liabilities to customers under investment contracts&#146;. As a consequence,
reported net insurance claims incurred and movement in policyholders&#146;
liabilities have reduced.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The majority of HSBC&#146;s non-life insurance business largely relates to the provision of personal insurance products. Minimal impact from hurricane damage
in the US and a lack of significant claims events during 2005 resulted in a relatively stable</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">claims experience, augmented by negligible prior-year reserve development in respect of 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Excluding the effect of the above reclassification, the most significant reduction in net claims occurred in Europe, due to the effect of revised actuarial
valuations of existing life insurance policies in the UK life operation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The reinsurers&#146; share of claims incurred and movement in policyholder liabilities in 2004 included the renegotiation of a reinsurance treaty in the UK
life operation, in which a greater proportion of risk was transferred to the reinsurer. The subsequent implementation of a revised liability valuation system in 2005 reduced the amount of reserves held for liabilities in respect of income protection
products, bringing additional benefits in terms of capital efficiency of the UK life operation.</FONT></P>
</div><br clear="all">
<P align="right">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">37</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p38"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Loan
impairment charges and other credit risk provisions</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,929</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24.7</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,033</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.8</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.9</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(220</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3.6</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">134</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.7</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,038</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">64.6</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,022</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81.1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">554</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">267</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total loan impairment charges and other credit risk provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,801</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,191</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=4 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">New allowances</FONT></font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,140</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,873</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Reversal of allowances no longer required</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,786</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,267</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts previously written off</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(494</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(913</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,860</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,693</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Individually assessed allowances</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">518</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Collectively assessed allowances</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,342</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(498</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other credit risk provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(59</FONT></B>
        </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total loan impairment charges and other credit risk provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,801</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,191</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer impaired loans</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,446</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,427</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer loan impairment allowances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,357</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,542</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td><font size="2"><i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">Loan
    impairment charges in 2004 refer to specific provisions</font></i><font
face="TimesNewRoman,Times New Roman,Times,serif">.</font></font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">During 2005, the
underlying growth in customer lending excluding loans to the financial sector
and the impact of grossing adjustments required from 1 January 2005 under IFRSs,
was 12 per cent. Personal lending accounted for 63 per cent of this increase,
principally in mortgages, credit cards and other personal lending products. At
31 December 2005, personal lending accounted for 56 per cent of the customer
loan portfolio, in line
with 2004. The proportion of the portfolio attributable to corporate and commercial
lending was augmented by the IFRSs adjustment noted above. Residential mortgages
comprised 56 per cent of the personal lending portfolio</FONT><B><FONT size=1
face="TimesNewRoman,Bold,Times New Roman,Times,serif">.</FONT></B></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The charge for loan impairment adjusts the balance sheet allowance for loan impairment to the level that management deems adequate to absorb actual and
inherent losses in the Group&#146;s loan portfolios. The majority of the Group&#146;s loan impairment charges are determined on a portfolio basis, employing statistical calculations using roll rate methodologies. The total charge for loan impairment
and other credit risk provisions in 2005 was US&#36;7,801 million compared with a total charge of US&#36;6,191 million in 2004, a rise of 26 per cent. This reflected:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">underlying
      growth in lending of 12 per cent;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
</div>
<div style="float: right; width: 48%">
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">a weakening
        credit environment in the UK and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil
      but an improved credit experience in the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">US; and</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the non-recurrence
        of the 2004 net release of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">general
      provision of US&#36;498 million.</font> </td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the US, the underlying trend in loan impairment charges was favourable compared with 2004, notwithstanding the negative effect on loan impairment charges
of Hurricane Katrina and a surge in personal bankruptcies in October ahead of new legislation making such declarations more onerous. This was due to a change in portfolio mix towards higher quality lending and a positive economic
environment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the UK, credit costs rose following an expansion in personal lending, which was accompanied by an increase in delinquencies as the economy slowed during
2005. This was evidenced by rising personal bankruptcy, caused in part by legislative changes which facilitated debt reconstruction procedures, an increase in unemployment and higher levels of personal debt. In Hong Kong, the credit environment
remained benign, with falling bankruptcies contributing to a modest reduction in loan impairment allowances in the personal sector. A fall in releases in the corporate</FONT></P>
</div><br clear="all">
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">38</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p39"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sector, however, contributed to a modest charge for loan impairment as compared with a net release in 2004. In the Rest of Asia-Pacific, continuing releases and recoveries partly offset
the impact of lending growth in the region. Higher charges in the personal sector in Brazil followed intense competitive pressure in the consumer segment, where significant increases in the availability of credit led to customers becoming
over-indebted.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The aggregate customer loan impairment allowances at 31 December 2005 of US&#36;11,357 million represented 1.5 per cent of gross customer advances (net of
reverse repos, settlement accounts and netting) compared with 2.0 per cent at</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December 2004. As in 2004, HSBC&#146;s cross-border exposures did not necessitate significant allowances.</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"></FONT>Impaired loans to customers were US&#36;11,446 million at 31 December 2005 compared with US&#36;12,427
million at 31 December 2004, largely reflecting the write-off of impaired loans
against the provisions held in respect of these loans. At constant exchange rates,
impaired loans were 3 per cent lower than 2004 compared with underlying lending
growth (excluding lending to the financial sector and settlement accounts) of
12 per cent.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Operating expenses</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,639</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41.4</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,028</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44.4</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,867</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.4</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,558</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.4</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,762</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,087</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.7</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,217</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33.6</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,032</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33.3</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,967</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.5</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,413</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.2</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,452</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,118</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intra-HSBC elimination</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(938</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(631</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,514</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,487</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By expense category</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employee compensation and benefits</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,145</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,523</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Premises and equipment (excluding depreciation)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,977</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,615</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General and administrative expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,206</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,124</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Administrative expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,328</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,262</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation of property, plant and equipment</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,632</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,731</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Amortisation of intangible assets<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">554</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">494</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,514</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,487</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Staff numbers (full-time equivalent)</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,755</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,861</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,931</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,552</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55,577</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,031</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75,926</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69,781</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,282</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,108</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total staff numbers</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">268,471</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">243,333</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Intangible asset amortisation comprises the expensing through the income statement of purchased intangibles such as mortgage servicing rights and customer/merchant relationships
and amounts allocated to intangible assets on the fair valuation of assets within acquired business combinations. This latter category principally includes customer relationships.</FONT></I>  </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<div style="float: left; width: 48%">
<p>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses
of US&#36;29,514 million were</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;3,027
million, or 11 per cent, higher than in 2004. On an
      underlying basis, cost growth was 9 per</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> cent,
      trailing net operating income growth before</FONT></p>
  <p>&nbsp;</p>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">39</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p40"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P>
  <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">impairment charges by 3 percentage points. This resulted in a slight improvement in the cost efficiency ratio to 51 per cent. The three main drivers of cost growth were as
follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>&#8226;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">volume expansion
in many markets drove both revenue and costs. In Personal Financial Services
and Commercial Banking, business expansion drove cost growth of 6 per cent and</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> 4</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">per
cent respectively,
though this was </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">exceeded
by growth in net operating income before loan impairment charges of 11 per cent
and 15
per cent respectively. In Mexico, Turkey and Brazil, cost increases contributed
over half of the overall increase, but were significantly exceeded by income
growth;</font> </TD>
</TR>
<TR>
<TD>&nbsp;</TD>
<TD valign=top>&nbsp;</TD>
    </TR>
<TR>
        <TD valign=top>&#8226;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC continued
to improve productivity in mature markets. In the UK, reorganisations in Personal
Financial Services and Commercial Banking in 2004 resulted, in aggregate, in
broadly
flat
costs compared with growth of</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> 10</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">per
cent in net operating income before loan </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">impairment
charges. This was delivered through greater utilisation of direct channels, improved
training
and increased incentives. In Hong Kong, the promotion of cost-efficient delivery
channels and greater utilisation of the Group Service Centres contributed to
a 6 percentage point improvement in the cost efficiency ratios in Personal Financial
Services and Commercial Banking; and</font> </TD>
</TR>
<TR>
<TD>&nbsp;</TD> <TD valign=top>&nbsp;</TD>
    </TR>
<TR>
        <TD valign=top>&#8226;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">following a number of senior hires in 2004 in Corporate, Investment Banking and Markets, subsequent investment was focused on operations and technology, to support revenue growth.
Non-staff costs increased by 23 per cent in 2005, with staff costs growing by 14 per cent.</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The rate of cost
growth peaked during the year and the cost efficiency ratio was 2 percentage
points better in the second half of the year than the first half, as net operating
income
before loan impairment charges grew faster than costs.</font> </TD>
</TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following points are also of note. In Europe, costs included the rebranding of the Group&#146;s operations in France, the refurbishment of 60 UK branches
and increased marketing costs. These increases were offset by lower costs in Commercial Banking in the UK following restructuring activity</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in 2004. Costs in Corporate, Investment Banking and Markets increased by 9 per cent, reflecting increased staff numbers and investments in technology and infrastructure.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Hong Kong, higher operating expenses reflected business expansion in Corporate, Investment Banking and Markets, supported by increased staff in the
investment banking division and the recruitment of senior relationship managers. This was partly offset by the effect of branch restructuring and increased utilisation of the Group Service Centres in Personal Financial Services, which led to a 4 per
cent fall in branch headcount.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Underlying operating expenses in the Rest of Asia-Pacific increased by 31 per cent, reflecting investment in broadening the customer base and the
distribution platform. HSBC&#146;s branch network was extended in mainland China, South Korea, and India and additional sales and support staff were recruited in Personal Financial Services and Commercial Banking. Staff numbers also increased in
response to the migration of call centre activities to the Group Service Centres in the region. Growth initiatives required investment in infrastructure and technology, and accordingly non-staff costs increased by 39 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In North America, costs bore a particularly large share of the investment in Corporate, Investment Banking and Markets, reflecting HSBC&#146;s commitment to
growing its presence in the region. Costs also reflected the expansion of the network, with the opening of 27 new branches in 2005 and the launch of HSBC&#146;s on-line savings account in the US.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
South American operations reported a 17 per cent increase in operating expenses
on an underlying basis, partly as a result of higher average  staff numbers following
the acquisition of consumer finance businesses in 2004. Marketing costs rose
following a number of high profile campaigns in 2005, while transactional taxes
and incentive payments grew as a direct consequence of higher
income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Productivity improvements and strong disposal gains allowed HSBC to substantially complete its investment in Corporate, Investment Banking and Markets
without any deterioration in the Group&#146;s cost efficiency ratio.</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">40</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p41"></a><p><a href="#contents"><font size="2">Back to Contents</font></a> </p>
<p><b><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Cost
      efficiency ratios</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="4" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.2</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51.6</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.1</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58.2</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65.7</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33.3</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39.2</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">72.3</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70.8</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.8</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41.9</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66.6</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">72.5</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49.9</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55.2</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27.2</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33.7</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43.8</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42.7</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45.9</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48.3</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60.5</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62.9</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      cost efficiency ratio on an underlying basis improved from 52.4 per cent
      to 51.2 per
    cent. This was mainly attributable to improvements in productivity in Personal
    Financial
    Services and Commercial Banking, as illustrated in the</FONT>
</p>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">tables set out above. The deterioration in cost efficiency ratios in the Rest of Asia-Pacific reflected continuing investment to expand HSBC&#146;s presence within the region.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Asset deployment</FONT></B></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49.7</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53.2</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.5</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,449</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">232,909</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.6</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,342</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.2</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,928</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,190</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill and intangible assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,200</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.2</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,495</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">101,070</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.8</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77,579</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,489,416</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,268,096</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Government certificates of indebtedness</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,970</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers include:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reverse repos</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,610</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,346</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">settlement accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,142</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,819</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks include:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reverse repos</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,754</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,543</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">settlement accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,669</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,086</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s total assets (excluding Hong Kong Government certificates of indebtedness) at 31 December 2005 were US&#36;1,489.4 billion, an increase of US&#36;221.3 billion or 17 per cent
since 31 December 2004. Acquisitions, including Metris in the US, added just over US&#36;6 billion to total assets. The accounting effect of the adjustments required under IFRSs from 1 January 2005 added a further US&#36;89.8 billion, to which the
largest single contributor was the grossing up of certain customer</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lending and current account relationships in the UK, mainly in Corporate, Investment Banking and Markets, which would previously have been offset in reported loans and advances and
customer accounts. At 31 December 2005, this grossing change resulted in a US&#36;44.2 billion increase in customer loans and advances. At constant exchange rates and excluding these changes, total assets grew by 17 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, HSBC&#146;s balance sheet remained highly liquid. The proportion of assets</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">41</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p??"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P>
  <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Financial</FONT></B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"><B> Review</B></font><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">deployed in customer advances fell to 50 per cent, largely due to expansion of the fixed income business and the reclassification of certain financial instruments to &#145;Trading
  assets&#146;. Customer advances increased by 10 per cent, driven by lending to finance consumer spending, mortgage financing and cards. These were areas in which HSBC grew market share, particularly through competitive pricing and marketing
  initiatives in parts of Asia-Pacific, the UK and the US. Growth in corporate lending was concentrated in Commercial Banking, and largely reflected trade financing, project finance in the Middle East and expansion of the customer base in the UK,
  particularly in the property, distribution and services sectors. At constant exchange rates and excluding the grossing change mentioned above, net loans and advances to customers grew by 10 per cent in 2005, of which acquisitions represented 1 per
  cent, or US&#36;5.3 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, assets held by HSBC as custodian amounted to US&#36;3,242 billion, 15 per cent higher than the US&#36;2,819 billion held at 31 December
2004. At constant exchange rates, growth was 22 per cent. Custody is the safekeeping and administration of securities and financial instruments on behalf of others.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Complementing this is HSBC&#146;s funds under administration business. At 31 December 2005, the value of funds held under administration by the Group
amounted to US&#36;779 billion, 28 per cent higher than the US&#36;610 billion held at 31 December 2004. At constant exchange rates, growth was 37 per cent.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Trading assets and financial investments</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets principally consist of debt and equity instruments acquired for the purpose of benefiting from short-term price movements. Securities classified as held-for-trading are
carried in the balance sheet at fair value with movements in fair value reflected within the income statement.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets of US&#36;232.9 billion were 91 per cent higher than at 31 December 2004. This increase was primarily driven by the reclassification of
certain financial instruments from loans and advances to &#145;Trading assets&#146;, coupled with the expansion of the fixed income platform in Global Markets.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments include debt and equity instruments that are classified as available-for-sale or, to a very small extent, held to maturity. The
available-for-sale investments essentially represent the deployment of the Group&#146;s surplus deposits and</FONT></P></div>
<div style="float: right; width:48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">may be disposed of either to manage liquidity or in response to reinvestment opportunities arising from favourable movements in economic indicators, such as interest rates, foreign
exchange rates and equity prices. They are carried at fair value with unrealised gains and losses from movements thereon reported in equity until disposal. On disposal, the accumulated unrealised gain or loss is recognised through the income
statement and reported as &#145;Gains less losses from financial investments&#146;.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments of US&#36;182.3 billion were broadly in line with the balance at 31 December 2004. Unrealised gains included in the valuation of
equities amounted to US&#36;1.1 billion.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Funds under management</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Funds under management of US&#36;561 billion were US&#36;85 billion, or 18 per cent, higher than at 31 December 2004. Growth reflected strong inflows of net new money and good investment
performances in both Group Investment Businesses and Private Banking, partly offset by the translation effect of the strengthening US dollar on sterling and euro-denominated funds.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Group Investment Businesses, net new money trebled to US&#36;33 billion compared with the previous year. Included in this, HSBC&#146;s Sinopia subsidiary
in France grew funds under management by 35 per cent, particularly in alternative funds. HSBC continues to manage some of the world&#146;s largest active equity funds investing in India and China with US&#36;4.7 billion and US&#36;1.9 billion of
assets, respectively, at the end of 2005. In Private Banking, increased recognition of HSBC in the private banking sector and an expanded product range contributed to strong funds inflows.</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
2005, HSBC&#146;s Group</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
Businesses, including affiliates, reported funds under management of US&#36;272
billion, and Private Banking reported funds under management of US&#36;202 billion.
Other funds  under management, of which the main constituent was a corporate
trust business in Asia, comprised US&#36;87
billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Client assets, which are a measure of overall Private Banking volumes and include funds under management, cash deposits and fiduciary deposits, rose by 13
per cent to US&#36;282 billion.</FONT></P>
<P></div>
<div align="center"><br clear="all">
    <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">42</FONT></div>
<p></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p??"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width:48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;bn</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Funds under management</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">476</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">386</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net new money</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &#150; Bank
    of Bermuda
</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT></TD>
    <TD align=right bgcolor="#cccccc"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value change</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange and other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(23</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">561</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">476</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Economic profit</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s internal performance measures include economic profit, a calculation which compares the return on financial capital invested in HSBC by its shareholders with the cost of that
capital. HSBC prices its cost of capital internally and the difference between that cost and post-tax profit attributable to ordinary shareholders represents the amount of economic profit generated. Economic profit is used by management as a means
to decide where to allocate resources so that they will be most productive. In order to concentrate on external factors rather than measurement bases, HSBC emphasises the trend in economic profit within business units rather than absolute amounts.
In light of the current levels of world interest rates, and taking into account its geographical and customer group diversification, HSBC believes that its true cost of capital on a consolidated basis is 10 per cent. HSBC plans to continue using
this rate until the end of the current five-year strategic plan in 2008 in order to ensure consistency and comparability.</FONT></P>
</div>
<div style="float: right; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effect of adopting IFRSs on the Group&#146;s financial results has been reflected in the derivation of economic profit shown below. Under IFRSs, there is
no periodic amortisation charge for goodwill arising on acquisitions. This removes the need for adjustments to post-tax profit for economic profit purposes. In addition, the Group has modified its calculation of economic profit for the
following:</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrealised
        gains and losses on effective cash flow hedges. Gains and losses on the
        effective hedging of future cash flows essentially reflect the opportunity
        profit or loss on decisions taken to fix in monetary terms the yield
        on assets or the cost of liabilities when measured against current market
        rates. Given that these amounts are ultimately reflected in profit for
        the period, they are excluded from average invested capital upon which
      the capital charge is based.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="Arial,Arial,Helvetica,sans-serif">&nbsp; </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrealised
        gains and losses on available-for-sale securities. These are excluded
        from the measure of average invested capital for the purpose of computing
        economic profit because (i) the gains or losses represent unrealised
        profit which may be offset or reversed in the future, and (ii) there
        is accounting asymmetry in that the offsetting profit or loss on the
      liabilities taken out to fund these assets is not reflected.</font></td>
  </tr>
</table>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On
    this basis, economic profit increased by US&#36;1,318 million or 31 per cent
  compared with 2004, reflecting improved underlying profitability. </FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P><b><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Economic profit</FONT></b></P>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td colspan="7" align=center><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
    ended 31 December</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td colspan="7" align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>%</b></font> </td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <sup> 1</sup> </font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font></td>
    <td align=left><sup><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font></sup>  </td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
        total shareholders&#146; equity</font></td>
    <td width=8% align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">89,589</font></b> </td>
    <td width=2% align=left><font size="2">&nbsp;</font> </td>
    <td width=8% align=left><font size="2">&nbsp;</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font> </td>
    <td width=8% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,391</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font> </td>
    <td width=8% align=left><font size="2">&nbsp;</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Add:
        Goodwill previously amortised or written off</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,172</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,172</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Less:
        Property revaluation reserves</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,092</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,092</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Reserves
        for unrealised gains on effective hedges</font></font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(315</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Reserves
        for unrealised gains on available-for-sale securities</font></font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,294</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Preference
        shares</font></font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(351</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Average
        invested capital<sup>2</sup></font>&nbsp; </font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94,709</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">86,471</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><HR noshade size=2></td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right><HR noshade size=2></td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Return
        on invested capital<sup>3</sup></font>&nbsp; </font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,060</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.9</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.0</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benchmark
        cost of capital</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9,471</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10.0</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8,647</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10.0</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Economic
        profit/spread</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,589</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.9</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,271</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><HR noshade size=2></td>
    <td align=left>&nbsp;</td>
    <td align=right><HR noshade size=2></td>
    <td align=left>&nbsp;</td>
    <td align=right><HR noshade size=2></td>
    <td align=left>&nbsp;</td>
    <td align=right><HR noshade size=2></td>
    <td align=left>&nbsp;</td>
  </tr>
</table>
<BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>  </TD>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Expressed as a percentage of average invested capital.</FONT></I>       </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>  </TD>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Average invested capital is measured as average total shareholders&#146; equity after adding back goodwill previously written-off directly to reserves, deducting preference
shares issued by HSBC Holdings and deducting average reserves for unrealised gains/(losses) on effective hedges and available-for-sale securities. This measure reflects capital initially invested and subsequent profit.</FONT></I>   </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>  </TD>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Return on invested capital is based on the profit attributable to ordinary shareholders of the parent company.</FONT></I>       </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">43</FONT></P>


<div style="page-break-before:always"></div><page><a name="p44"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
      S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B> (continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Analysis
      by customer group and by geographical region</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
  </tr>
</table>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">By
  customer group</FONT></B></p>



<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD colspan="19" align=center> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Year
      ended 31 December 2005</B> </font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="19" align=center><hr size="1" noshade></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</font></b>
    </TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><br>
      </FONT></B></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><br>
      </FONT></B></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp; </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Inter-</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Financial</b>
      </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Commercial</b>
      </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking
      &amp;</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>segment</b>
      </font> </TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Markets</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Banking</b>
      </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Other</b></font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><sup><b>6</b> </sup> </font> </TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>elimination</b></font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Total</b>
      </font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</font></b></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b>
    </TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b>
    </TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b>
    </TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left valign="bottom"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b>
    </TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">income/(expense)</FONT></font></TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,351</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,310</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,001</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">848</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(472</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,704</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,313</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,876</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,967</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,080</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">220</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income/(expense)</font><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">excluding
      net interest</font></font><font size="2">&nbsp; </font></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp;</font><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></font></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">360</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,919</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(90</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,656</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income/</font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">(expense)
      on trading</font></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> activities</font></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">214</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">306</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,704</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      trading</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">income/(expense)<SUP>1</SUP></FONT>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">574</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">147</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,225</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(103</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,704</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income/(expense) from</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">financial
      instruments</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;designated
      at fair value .</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">574</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">406</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">475</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,864</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">260</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">729</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,621</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,634</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37,440</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,902</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,511</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,366</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,131</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,704</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,716</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(118</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(54</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(179</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,067</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</font></B> &nbsp;<b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">before
      loan impairment</font> </b></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; <b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">
      &nbsp;&nbsp;</font><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">charges</font> <font face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
      other credit</font></b>&nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">risk
       provisions</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,724</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,784</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,457</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,366</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,952</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,637</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      other credit risk</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,537</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(547</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">272</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,801</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,187</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,237</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,729</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,378</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,951</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,836</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16,427</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,453</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6,838</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,466</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,976</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,646</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,514</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,760</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,784</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,891</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(25</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,322</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">177</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">272</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">644</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,904</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,961</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,163</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">before
      tax</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47.2</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23.7</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24.6</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.4</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.1</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48.7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45.5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">59.7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62.0</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.8</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp;<b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
      balance sheet</font></b>&nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">customers
      (net)</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">398,884</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">142,041</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169,435</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,749</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,893</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">471,760</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">175,120</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">755,056</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">59,827</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,653</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,489,416</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">321,240</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">148,106</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202,361</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,205</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">507</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">banks
      (net)<SUP>5</SUP></FONT>&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">106,123</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets, financial</font><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">assets
      designated at fair</font></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size="2">&nbsp;&nbsp;&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">value,
      and financial</font> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments<SUP>5</SUP></FONT>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">373,787</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,853</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2"><I><FONT size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For
      footnotes, see page 55.</FONT></I>&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">44</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p45"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="13" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December 2004</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD colspan="13" align=center><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center><font size="2">&nbsp;</font> </TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inter-</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking
      &amp;</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>6</sup></font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">elimination</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,422</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,875</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,994</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">718</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT>
    </TD>
    <TD width="2%" align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,406</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,645</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,764</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">962</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">320</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,935</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">assets
      backing policy-</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">holders&#146;
      liabilities</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">635</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">324</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">219</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">548</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size="2">&nbsp;</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,652</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,072</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">558</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">360</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">513</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,029</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,050</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,890</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,706</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,562</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,188</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,953</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,264</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(359</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> before
      loan impairment</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size="2">&nbsp;&nbsp;&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">charges
      and other credit risk provisions</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,937</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,442</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,503</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,829</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,353</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      other credit risk</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,500</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(200</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">499</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,437</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,242</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,002</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,016</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,828</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,162</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15,009</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,220</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,809</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,319</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,493</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,363</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      profit</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,428</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,022</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,193</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">335</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      before tax</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,497</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,057</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,288</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">404</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">before
      tax</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44.9</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.4</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27.9</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.7</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.0</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55.3</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65.8</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88.1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51.6</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Selected
      balance sheet data</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">customers
      (net)</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">370,576</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">130,160</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">145,353</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,463</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,339</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441,114</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159,251</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">584,779</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56,751</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,201</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,268,096</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319,485</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">137,801</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177,449</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,780</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">557</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following assets and</FONT><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">liabilities
      were significant</font></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp; <font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;to
      Corporate, Investment</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
      and Markets:</font></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">banks
      (net)</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128,032</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets, financial</font><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">assets
      designated at fair</font></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp;&nbsp;&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">value,
      and financial</font> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">252,459</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,443</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2"><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">For
      footnotes, see page 55.</FONT></I>&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">45</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p46"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
      S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B> (continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Personal
  Financial Services</FONT></B></p>



<div style="float: left; width: 48%"><P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
  <TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
    <TR valign="bottom">
      <TD align=left>&nbsp; </TD>
      <TD colspan=4 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
        ended<br>
        31 December</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD colspan=4 align=center><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp; </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp; </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        interest income</FONT></TD>
      <TD width=11% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,351</FONT></B>
      </TD>
      <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD width=11% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,422</FONT>
      </TD>
      <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        fee income</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,313</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,406</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
        income excluding net</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">interest
        income</FONT></font></TD>
      <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">360</FONT></B>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">320</FONT>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        interest income</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">on
        trading activities</FONT></font></TD>
      <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">214</FONT></B>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        trading income</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">574</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">320</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
            income from financial</font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">instruments
      designated at fair</font></font><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">value</font></font></div></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">574</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
              investment income on assets</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">backing
      policyholders&#146; </font>liabilities</font></div></TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">635</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial</font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">investments</font></font></div></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
        income</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        earned insurance premiums</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,864</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,652</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
        operating income</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">729</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">360</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
        operating income</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37,440</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,890</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,716</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,953</FONT>
      </TD>
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> Net
                operating income before loan impairment charges and  other</font></b>&nbsp;<b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit
      risk provisions</font></b></font></div></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,724</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,937</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
            impairment charges and other</font><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">credit
      risk provisions</font></font></div></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,537</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,500</FONT>
      </TD>
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
        operating income</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,187</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,437</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
        operating expenses</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16,427</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15,009</FONT>
      </TD>
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
        profit</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,760</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,428</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
            of profit in associates and</font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">joint
      ventures</font></font></div></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
        before tax</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,904</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,497</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By
        geographical region</FONT></B></TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,932</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,621</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
        Kong</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,628</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,063</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
        of Asia-Pacific</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">377</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">336</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
        America</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,761</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,384</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
        America</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">206</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
        before tax</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,904</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,497</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
        of HSBC&#146;s profit before tax</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47.2</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44.9</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
        efficiency ratio</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48.7</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.1</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
        balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif"><b>3</b></FONT></SUP><b>&nbsp;</b>
        </font></TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">(net)</font></font></div></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">398,884</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">370,576</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
        assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;
        </font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">471,760</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441,114</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
        accounts</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">321,240</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319,485</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size="2"><I><FONT size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For
        footnotes, see page 55.</FONT></I><font size="1">&nbsp; </font></font></TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
  </TABLE>
</div>
<div style="float: right; width: 48%">
  <p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Business highlights</FONT></p>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pre-tax
        profits from Personal Financial Services grew by 17 per cent to US&#36;9,904
        million, driven by improved performances in the core operations in the
        UK, North America and Hong Kong. On an underlying basis, growth in profit
        before tax was 15
        per cent, and markedly strong rates of growth were achieved
        in Turkey, Canada, the Middle East and Brazil.</font> </td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The importance
        of direct sales channels continued to increase globally. HSBC conducted
        183 million transactions online in 2005, an increase of 17 per cent on
        2004. Online sales to personal customers rose by 65
        per cent and online revenues by 71 per cent.</font> </td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The number
           of customers using HSBC <i>Premier
        </i>grew for the sixth consecutive year, to 1.3 million, an increase
         of 17 per cent compared with 2004. HSBC<i> Premier
        </i>was
        launched in Bangladesh and South Korea during the year, and is now available
         in 35 countries.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</font></b></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the
        UK, investment in marketing and a range of campaigns,
        including the first ever January sale for a UK bank, heightened brand
        awareness and increased market
        share in most product lines. In France, marketing campaigns accompanying
        the rebranding to
        &#145;HSBC&#146; by CCF and four subsidiary banks generated sales growth in mortgages,
        current accounts
        and savings products. In Turkey, marketing helped increase customer numbers
        by 7 per cent to 2.2
        million.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        mortgage products in the UK were highly rated:
        HSBC was named &#145;Best Value National Bank&#146; for
        mortgage borrowing over two, five and ten years by
        <i> What Mortgage </i> magazine
        for the fourth year running,
        and &#145;Best Bank&#146; for mortgages by <i> Mortgage</i>
         magazine.
        First Direct was also named &#145;Best Direct Lender&#146; over two and ten
        years by <i> What
        Mortgage</i>  magazine, and &#145;Best Offset Mortgage&#146; by <i> Mortgage</i>
         magazine.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The UK
        business was further streamlined, with the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">product
        range simplified and strengthened and the</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">rollout of a branch refurbishment
        programme initially</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">covering
        60 major branches. In the UK, the credit</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">card operations of HFC Bank and
        HSBC Bank were</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">merged.
        Good progress was made with the integration</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and expansion of M&amp;S Money.</font></td>
    </tr>
  </table></div><br clear="all">
  <p>&nbsp;</p>
<P align="center"> <FONT size=2 face="Arial,Arial,Helvetica,sans-serif">46</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p47"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      UK current account offering was</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">relaunched
      in 2005, providing a range of</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">simplified propositions tailored
      to customer</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">segments,
      including HSBC&#146;s first packaged</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">bank account in the UK market.
      </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Personal</font></i>
      <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">Finance Magazine </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded
      HSBC &#145;Best</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current
      Account&#146; provider during the year.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong
      Kong</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC built
      on its leading position with the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">rollout
      of 25 new Financial Management</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Centres, providing investment
      planning services</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
      non-</font><i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">Premier </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC was
      named by the </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Asian
      Banker </font></i><font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">as the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#145;Best
      Retail Bank&#146; in Hong Kong and Asia in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004,
      and its web site was rated by </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Global</font></i>
      <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Finance
      </font></i><font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">as the &#145;Best Consumer Internet Bank&#146;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
      Hong Kong in 2005.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC maintained
      its position as the largest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
      card issuer in Hong Kong, increasing the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">number of cards in circulation
      by 15 per cent</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      its market share of spending from 50.5 per</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">cent to 52.1 per cent.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A new innovative
      retirement planning solution</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">was
      launched to meet the retirement planning</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">needs of customers of all ages.
      HSBC was one</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      the first banks in Hong Kong to offer such a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">comprehensive service.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest
      of Asia-Pacific</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      acquisition was a core focus again in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005,
      with customer numbers growing by 22 per</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">cent to 7.0 million. HSBC continued
      to enhance</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">distribution
      channels with a 43 per cent increase</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">in the sales force. Seven new
      branches were</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">opened
      in South Korea, Vietnam and India.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      loans grew by 20 per cent, driven by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
      new customer acquisition programmes. In</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">particular, the number of credit
      cards in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">circulation
      grew by 34 per cent, or 1.6 million</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">cards, to 6.3 million.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In mainland
      China, HSBC maintains the largest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">branch
      network amongst foreign banks, and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">opened ten new branches and sub-branches
      in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005.
      Average deposit balances grew by 80 per</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">cent and income by 61 per cent.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North
      America</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC continued
      to expand its banking presence</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
      the US by opening 27 new branches. The</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">introduction of the HSBC </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier
      </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Savings</font>
      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">account and
      the Online Savings Account,</font></td>
  </tr>
</table> </div>
<div style="float: right; width: 48%"><table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      first nationwide savings product, generated total new deposit balances of
      US&#36;2.5 billion and added over 30,000 new customers to HSBC.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other niche
      marketing initiatives introduced by HSBC in the US included the launch of
      deposit generation programmes focused on the Chinese and Hispanic communities.
      Together these garnered US&#36;589 million of new deposits.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">An agreement
      was reached for HSBC to offer American Express branded credit cards in the
      US. This will allow HSBC to expand its product range and offer broader choice,
      value and convenience to customers.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC completed
      its acquisition of Metris on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font>&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">December
      2005, and is now the 5th largest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">issuer
      of MasterCard and Visa cards in the US. This will strengthen HSBC&#146;s
      capabilities to serve the full spectrum of credit card customers.</font>
    </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC acquired
      Invis Inc, the largest independent mortgage broker in Canada.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Mexico,
      strong asset and liability growth continued. Average deposit balances grew
      by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</font>
      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">per cent,
      due in part to the success of the 'Tu
      Cuenta' product,
      the only integrated financial services product of its kind in the country.
      Since its launch in February, over 600,000 new accounts have been opened.
      Product innovation, improved customer service and competitive pricing led
      to strong growth in mortgages, vehicle financing and payroll loans.</font>
    </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico&#146;s
      cards in circulation grew by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</font>
      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">per cent to
      over one million, following an active marketing campaign, and strong sales
      to the existing customer base.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South
      America</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Brazil,
          the integration of two consumer</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">finance
          businesses purchased in 2004 into the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Losango operating model was completed
          during</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A number
      of new products were introduced in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005.
      In Brazil, HSBC launched Cons&oacute;rcio de</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Im&oacute;veis, a lending product
      aimed at funding</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">property
      purchases, and a new credit card,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Cart&atilde;o Solidariedade,
      which enables donations</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
      be made to a children&#146;s charity in lieu of an</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">annual fee. In Argentina, a co-branded
      C&amp;A</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
      card was launched in November, with</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">over 25,000 cards issued in the
      following</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">month.</font></td>
  </tr>
</table></div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">47</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p48"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
      S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B> (continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Commercial
  Banking</FONT></B></p>



<div style="float: left; width: 48%">
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
  <TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD colspan=4 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
        ended<br>
        31 December</FONT> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD colspan=4 align=center><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        interest income</FONT></TD>
      <TD width=11% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,310</FONT></B>
      </TD>
      <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD width=11% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,875</FONT>
      </TD>
      <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        fee income</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,876</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,645</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
        income excluding net</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">interest
        income</FONT></font></TD>
      <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        interest expense</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">on
        trading activities</FONT></font></TD>
      <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B>
      </TD>
      <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
      </TD>
      <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        trading income</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">147</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
          expense from financial</font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">instruments
      designated at fair</font> </font></TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;value</font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        investment income on assets</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">backing
        policyholders&#146;</font></TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">
        liabilities</FONT></font></TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">324</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
        less losses from financial</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
        income</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        earned insurance premiums</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,072</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
        operating income</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">513</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
        operating income</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,902</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,706</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(118</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,264</FONT>
      </TD>
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <font size="2"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
        operating income before loan</font> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">impairment
        charges and</font><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">
        </FONT></B></font></TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<B><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">other </font><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit
        risk provisions</FONT></B></font></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,784</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,442</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
        impairment charges and other</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">credit
        risk provisions</FONT></font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(547</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(200</FONT>
      </TD>
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
        operating income</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,237</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,242</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
        operating expenses</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,453</FONT></B>
      </TD>
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,220</FONT>
      </TD>
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
        profit</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,784</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,022</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
        of profit in associates and</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">joint
        ventures</FONT></font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">177</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
        before tax</FONT></B></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,961</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,057</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By
        geographical region</FONT></B></TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,939</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,663</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
        Kong</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">955</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">904</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
        of Asia-Pacific</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">818</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">483</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
        America</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,064</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">848</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
        America</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">185</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="1" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
        before tax</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,961</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,057</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right><hr size="2" noshade></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
        of HSBC&#146;s profit before tax</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23.7</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.4</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
        efficiency ratio</FONT></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45.5</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.0</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
        balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif"><b>3</b></FONT></SUP>&nbsp;
        </font></TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        and advances to customers</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">(net)</FONT></font></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">142,041</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">130,160</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
        assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;
        </font></TD>
      <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">175,120</FONT></B>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159,251</FONT>
      </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
        accounts</FONT></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">148,106</FONT></B>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
      <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">137,801</FONT>
      </TD>
      <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
      <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <font size="2"><I><FONT size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For
        footnotes, see page 55.</FONT></I>&nbsp; </font></TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
  </TABLE>
</div>
<div style="float: right; width: 48%">
  <p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Business highlights</FONT></p>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr valign="top">
      <td width="3%">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pre-tax
        profit was 22 per cent higher than last year,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">driven
        by strong growth in net operating income</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">before loan impairment,
        which more than</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">compensated
        for the non-recurrence of the loan</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">provision releases that benefited
        results in 2004. On</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">an
        underlying basis, profits increased by 19 per cent.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
        numbers rose by 10 per cent to 2.5 million</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">as
        customers were attracted by HSBC&#146;s competitive</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">positioning.
        Loans and advances to customers and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">customer
        account balances increased by 9 per cent</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and 7 per cent respectively,
        with significant</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">expansion
        in the UK and Hong Kong. Interest spreads</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">increased in Hong Kong, North
        America and the Rest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        Asia-Pacific following interest rate rises.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commercial
        customer base was refined and now</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">comprises
        four categories: Corporate, Mid-Market</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">(together, &#145;MME&#146;),
        Small and Micro businesses</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(collectively,
        &#145;SME&#146;), building upon the successful</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">business segmentation
        model in existence in Hong</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong
        and the UK.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cross-border
        sales were strengthened by the launch</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        new cross-border referral programmes and the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">global implementation of online
        cross-border account</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">opening
        and referral tools.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        competitiveness in meeting the needs of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">SMEs
        was enhanced through the introduction of pre-</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">approved loans and lines
        of credit in Hong Kong, the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">launch
        of scored lending in India, the introduction of</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">small business accounts
        in Singapore and the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">expansion
        of business banking centres in Malaysia.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customers
        responded favourably to enhanced online</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">banking
        services, with numbers registered for internet</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">banking increasing by
        24 per cent and online</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">transaction
        volumes during the year up by 116 per</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">cent.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Business
          insurance and wealth management sales</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">continued
          to advance, supported by two new</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">dedicated insurance sales teams
          in Hong Kong. A</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">worksite
          marketing programme launched in Mexico,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and a programme across the Rest
          of Asia-Pacific to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">increase
      the sale of structured investment products,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">were also notable successes.</font></td>
    </tr>
    <tr valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="top">
      <td>&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Having
          enhanced its systems, HSBC retained its</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">position
          as &#145;Best in Cash Management in Asia and</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">the Middle East&#146;,
          its number two ranking in the world</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
          its top five ranking for Europe, North America,</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">Latin America and Africa
          in </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Euromoney</font></i><font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">&#146;s 2005 Cash</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management
      Survey.</font></td>
    </tr>
  </table></div><br clear="all">
  <p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">48</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p49"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&#8226;</td>
    <td> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Finance
          Asia </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">named
          HSBC &#145;Best Trade Bank in</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">Asia&#146; for the ninth successive year, reflecting</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    continuing development of new</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">products and services.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the
        UK, HSBC continued to focus on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        start-ups and customers switching from</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">other banks to grow its customer
        base. As a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">result,
        more customers moved their banking</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">relationships from other financial
        institutions to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    than to any other established high street</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">bank.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
        in customer service as a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">differentiating
        factor continued, with the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">recruitment of further relationship
        managers, the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">improved
        deployment and training of over 600</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">dedicated small business specialists
        and a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">substantial
    investment in mobile working</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">technology.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recognising
        lack of scale, HSBC outsourced the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">processing
        of its UK vehicle finance contract</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">hire product to a third party
        provider, Lex</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vehicle
        Leasing. As well as releasing capital,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">this provided HSBC with access
        to Lex&#146;s IT</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">systems
        and expertise to enable a greater range</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">of services to be offered to
    customers.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In France,
        the most experienced relationship</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">managers
        focused on the largest 350 MME</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">customers in 2004, resulting
        in income growth</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">from
        this segment of 17 per cent in 2005. In</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">addition, a centralised and
        specialised</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">franchising
    team was established to increase</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">penetration of this significant and expanding</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">market.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A substantial
          investment was made to grow the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
          Banking franchise in Turkey with</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">the launch of SME banking, invoice
          discounting</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
          commercial cards.</font>
    </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong
    Kong</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan balances
        increased as HSBC added</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">relationship
        managers and launched two new</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">pre-approved lending products,
        the &#145;Pre-approved
        Small Business Loan&#146; and the &#145;Pre-approved Business Revolving
    Credit&#146; account.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The first
        ever Commercial Banking brand</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">awareness
        campaign was launched in 2005.</font>       <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">SME
        sales outlets were also rebranded as &#145;SME</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Centres&#146; to
      strengthen the brand identity and</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">more closely align HSBC
    with this market</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment.</font></td>
  </tr>
</table> </div>
<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&#8226;</td>
        <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Supporting
            customer service, a new SME call</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">centre,
            employing 100 staff and incorporating a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">dedicated sales hotline, took
            over four million</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">calls
        in 2005.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
        <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest
    of Asia-Pacific</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
        <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
        <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Regional
            relationship management offering a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">single
            point of contact across several countries</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">was implemented in the Middle
            East. A similar</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">approach
        was adopted in Hong Kong, mainland</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">China and Taiwan.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
        <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
        <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
            sales distribution network was expanded in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">key
            growth markets. In mainland China, three</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">new branches and an additional
            sub-branch,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">with
            commercial banking presence, were</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">opened. In South Korea, four commercial</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">banking
        centres were established to extend</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">HSBC&#146;s presence in the MME market.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
        <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Across
        the region, several liability products</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">were
        tailored for individual markets. HSBC in</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Bangladesh designed an innovative
        deposit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">scheme, &#145;Double
        Your Money&#146;, and in Taiwan</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">HSBC launched a &#145;Cash Marketing
    Campaign&#146;.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North
    America</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        market share of small business</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers
        in New York City increased,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">supported by the success of
        the BusinessSmart</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value
        package which added 41,000 new</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">accounts in 2005. HSBC Bank USA was voted</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
    No. 1 Small Business Administration lender</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">in New York State.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The MME
        and commercial real estate</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">businesses
        continued to expand in Boston,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Miami, Los Angeles, San Francisco
        and Seattle,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">with
    new offices established in Washington DC,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Philadelphia and New Jersey.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico
        was awarded &#145;The best initiative</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
        support of small and medium business owners</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">in Mexico&#146; by the Mexican
        Minister of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Economy
    for &#145;Estimulo&#146;, a tailor-made financial</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">services package.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South
    America</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">40 commercial
        centres with 100 specialised staff</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">were
        established to expand sales activity and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">address the banking needs of
        over 12,500 larger</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">SMEs
    in Brazil.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Argentina,
        customer service was improved</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">through
        the launch of an in-house internet</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">banking solution, PC Banking
        Empresas, and a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">dedicated
    inbound call centre.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">49</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p50"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
            Review</FONT></B> (continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Corporate, Investment Banking and Markets</FONT></B></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=4 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan=4 align=center><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD width=12% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,001</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=12% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,994</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,967</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,764</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    income excluding net
      </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">interest income</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,919</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,935</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    interest income</font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">on
    trading activities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">306</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net trading income<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,225</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,935</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    income from financial
       </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">instruments designated at fair</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment
income on assets</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">backing
policyholders&#146;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"> liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
    less losses from financial
            </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">475</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">548</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,621</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,029</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,511</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,562</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(54</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
                operating
income before loan</font> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">impairment
charges</font></B></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<B><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
                other</font> <FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit
      risk provisions</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,457</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,503</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
              recovery of
loan impairment</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">charges
and other</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp;&nbsp; <font face="TimesNewRoman,Times New Roman,Times,serif">credit
      risk</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">272</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">499</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,729</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,002</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6,838</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,809</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,891</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,193</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
    of profit in associates and</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">joint
    ventures</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">272</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,163</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,288</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,114</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,668</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">922</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,603</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,207</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">942</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">774</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">966</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,163</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,288</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s profit before tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24.6</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27.9</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">59.7</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55.3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<I><FONT size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 55.</FONT></I><font size="1">&nbsp;</font>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
</div>
<div style="float: right; width: 48%">
  <p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Business highlights</FONT></p>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increased
          revenues marginally failed to cover</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">increased
          costs arising from continuing investment to</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">expand product capabilities
          and customer penetration. Notwithstanding
        a decline in balance sheet</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">management
        revenues of US&#36;1 billion and a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">US&#36;1 billion increase in
        costs, pre-tax profit only fell</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
        2 per cent to US&#36;5,163 million. On an underlying</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">basis, pre-tax profits
        fell by 4 per cent. Earnings grew</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
        key product areas and client sectors where HSBC</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">has invested, particularly
        in foreign-exchange</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">options,
        project and export finance, and securities</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">services, demonstrating the
        success of the strategy to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">diversify
        revenue streams. Operating expenses</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">increased by 18 per cent. The
        rate of cost growth</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">peaked
        during the year as the investment phase of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Corporate, Investment Banking
        and Markets</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">development
        plan neared completion. Some 3,600</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">additional people were recruited
        during 2005 and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,220
        people departed. The cost efficiency ratio was</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">2 percentage points better in
        the second half of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">year
        than in the first half as net operating income</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">before loan impairment charges
      grew faster than</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">costs.</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As the
          investment-led phase of the development</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">strategy
          moved to implementation, the competitive</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">advantage of HSBC&#146;s geographic
          network and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">emerging
          market capabilities was underscored by</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">client demand for cross-border
          services. HSBC</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">advised
          on several cross-border acquisitions, notably</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">outward investment by clients
          in the Middle East and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">inward
          investment into mainland China. The parallel</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">development of primary debt
          finance and secondary</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">debt
          trading capabilities allowed HSBC, acting as</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">bookrunner, to help 792 clients
          in 65 countries to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">raise US&#36;867.8
          billion in bond and loan financing in the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">public markets. In Global Transaction
          Banking,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
          won several new multi-country mandates. Foreign
        exchange trading benefited from strong</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
      streams from emerging markets.</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Global
          Markets, client revenues and market share</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">rose
          in response to new investment. Money market</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">and balance sheet management
          income fell due to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">rising
          short-term US dollar and Hong Kong dollar</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">interest rates, together with
          the flattening and in some</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">cases
          inversion of yield curves in the US, Hong</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Kong, the UK, eurozone, Mexico
      and Brazil.</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
          and rates revenue rose. HSBC is now a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">primary
          dealer in 10 European government bond</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">markets compared with eight
          at the end of 2004. Cash</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">equities
      commission revenue rose, reversing a four-</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">year declining trend.</font></td>
    </tr>
  </table>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">50</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p51"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<div style="float: left; width: 48%">
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Management view of total operating income</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan=3 align=center><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Global Markets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Money market and balance sheet</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,238</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,376</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign exchange</FONT></TD>
        <TD width=15% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,200</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD width=15% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,125</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit and rates</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">931</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">655</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Structured derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">387</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">386</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">324</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">256</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,080</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,798</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate and Investment Banking</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Global Investment Banking</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,022</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">877</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate and Institutional
Banking</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">and
Global</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"> Transaction
      Banking</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,433</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,937</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private Equity</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">648</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">207</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,103</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,021</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,328</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,743</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,511</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,562</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150; customers
    (net)
</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169,435</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">145,353</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150; banks
    (net)
</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">106,123</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128,032</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total assets<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">755,056</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">584,779</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202,361</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177,449</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets,
financial instruments</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">designated</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">at
              fair value, and </font><FONT face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">373,787</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">252,459</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,853</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,443</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#145;Other&#146; includes the Corporate, Investment Banking and Markets business of HSBC Trinkaus &amp; Burkhardt, Group Investment Businesses, and net interest earned on free
capital held in Corporate, Investment Banking and Markets not assigned to products.</FONT></I></TD>
</TR>
<TR><TD colspan=2><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For
        other footnotes, see page 55.</font></i></TD>
</TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Structured
        derivatives activity rose strongly as a significant upgrade and expansion
        of the quantitative skill base and investment in systems allowed HSBC
        to complete higher volumes of derivatives transactions in 2005. In accordance
        with IFRSs, the inception profits on certain types of these transactions
      are deferred as described in Note 17 on the Financial Statements.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The strong
        momentum in client revenue was confirmed by industry surveys. In the
        Euromoney foreign exchange survey, HSBC ranked second in FX options in
        2005, up from fourth in 2004 and eighth in 2003. In addition, HSBC was
        ranked fourth in foreign exchange trading market share, retained the
        premier ranking in Hong Kong and was voted, for the first time, the best
      foreign exchange bank in London.</font></td>
  </tr>
</table></div>
<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Corporate
        and Institutional Banking, which</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">includes
        relationship management and lending</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">activities, market conditions
        and competitive</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">pressures
        resulted in spread contraction in all</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">regions. This was mitigated
        by a continued focus on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">fee-generating
        business, cost management and a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">favourable credit environment.
        HSBC introduced a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">number
        of balance sheet management initiatives</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">including the implementation
        of a detailed review of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        portfolio and a balance sheet securitisation</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">programme to enhance return
      on capital employed.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Global
        Investment Banking, an increase in market</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">share
        reflected HSBC&#146;s success in developing</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">customer relationships.
        In debt capital markets,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        was ranked fifth in the international bond</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">league table, up from seventh
        in 2004. In project and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">export
        finance, </font><i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">Dealogic </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ranked
        HSBC first in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Global
        Financial Adviser, Project Finance
category.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the
        advisory business, there was continued</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">momentum
        in both developed and emerging markets.</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Notable transactions included
        advising Dubai</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">International
        Capital on its US&#36;1.5 billion</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">acquisition of Tussauds Group
        and acting as adviser</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
      Autoroutes Paris-Rhin-Rhone on its privatisation.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Significant
        equity-related transactions, in which</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        acted as joint global coordinator, were the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">US&#36;2.8 billion Link Real
        Estate Investment Trust</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(&#145;REIT&#146;)
        IPO, the largest ever real estate offering</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">and REIT IPO in the world,
        and the US&#36;2.2 billion</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IPO
      by the Bank of Communications.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Global
        Transaction Banking, a move to offering a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">wider
        range of integrated solutions to clients played</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">a large part in winning
        Unilever&#146;s first Asian pan-</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">regional
      cash management mandate, covering 17</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">countries and territories.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At the
          end of December 2005, Group Investment</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Businesses
          managed US&#36;272 billion of assets, a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">33 per cent increase on 2004,
          driven mainly by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;33
          billion of net flows from clients. Assets in</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">money market products exceeded
          US&#36;60 billion.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
          manages two of the world's largest active</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">equity
          funds investing in India and China with</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">US&#36;4.7 billion and US&#36;1.9
          billion assets,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">respectively.
          HSBC&#146;s presence in mainland China</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">was strengthened with an asset
          management joint</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">venture
          with Shanxi Trust and Investment</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Corporation Limited.</font>
    </td>
  </tr>
</table>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">51</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p52"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
            Review</FONT></B> (continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Private Banking</FONT></B></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan=3 align=center><hr size="1" noshade></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD width=15% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">848</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=15% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">718</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,080</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">962</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net trading income<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net expenses from
financial</FONT> <font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">instruments
designated</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;at
      fair value</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
    less losses from financial
            </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,366</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating
income before loan</FONT> <font size="2">&nbsp;<font face="TimesNewRoman,Bold,Times New Roman,Times,serif">impairment
charges</font></font></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
      other</font></b> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit
      risk provisions</FONT></B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,366</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net recovery of
loan impairment</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">charges
and other</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">credit
      risk </font><FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,378</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,016</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,466</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,319</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
    of profit in associates and</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">joint
    ventures</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">539</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">438</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">104</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s profit before tax</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62.0</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65.8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to customers
           </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">(net)</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,749</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,463</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total assets<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">59,827</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56,751</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,205</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,780</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<I><FONT size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 55.</FONT></I>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
</div>
<div style="float: right; width: 48%">
  <p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Business highlights</FONT></p>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pre-tax
          profit grew by 31 per cent compared with</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004,
          supported by strong growth in client assets and</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">lending. On an underlying
          basis, growth was also</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
          per cent. Operational efficiency was increased by</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">greater utilisation of Group
          Service Centres and the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost
      efficiency ratio was reduced by 4 percentage points</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">to 62 per cent.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
          won a number of awards in the </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Euromoney</font></i> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">third annual private banking survey. In the global</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">private
          banking awards, notable wins included &#145;1st</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">Private Bank for Trust Services&#146; for the second year</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">running, &#145;1st
          Private Bank for Islamic Services&#146; and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">&#145;1st Private Bank for Inheritance
          and Succession</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Planning&#146;.
      Overall, HSBC improved one place to</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">&#145;3rd best Private Bank&#146;.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Client
          assets increased
by 13 per cent to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;282
billion, benefiting from net new money of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;35.7
billion in 2005. On an underlying basis,</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">growth was 20 per cent.
Discretionary and advisory</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">asset
growth benefited from the establishment of</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">dedicated investment advisory
resources in all major</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">regions,
and also from growth in the Strategic</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Investment Solutions product,
in which invested</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">assets
increased by US&#36;1.9 billion to US&#36;2.9 billion</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">during the year.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
          also continued to develop alternative</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">investment
          products. Total client investment in hedge</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">funds reached US&#36;29.5 billion,
          and HSBC Private</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank
          was named the third largest global provider of</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">hedge funds by capital invested
      by </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Institutional</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">Investor </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">magazine.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dedicated
          teams
working with Commercial Banking,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
Financial Services and Corporate,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Investment Banking and Markets
produced a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">significant
increase in intra-Group referrals in 2005.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
closer alignment with the latter was also reflected</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
the manufacture of tailored structured products for</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">private
banking
clients. Bank of Bermuda&#146;s private</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">banking
operations were fully integrated during the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">year.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The lending
          book grew strongly, as clients sought to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">leverage
          their investments in the low interest rate</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">environments in North
          America, Europe and Asia. In</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
          UK and US, lending book growth was also</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">buoyed by strong growth in higher
      value mortgages.</font></td>
    </tr>
  </table></div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">52</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p53"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</font></b></td>
  </tr>
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In France,
        HSBC Private Bank&#146;s subsidiary, Louvre</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gestion,
        was awarded second and fourth places for</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">overall performance over
        five and three years</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">respectively
        by </font><i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">La Tribune </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; Standard &amp; Poor&#146;s.</font>       <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
        number of HSBC&#146;s individual funds also won</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">awards
    in the Lipper Fund Awards &#150; France.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private
        Banking expanded its onshore business</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">through
        the launch of regional offices in the UK and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">France, bringing HSBC closer
        to customers and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">strengthening
        referrals with the retail bank. Regional</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">offices were also launched in
        Russia, and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">preparations
    were made for further expansion in</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">2006.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Client
        assets increased by 12 per cent, or 22 per cent</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">on
    an underlying basis, with net new money</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">reaching US&#36;23.4 billion.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Euromoney </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded
    HSBC &#145;Best Private Bank &#133; in</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">Monaco &#133; for Ultra High Net Worth Clients&#146;.</font></td>
  </tr>
</table> </div>
<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia</font></b></td>
  </tr>
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Client
        assets increased by 17 per cent, or 19 per cent</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">on
        an underlying basis. Investment in Taiwan and</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">Japan continued and HSBC
        expanded its support of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">clients
        from mainland China. Onshore operations</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">were launched in Dubai and India
        during the year,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        the expansion of the discretionary managed team</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">aided growth of 47 per cent
    in this asset class.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC won
        awards from </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Euromoney </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">as &#145;1st
        for</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inheritance
        and Succession Planning&#146;, &#145;1st for Tax</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guidance
        and Services&#146; and &#145;1st for Trust Services&#146;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
    Asia.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North
    America</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC extended
        its Private Banking capabilities</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">through
        front office recruitment in New York,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">California and Florida, and
        expanded its Wealth and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax
    advisory business in Philadelphia through</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">recruitment and a small acquisition.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The business
        was streamlined through restructuring,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">delivering
        front office synergies with Corporate,</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment Banking and
        Markets, cross-selling with</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
        Banking was enhanced, and a single</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">management structure was put
        in place to cover the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hispanic
    customer base.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">53</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p54"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
            Review</FONT></B> (continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other</FONT></B><B><SUP><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">6</FONT></SUP></B></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan=3 align=center><hr size="1" noshade></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest (expense)/income</FONT></TD>
        <TD width=15% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(472</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=15% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">220</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    (expense)/income</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">excluding
    net interest income</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(90</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    interest expense on trading
             </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">activities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net trading income<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(103</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    income from financial
       </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">instruments designated at fair</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">406</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment
income on assets</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">backing
policyholders&#146;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"> liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
    less losses from financial
            </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">219</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">260</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">558</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,634</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,050</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,131</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,188</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(179</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(359</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating
income before loan</FONT> <font size="2">&nbsp;<font face="TimesNewRoman,Bold,Times New Roman,Times,serif">impairment
charges</font></font></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<B><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
                other</font> <FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit
      risk provisions</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,952</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,829</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment
charges and other</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">credit
risk</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"> provisions</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,951</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,828</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,976</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,493</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit/(loss)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(25</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">335</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
    of profit in associates and
             </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">joint ventures</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">404</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">By geographical region</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(168</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">366</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(178</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">129</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(196</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">109</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">404</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s profit before tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.8</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88.1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to customers
           </font><font size="2"> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">(net)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,893</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,339</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total assets<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,653</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,201</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">507</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">557</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<I><FONT size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 55.</FONT></I><font size="1">&nbsp;</font>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
</div>
<div style="float: right; width: 48%">
  <p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Notes</FONT></p>
  <table width="100%%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For a
          description of the main items reported under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#145;Other&#146;,
      see footnote 6 on page 55.</font></td>
    </tr>
    <tr>
      <td width="3%" valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
          IFRSs, from 1 January 2005 dividends payable</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">on
          preference securities classified as liabilities have</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">been
          recognised as an interest expense within &#145;Other&#146;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
          2005. In 2004, these dividends were shown as
non-</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">equity
minority interests. This change decreased net</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">interest
income by US&#36;653 million compared
with</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004.
It also affected inter-regional dividends and this</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">increased
net interest income in Europe by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;387
million, which was offset at a Group level by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">an
equivalent reduction in net interest income in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
Kong.</font></td>
    </tr>
    <tr>
      <td width="3%" valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The US
          Technology Centre incurred and recharged</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;1,100
          million of expense, 18 per cent higher than</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004 as a result of increased
          activity in support of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">both
          increased global IT requirements and the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">development of new capabilities
          in Corporate,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
      Banking and Markets.</font></td>
    </tr>
    <tr>
      <td width="3%" valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Costs
          incurred in the Group Service Centres outside</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
          US increased by 75 per cent to US&#36;302 million,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">reflecting
          the ongoing migration of processing and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">call
      centre activities.</font></td>
    </tr>
    <tr>
      <td width="3%" valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
          on the sale and revaluation of property and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">investments
          in Hong Kong were US&#36;65 million lower</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">than in 2004, at US&#36;263
      million.</font></td>
    </tr>
    <tr>
      <td width="3%" valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increases
          in US interest rates led to higher net interest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
          earnings on centrally held US dollar</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">denominated investments
          in Hong Kong and the Rest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      Asia-Pacific.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The reclassification
          of the Brazilian insurance</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
          from Other to Personal Financial Services</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">led to a US&#36;16 million reduction
          in profit before tax,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">though
          significant variances were observed on</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">operating income and operating
      expenses lines.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Argentina,
          HSBC received compensation bonds in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
          related to the pesification in 2002. This,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">together with reduced Amparos
          provisions and other</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">items
          related to the sovereign debt default, led to a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">US&#36;17 million increase in
      profit before tax.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Movement
          in the fair value of own debt designated at</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">fair
          value was US&#36;386 million, arising in North</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">America and Europe. No
      movement was reported in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004.</font></td>
    </tr>
  </table></div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">54</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p55"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">By geographical region</FONT></B><BR>
<P align="left">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the analysis of profit by geographical region that follows, operating income and operating expenses include intra-HSBC items of US&#36;938 million (2004: US&#36;631 million).</FONT></P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT><BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>       </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=center><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,356</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30.3</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,756</FONT></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30.4</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,517</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.5</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,830</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.5</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,574</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.3</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,847</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.8</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,872</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32.8</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,070</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">440</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Total assets</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,4</FONT></SUP></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT>       </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan="7" align=center><hr size="1" noshade></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">636,703</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.7</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">545,557</FONT></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43.0</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">222,822</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">213,458</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.8</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">142,014</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.5</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120,530</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.5</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">463,143</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31.1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">371,183</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.3</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,734</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.7</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,368</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.4</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,489,416</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,268,096</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<br><br>
<div style="float: left; width: 48%">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Basis of preparation</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The results are presented in accordance with the accounting policies used in the preparation of HSBC&#146;s consolidated financial statements. HSBC&#146;s operations are closely
integrated and, accordingly, the presentation of customer group data includes internal allocations of certain items of income and expense. These allocations include the costs of certain support services and head office functions, to</FONT></P></div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the extent that these can be meaningfully attributed to operational business lines. While such allocations have been made on a systematic and consistent basis, they necessarily involve a
degree of subjectivity.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Where relevant, income and expense amounts presented include the results of inter-segment funding as well as inter-company and inter-business line
transactions. All such transactions are undertaken on arm&#146;s length terms.</FONT></P></div><br clear="all">
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD colspan="2" valign=top><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Footnotes
    to &#145;Analysis by customer group and by geographical region&#146;</font></TD>
  </TR>
<TR>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net trading income comprises all gains and losses from changes in the fair value of financial assets and financial liabilities classified as held for trading, together with
related external and internal interest income and interest expense, and dividends received.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I>       </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I>    </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excluding Hong Kong Government certificates of indebtedness.</FONT></I> </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Assets and liabilities recorded here were significant to Corporate, Investment Banking and Markets.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The main items reported under &#145;Other&#146; are the income and expenses of wholesale insurance operations, certain property activities, unallocated investment activities
including hsbc.com, centrally held investment companies, movements in the fair value of own debt designated at fair value, and HSBC&#146;s holding company and financing operations. The results include net interest earned on free capital held
centrally and operating costs incurred by the head office operations in providing stewardship and central management services to HSBC. Net operating income of the Group&#146;s wholesale insurance operations amounted to US&#36;460 million in 2005
(2004: US&#36;511 million). &#145;Other&#146; also includes the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries.</FONT></I>      </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">55</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p56"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><font size="2" face="Univers,Arial,Helvetica,sans-serif"> (continued)</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Europe
</FONT></B></p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before tax by country within customer group</FONT></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD rowspan="5" align=left>&nbsp;</TD>
  <TD colspan="4" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
    ended 31 December</FONT></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD colspan="4" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Personal Financial
Services</B></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,932</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,621</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
United Kingdom<SUP>1</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,475</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,340</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
France<SUP>2</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">223</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">205</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Turkey</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">134</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Commercial Banking</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,939</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,663</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
United Kingdom</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,495</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,258</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
France<SUP>2</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">278</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">272</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Turkey</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Corporate, Investment
Banking and Markets</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,114</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,668</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
United Kingdom</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,186</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,021</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
France<SUP>2</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">472</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">337</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Turkey</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">364</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">222</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Private Banking</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">539</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">438</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
United Kingdom</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">135</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
France<SUP>2</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Switzerland</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">254</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Other</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(168</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">366</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
United Kingdom</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(47</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <b>)</b></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">477</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
France<SUP>2</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(147</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(123</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Total</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,356</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,756</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
United Kingdom</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,280</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,231</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
France<SUP>2</SUP></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">833</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">669</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Turkey</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">265</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Switzerland</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">254</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">724</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">511</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD width="2%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In the UK, the Personal Financial Services business primarily comprises HSBC Bank and the UK subsidiary of HSBC Finance. The latter&#146;s results included within UK Personal
Financial Services in 2005 were a loss of US&#36;76 million (2004: profit US&#36;97 million).</FONT></I></TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">France primarily comprises the domestic operations of HSBC France and the Paris branch of HSBC Bank.</FONT></I></TD>
</TR>
</TABLE>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">56</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p57"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</font>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD rowspan="3" align=left>&nbsp;</TD>
  <TD colspan="4" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
    ended 31 December</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD colspan="4" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT> </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
        <b>Europe</b></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net interest income</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,221</FONT></B>
        </TD>
        <TD width=2% align=left>&nbsp;</TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,098</FONT>
        </TD>
        <TD width=2% align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net fee income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,299</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,980</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net trading income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,036</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">997</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net income from financial
instruments designated at fair value</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">362</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net investment income
on assets backing policyholders&#146; liabilities</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">571</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Gains less losses from
financial investments</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">439</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividend income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">558</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net earned insurance premiums</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,599</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,875</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other operating income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,603</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,175</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Total operating
income</B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,622</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,408</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net insurance claims incurred
and movement in policyholders&#146; liabilities</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(818</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,628</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Net operating income before loan impairment charges and other credit risk
provisions</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,804</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,780</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loan impairment charges
and other credit risk provisions</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,929</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,033</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Net operating
income</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,875</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,747</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total operating expenses</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12,639</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12,028</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> ) </font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Operating profit</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,236</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,719</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of profit in associates
and joint ventures</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Profit before
tax</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,356</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,756</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left>&nbsp;
        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of HSBC&#146;s profit
before tax</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30.3</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30.4</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cost efficiency ratio</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60.8</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64.0</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Year-end staff numbers
(full-time equivalent)</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,755</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,861</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance
    sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to
customers (net)</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">312,537</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">277,560</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to
banks (net)</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,360</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56,049</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial investments, trading assets, and financial instruments designated at
fair value</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146,777</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">139,183</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total assets</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">636,703</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">545,557</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Deposits by banks</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47,202</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,720</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Customer accounts</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">334,200</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">292,568</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">1</font><font size="2"><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;Third
    party only</FONT></I><FONT face="TimesNewRoman,Times New Roman,Times,serif">.</FONT></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="float: left; width:48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Growth in the </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">UK</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> economy remained
subdued during 2005 at 1.8 per cent, the lowest rate since 1992. Consumer spending and housing activity slowed sharply during the first nine months of the year, staging a minor recovery in the final quarter. Doubts remained over the strength of
consumer spending, given the rise in unemployment in ten consecutive months and reduced confidence in the housing market. The boost to the economy from government spending in recent years was also not expected to be as significant. The recovery in
exports was maintained, helped in large part by the strength of the global economy, though the industrial sector continued to struggle. Industrial output contracted in 2005 for the fourth time in the past five years. Companies remained reluctant to
invest despite a general profit recovery, stronger balance</FONT></p>
</div>
<div style="float: right; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sheets and an impressive equity market performance. Although commodity prices rose sharply, inflation remained well contained at around 2 per cent and wage growth eased. In response to
weaker economic activity, the Bank of England cut interest rates in August to 4.5 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">eurozone</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif"> experienced lacklustre economic growth in 2005 of 1.4 per cent, although momentum accelerated during the course of the year. With consumer spending growth remaining subdued, the strongest areas were exports and fixed investment.
There was, as usual, considerable divergence between countries: Italy and Portugal saw hardly any economic growth while Spain, Greece and Ireland grew by over 3 per cent. Growth in France slowed from 2.1 per cent in 2004 to 1.4 per cent in 2005 but
both investment and consumer spending revived a</FONT></P>
</div>
<p><br clear="all">
</p>
<p>&nbsp; </p>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">57</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p58"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><font size="2" face="Univers,Arial,Helvetica,sans-serif"> (continued)</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">little in the
    second half of the year. Weak domestic demand continued to constrain German
    gross domestic product (&#145;GDP&#146;) growth, which slowed from 1.1 per
    cent in 2004 to 0.9 per cent in 2005, despite a strong increase in exports,
    particularly capital goods. Eurozone inflation averaged a little over 2 per
    cent in 2005, with higher energy prices boosting inflation by around 0.5
    per cent. The European Central Bank raised
interest rates from 2.0 per cent to 2.25 per cent in early December, the first
increase for almost five years.</FONT></p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The performance of the Turkish economy in 2005 remained very positive. GDP grew by approximately 5.5 per cent, while inflation continued to fall, to 7.7 per
cent in December from 9.7 per cent a year earlier. Economic policy remained anchored by the government&#146;s agreement with the IMF. Turkey&#146;s current account deficit, which reached US&#36;23.1 billion, or approximately 6.3 per cent of GDP in
2005, is increasingly being financed by longer-term foreign direct investment into the country, which should help reduce Turkey&#146;s vulnerability to a sudden reversal in short-term capital flows.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">European operations reported a pre-tax profit of US&#36;6,356 million compared with US&#36;5,756 million in 2004, an increase of 10 per cent. IFRSs changes
to the treatment of preference share dividends led to a US&#36;275 million reduction in pre-tax profits. On an underlying basis, pre-tax profits grew by 25 per cent and represented around 30 per cent of HSBC&#146;s equivalent total profits. In the
UK, strong revenue growth in Personal Financial Services and good cost discipline were partially tempered by a weaker credit experience. A quadrupling of pre-tax profits in Turkey reflected the strong growth in customer acquisition and retention
achieved in the country. In Commercial Banking, HSBC&#146;s strong service proposition attracted a 5 per cent growth in customers with consequent growth in deposits, receivables and service revenues. Corporate, Investment Banking and Markets
delivered strong revenue growth in Europe, notably in client related trading activities, Global Transaction Banking and securities services. In aggregate, European Corporate, Investment Banking and Markets&#146; revenues grew by 15 per cent against
a 9 per cent increase in operating expenses.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is on an underlying basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of US&#36;1,932
million, an increase of 16 per cent compared with 2004, driven by revenue growth and productivity improvements in the UK and</FONT></P></div>
<div style="float: right; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">expansion in Turkey, where pre-tax profit more than quadrupled to US&#36;134 million. In France, revenue growth benefited from the rebranding of CCF and four subsidiary banks to
&#145;HSBC France&#146;, with a notable increase in international products, particularly mortgage lending to overseas customers.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Continued emphasis was placed on streamlining the business to improve productivity, and on sales and channel management, particularly in the UK, where one
third of sales were made through direct channels in 2005. Attention was also paid to further simplifying HSBC&#146;s product range in the UK, and on integrating the M&amp;S Money business in its first full year since acquisition. A number of
innovative marketing campaigns and promotions during 2005 heightened brand awareness, leading to greater customer consideration of HSBC products. This was evidenced in strong balance growth and market share gains across most major product lines. In
Turkey, an emphasis on business expansion and customer acquisition delivered increased card sales and utilisation combined with higher mortgage sales. In France, marketing campaigns in conjunction with the rebranding exercise boosted mortgage
lending and sales of insurance and investment products.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 10 per cent to US&#36;5,309 million. This arose substantially in the UK through increases in mortgage and credit card
lending, and in Turkey, mainly in credit cards. Increased net interest income from balance sheet growth in France was offset by spread compression.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Despite a more subdued housing market, net interest income from UK mortgages increased by 37 per cent, driven by balance growth of 22 per cent and
improvements in customer retention. Spreads also increased, reflecting the inclusion from 1 January 2005 of fee income within the effective interest rate calculation under IFRSs. New lending was strongest in the first time buyer market, where
successful pricing and marketing strategies helped gain market share of new sales in a market which contracted overall.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income from UK credit cards increased by 24 per cent, driven by balance growth and the IFRSs impact noted above. Increased card utilisation by
existing customers, as well as new customers attracted by competitive pricing, marketing and cross-sales, contributed to an increase of 16 per cent in average balances. HSBC-branded cards increased market share of new cards issued; sales of the John
Lewis branded credit card also increased. Income benefited from the roll-off of balance transfers introduced in the &#145;0 per cent&#146; campaign at the end of 2004, while more</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">58</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p59"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width:48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sophisticated risk-based pricing enabled customer rates to be differentiated more acutely.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income from other unsecured lending in the UK increased by 4 per cent. The launch of differentiated pricing initiatives in April, notably
through preferential personal lending rate offers to lower-risk customers, helped boost average loan balances by 9 per cent, and increase HSBC&#146;s market share of gross advances from 10.7 to 11.7 per cent. Focused sales and marketing, notably the
&#145;January sale&#146;, also contributed to higher balances. As indebtedness levels grew, growth was curtailed through a tightening of underwriting criteria in the more difficult credit environment. The introduction of preferential pricing, and a
mix change towards higher value but lower-yielding loans, led to a 48 basis point narrowing of spreads.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recruitment of new current account customers was strong, and HSBC&#146;s market share of new current accounts increased to 14.7 per cent, largely through
brand-led awareness and marketing. The launch of two new current account propositions, including HSBC&#146;s first value-driven packaged account in the UK market, and improved cross-sales aided growth of 6 per cent in overall customer accounts. This
led to an increase in net interest income from UK current accounts of 5 per cent to US&#36;1.0 billion, broadly in line with the 6 per cent increase in average balances.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sales of new UK savings accounts increased markedly, and average balances rose by 15 per cent, driven by a greater front-line focus, competitive pricing and
the launch of new products, including &#145;Regular Saver&#146; and &#145;Online Saver&#146;. Included in this was growth of over US&#36;1.2 billion in First Direct&#146;s &#145;e-savings&#146; product, launched in September 2004. Net interest
income, however, fell by 5 per cent, largely due to the non-recurrence of the benefit to spreads from base rate rises in 2004, and a slight reduction in margin. The latter arose from competitive pricing initiatives partly designed to improve brand
awareness and widen product consideration.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Turkey, innovative marketing initiatives and advertising campaigns, with an emphasis on attracting new customers, contributed to strong growth in net
interest income, which more than doubled compared with 2004. Average card balances increased by 66 per cent to US&#36;0.9 billion, and average mortgage balances more than doubled to US&#36;0.6 billion. Higher card usage by existing customers, higher
average mortgage advances and a 7 per cent increase in overall customer numbers contributed to the growth.</FONT></P></div>
<div style="float: right; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In France, net interest income was broadly in line with 2004. Marketing campaigns in the run-up to the rebranding exercise contributed to a 54 per cent
increase in mortgage sales in a buoyant market, and a resulting 18 per cent increase in average balances. Cross-sales of current and special regulated savings accounts were strong, and average deposit balances grew by 4 per cent to US&#36;14.9
billion. The benefit of this balance sheet expansion was largely offset by lower spreads, as competitive pricing reduced yields on lending products, and the maturing of older, higher-yielding investments reduced the funding benefit from
deposits.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Excluding net interest income, net operating income before loan impairment charges grew by 16 per cent to US&#36;3,386 million, of which 12 percentage points
was in the UK and largely attributable to increased fees associated with the increase in personal lending, mortgage and credit card volumes described above. Increased card utilisation also led to higher cash advance fees and currency conversion
income. An improved investment fund offering, following the depolarisation of the previously tied sales force, was reflected in a 5 per cent increase in related commissions. In Turkey, fee income benefited from increased lending activity. In France,
privatisations boosted brokerage income, and new product launches and marketing aided growth in insurance and investment sales.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under IFRSs, changes in presentation from 1 January 2005, notably for certain contracts previously accounted for as insurance, and with the designation of
insurance-related assets at fair value, caused large movements within certain individual income lines. These had negligible impact on income overall. There was also a US&#36;32 million gain from the fair value measurement of options linked to French
home-savings products.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges of US&#36;1,711 million were 73 per cent higher than 2004, the majority of which occurred in the UK. In large part, this reflected
the strong growth in higher margin credit card and other unsecured lending in recent years. Weakening economic conditions and sharply rising personal bankruptcies, following the change in legislation in 2004, were also significant
contributors.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges as a percentage of period end net customer advances rose from 0.8 to 1.4 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC responded to the weaker UK credit environment by further refining its credit eligibility criteria, and by enhancing its credit scorecards with</FONT></P>
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<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><font size="2" face="Univers,Arial,Helvetica,sans-serif"> (continued)</font></P>
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<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">full positive
    credit reference data. HSBC became the first UK high street clearing bank
    to share full customer credit performance data in 2005. </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Underwriting
    activity was also further centralised. Collections capabilities were enhanced,
    resulting in an increase in amounts collected, and resources were added to
    the Retail Credit  Risk Management function. As a result, lending activity
    in the second half of the year indicated that the credit quality of more
    recent unsecured lending had improved. </FONT></p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Higher charges in Turkey were broadly in line with balance sheet growth, while credit quality in France remained sound.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses were broadly in line with 2004. The 7.5 percentage point fall in the cost efficiency ratio, to 58 per cent, was largely driven by
productivity improvements in the UK. This reflected the benefits of the cost reduction strategy introduced in 2004. Increased focus on direct channels, and the greater centralisation of support functions enabled by this, reduced the UK cost base in
2005, which also benefited from the non-recurrence of the restructuring costs incurred in implementing this strategy. Costs in 2004 also included amounts for compensation expected to be payable to UK customers for shortfalls on certain mortgage
endowment policies and investment products. Operating expenses in 2005 included the initial phase of a UK branch refurbishment programme designed to improve customer experience, which added US&#36;73 million to costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In France, a 2 per cent increase in operating expenses was driven by the recruitment of additional sales staff, as well as the rebranding exercise and
associated marketing expenditure. In Turkey, marketing costs increased by 30 per cent and staff costs by 33 per cent, largely in support of the growing credit card business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported pre-tax profits of US&#36;1,939 million, an
increase of 18 per cent. In highly competitive markets, revenues grew by 6 per cent and profit improvement largely reflected reduced costs, more than offsetting higher loan impairment charges.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the UK, improved market segmentation led to a more acute focus on the needs of individual customers and underpinned a 20 per cent increase in pre-tax
profits. The establishment in 2004 of Corporate Banking Centres to improve the service offered to MMEs, and Commercial Centres focusing on larger SMEs, together with the recruitment of additional sales staff, contributed to a 6 per cent increase in
customers and strong growth in lending. Revenues responded strongly, and costs were lower</FONT></P>
</div>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">following a reorganisation in the UK in 2004 to improve efficiency. UK credit quality experienced some weakening in the fourth quarter of 2005, reflecting higher interest rates and the
resulting slowdown in consumer spending. However, the quality of HSBC&#146;s commercial lending book remained strong overall with impairment charges continuing to run below historic levels: as in prior periods, loan impairment charges principally
reflected allowances against a small number of accounts.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 16 per cent. In the UK, lending and overdraft balances increased by 23 per cent, or US&#36;6.6 billion, as a result of
strong customer demand. HSBC increased its lending market share, with particularly strong growth in the property, distribution and services sectors. In invoice financing, a 12 per cent increase in customer numbers supported by a sales force
realignment led to higher balances and a 10 per cent increase in net interest income. Risk-based pricing improved overdraft spreads by 15 basis points, while term lending margins were in line with 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A campaign designed to secure a greater share of the commercial savings market, in part through more competitive pricing, contributed to an 11 per cent
increase in UK deposit balances, with spreads falling by 16 basis points. Overall, UK commercial customer liability balances benefited from both deposit growth and a 12 per cent increase in current account balances. Current account customer numbers
rose to over 700,000 with over 20,000 customers switching their business to HSBC following marketing and advertising campaigns in 2005. In the UK, HSBC attracted over 90,000 start-up accounts, representing a 20 per cent market share. Spreads on
sterling current accounts fell as customers continued to migrate to interest-paying current accounts. Increases in US interest rates led to a widening of spreads on international and foreign currency current accounts.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income in Turkey increased by 29 per cent, principally as a result of higher lending and deposit balances, which increased by 25 per cent and 19
per cent respectively. HSBC deepened its relationships with its larger commercial banking customers and recruited additional sales staff to support the launch of SME banking in the second half of 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In France, increased marketing activity highlighting HSBC&#146;s international capabilities as CCF rebranded to HSBC France, together with a programme to
align the bank&#146;s 350 largest Commercial Banking customers with the most</FONT></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">experienced relationship managers, led to a 10 per cent increase in medium term loan balances. Sight deposit balances grew by 7 per cent, though deposit spreads decreased as maturing
funds were placed at lower prevailing interest rates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income increased by 2 per cent to US&#36;1,621 million, net of IFRSs changes to switch some fees into the effective interest rate calculation, which
led to a 15 per cent reduction in fee income. In the UK, higher new business volumes and lending activity contributed to a US&#36;77 million, or 27 per cent, increase in loan and overdraft fee income. Increased customer numbers, coupled with the
introduction of a new small business tariff in January 2005, led to a 13 per cent increase in current account fee income. Card acquiring income increased by 8 per cent, despite a slowdown in consumer spending driven by a 6 per cent increase in
transaction volumes, reflecting merchant acquisition. A 21 per cent increase in card customer numbers contributed to higher card issuing income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC benefited from the recruitment of additional sales staff, development of profitable relationships with brokers and the success of dedicated corporate
and commercial centres. Invoice financing fee income increased by 9 per cent, benefiting from an expanded client base, while a tariff review contributed to a 16 per cent increase in treasury income. The recruitment, in both 2004 and 2005, of
commercial independent financial advisors, together with the development of existing sales staff, led to a 13 per cent increase in insurance and investment income, with fee income from savings and investment products increasing by a third. Income in
the vehicle and equipment leasing businesses decreased by 13 per cent, following an agreement to outsource the operational functions of the UK vehicle finance contract hire business to Lex Vehicle Leasing, which took effect from November 2005.
Excluding the transfer, net fee income from leasing increased by 5 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions increased by 26 per cent to US&#36;378 million. In the UK, lending growth and sizeable allowances
against a small number of accounts led to a US&#36;162 million increase in charges. Overall credit quality remained relatively strong, although some deterioration was evident in the market in the last three months of 2005 as consumer spending
declined. In France, new individually assessed allowances were largely offset by higher recoveries, while in Malta net releases decreased as a large release against a single customer in 2004 was not repeated.</FONT></P></div>
<div style="float: right; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses decreased by 5 per cent and, together with increased income, resulted in a 6 percentage point improvement in the cost efficiency ratio. In
the UK, the non-recurrence of cost reduction expenditure in 2004, together with the resulting fall in staff numbers and strong cost control, contributed to a 10 per cent decrease in operating expenses. Although overall staff numbers declined,
additional sales staff were hired to take advantage of business opportunities in support of revenue growth. These sales staff were supported by press and other advertising campaigns aimed at attracting customers switching banks and start-up
businesses to HSBC, together with a campaign targeting SMEs which contributed to an increase in marketing costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In France, staff recruitment, increased marketing activity and re-branding led to an 8 per cent increase in costs. Staff costs rose as HSBC France recruited
additional sales staff to support business expansion, and success led to higher performance-related remuneration. Campaigns targeting top tier commercial customers and supporting product launches led to an increase in marketing expenditure, while
rebranding and supporting activity to emphasise the &#145;HSBC&#146; name change also contributed.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In an economy which grew by 5.5 per cent in 2005, increased business activity, the launch of SME banking and the recruitment of additional sales and support
staff in Turkey contributed to a rise in income and a 17 per cent increase in operating expenses.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of
US&#36;2,114 million, an increase of 27 per cent, compared with 2004. Revenues from all major client-related trading activities increased, particularly from the credit and rates, equities and structured derivatives businesses where HSBC has invested
in upgrading its capabilities. Operating expenses rose, reflecting the first full-year cost of the expanded sales and execution capabilities. However, cost growth slowed in the second half of 2005 and in aggregate in Europe, revenue growth
comfortably surpassed growth in costs. In Europe, 2005 marked the transition from the investment phase of Corporate, Investment Banking and Markets&#146; development strategy to a focus on implementation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income increased by 15 per cent to US&#36;5,510 million. Balance sheet management and money market revenues declined by approximately 46 per
cent reflecting a challenging interest rate</FONT></P>
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<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><font size="2" face="Univers,Arial,Helvetica,sans-serif"> (continued)</font></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">environment of higher short-term rates and a flattening yield curve.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate lending spreads remained under pressure as customers refinanced and negotiated better terms in response to falling credit spreads on virtually all
publicly traded debt instruments and strong liquidity in the banking system. In the UK, the adverse impact of a 23 basis point decrease in spreads on customer lending was partly mitigated by a 7 per cent increase in lending balances. Corporate and
Institutional Banking also implemented a balance sheet securitisation programme to enhance returns. In Global Transaction Banking, net interest income increased, primarily due to an increase in balances held on behalf of customers, coupled with the
favourable impact of rising short-term rates. Customer deposit balances increased by 23 per cent and spreads improved by 9 basis points.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fees rose by 7 per cent, partly due to an increase in earnings from the equity capital markets business. Additionally, as equity markets became more
buoyant, HSBC Securities Services fees increased and assets under custody grew by 15 per cent to US&#36;3,242 billion, primarily due to new business and market value appreciation. The asset-backed securities product also generated higher fees with
several notable transactions closing in 2005. In Germany, a 31 per cent rise in net fees was driven by origination activity and higher sales of structured solutions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The increase in income from trading activities arose from positive revenue trends on core products within Global Markets in response to the investment made
in client-facing trading capabilities. Fixed income revenues were boosted by higher volumes processed through electronic trading platforms and by the expansion of primary dealing activity in European government bond markets. In the UK, a strong
performance in structured derivatives reflected investment in new hybrid derivatives and structured fund derivatives businesses, while income in the credit and rates business rose by 25 per cent as a result of higher revenues from securities
trading, asset-backed securities and credit default swaps. There was growth in income from currency derivatives on the back of increasing client business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other income was boosted by gains from the restructuring and syndication of existing assets in Global Investment Banking.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains from sales of financial investments increased significantly to US&#36;396 million, due to higher realisations from Private Equity.</FONT></P></div>

<div style="float: right; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The overall credit environment remained favourable, with a net recovery in 2005 as in 2004. There were, however, lower recoveries of loan impairment charges
in the UK and France, as HSBC had benefited from a number of successful refinancings in 2004. In Italy, a net recovery reflected relatively lower allowances against loan impairment, coupled with releases of provisions made in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 9 per cent to US&#36;3,647 million, partly from the first full year effect of recruitment in 2004 and partly from a further
980 people recruited in 2005 to deliver the expanded capabilities reflected in the revenue gains described above. Extensive investment was also made to develop the infrastructure and technology platform required to integrate and support the business
expansion. In Global Markets, costs rose as new capabilities were added to the cash equities platform, the structured derivatives business in the UK and the credit and rates business. An increase in operational costs, particularly in Global
Transaction Banking, was due to higher transaction volumes.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported a pre-tax profit of US&#36;539 million, an increase
of 23 per cent compared with 2004, driven by strong growth in client assets, transaction volumes and the lending book. Operating expenses rose with a recruitment-driven increase in staff costs partly offset by efficiency savings and the
non-recurrence of restructuring costs in France in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 31 per cent, driven by strong balance sheet growth in the UK, Switzerland and, to a lesser extent, Germany. Overall, lending
balances increased by 21 per cent to US&#36;16.7 billion, as clients borrowed in the low interest rate environment to make alternative investments. This included strong growth in UK mortgage balances, which increased by 39 per cent, in part
reflecting synergies with HSBC&#146;s residential property advisory business. Deposits increased by 20 per cent to US&#36;38.6 billion, as new clients placed cash prior to investment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Client assets, including deposits, increased by 22 per cent to US&#36;174.7 billion. Net new money of US&#36;23.4 billion reflected notably strong inflows in
Switzerland, Germany, Monaco and the UK. In Switzerland, an increased marketing effort and successful product placement aided net new money of US&#36;9.6 billion. In Germany, US&#36;7.6 billion of new money was predominantly due to the success of a
new wealth management team. In Monaco, a focus on building the onshore business generated inflows of US&#36;4.1 billion, while in the UK, cross-referrals</FONT></P>
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<p><a name="p63"></a></p>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><font size="2" face="Univers,Arial,Helvetica,sans-serif"> (continued)</font></P>
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<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">with the wider
    Group contributed to nearly one quarter of the US&#36;1.6 billion of new
money.</FONT></p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A US&#36;20 million lower performance fee from a public equity fund dedicated to Russia was more than offset by increased core fees and commissions in line
with growth in client assets, and transactional income as new clients invested. Higher fee income also reflected growth in discretionary and advisory managed assets, and volume growth, which was boosted by the success of new products launched in
2005, notably in alternative investments. Gains from financial investments in both 2004 and 2005 were mainly on the sale of debt instruments. The overall gain in 2005 of US&#36;27 million was 17 per cent lower than in the previous year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The net release of loan impairment charges in 2005 related largely to specific clients; improved credit quality overall also led to a release of collective
impairment provisions.</FONT></P></div>
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<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses rose by 11 per cent, of which front office recruitment and increased performance-related remuneration comprised 4 and 5 percentage points
respectively. Investment costs, largely in IT and marketing, and supporting business growth contributed further to the increase. These were in part offset by back office efficiency savings and lower restructuring costs following 2004&#146;s merger
of HSBC&#146;s four French private banks.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, net operating income benefited from the change to the presentation of inter-company preference share dividends received from Hong Kong under IFRSs from 1 January 2005. Head office operating expenses increased, reflecting higher
brand advertising and marketing costs, increased professional fees incurred to comply with additional regulatory requirements including Sarbanes-Oxley and Basel II, and restructuring costs. In 2004, operating expenses benefited from the release of
litigation provisions.</FONT></P>
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<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><font size="2" face="Univers,Arial,Helvetica,sans-serif"> (continued)</font></P>
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<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before
tax by customer group</font> </p>

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  <TD colspan="14" align=center><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
    ended 31 December 2005</font></b></TD>
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  <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</font></b> </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
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</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
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        </TD>
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        </TD>
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<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Inter-</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking &amp;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
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<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">segment</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Markets</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">elimination</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <b>Net interest income</b></font></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,309</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,659</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">827</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">548</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,217</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,221</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net fee income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,314</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,621</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,339</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">730</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">295</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,299</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Trading
              income/(expense) excluding
              net interest</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">income</FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,493</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(23</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;
        </font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,660</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Net
              interest income/</font><font face="TimesNewRoman,Times New Roman,Times,serif">(expense)
              on trading activities</font></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">159</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,217</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,376</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Net
            trading income/(expense)</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">84</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,652</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(28</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> <b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b>&nbsp; </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,217</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,036</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">  <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Net
              income/(expense) from</font><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;financial &nbsp;instruments</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">designated
              &nbsp;&nbsp;at fair value .</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">305</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">71</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(31</FONT></B>
        </TD>
        <TD align=left><font size="2"> <b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b>&nbsp; </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">362</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Gains less losses from</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">financial
              investments</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">396</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">439</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividend income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net earned insurance</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,220</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">115</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">264</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,599</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other operating income</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">178</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,252</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">329</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(216</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,603</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Total operating
income</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,272</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,673</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,510</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,425</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">958</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(216</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,622</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net insurance claims<SUP>1</SUP></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(577</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(62</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(179</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(818</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Net operating
income</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">before
                loan</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">impairment
                charges and</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">other
                credit risk</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">provisions</FONT></B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,695</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,611</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,510</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,425</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">779</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(216</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,804</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loan impairment charges</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and
              other credit risk</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,711</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(378</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,929</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Net operating
income</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,984</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,233</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,665</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,430</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">779</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(216</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,875</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total operating expenses</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,058</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,301</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,647</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(891</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(958</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">216</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12,639</FONT></B>
        </TD>
        <TD align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Operating profit/(loss)</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,926</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,932</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,018</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">539</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(179</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,236</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of profit/(loss)
in</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">associates
              and joint</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">ventures</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">96</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Profit/(loss)
before tax</B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,932</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,939</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,114</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">539</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(168</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,356</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of HSBC&#146;s profit</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">before
              tax</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.8</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>)</b></font></TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30.3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cost efficiency ratio</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58.2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49.9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66.2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62.5</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">122.9</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60.8</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance
    sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">customers
              (net)</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120,302</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66,965</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107,899</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,368</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">312,537</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total assets</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">143,095</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80,864</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">367,893</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,971</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,880</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">636,703</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Customer accounts</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">122,118</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,789</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">109,086</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41,206</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">334,200</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">banks
              (net)<SUP>3</SUP></FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,218</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading assets, financial</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">instruments
              designated at</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">fair
              value, and financial</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments<SUP>3</SUP></FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">168,062</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Deposits by banks<SUP>3</SUP></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45,075</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">These assets and liabilities were significant to Corporate, Investment Banking and Markets.</FONT></I></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">64</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p65"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan="2" rowspan="6" align=left><font size="2">&nbsp;</font><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    </TD>
  <TD colspan="13" align=center><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended
      31 December
    2004</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="13" align=right><HR noshade size=1>
</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inter-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking &amp;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">elimination</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  <b>Net interest income</b></font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,644</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,305</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,403</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">421</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">325</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,098</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net fee income</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,110</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,593</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,261</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">658</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">358</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,980</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading income</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">116</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">735</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">104</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">997</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net investment income/</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> (expense)
            on assets</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> backing
            policyholders&#146;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> liabilities</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">445</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">127</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">571</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Gains less losses from</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  financial
            investments</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividend income/(expense)</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">526</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">558</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Net
              earned insurance</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,254</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">409</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,875</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other operating income</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">285</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">770</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">255</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(180</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,175</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  <b>Total operating income</b> </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,479</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,872</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,829</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,240</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,168</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(180</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,408</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net insurance claims<SUP>1</SUP></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,026</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(487</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(115</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,628</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net operating income</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  before
            loan impairment</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> charges
            and other credit</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> risk
            provisions</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,453</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,385</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,829</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,240</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,053</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(180</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,780</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loan impairment charges</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> and
            other credit risk</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> provisions</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(939</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(306</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">207</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,033</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><b><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  Net operating income</font></b></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,514</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,079</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,036</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,244</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,054</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(180</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,747</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total operating
    expenses</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,898</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,422</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,380</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(806</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(702</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">180</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12,028</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Operating profit</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,616</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,657</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,656</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">438</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">352</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,719</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of profit in associates</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  and
            joint ventures</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  <b>Profit before tax</b>      </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,621</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,663</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,668</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">438</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">366</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,756</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of HSBC&#146;s profit</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  before
            tax</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30.4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cost efficiency ratio</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65.7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55.2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70.0</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65.0</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66.7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64.0</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif"><b>Selected balance sheet
data<SUP>2</SUP></b></FONT><b>&nbsp;</b></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif">customers
              (net)</FONT>&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">118,796</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,458</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,628</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,676</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">277,560</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,515</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">83,289</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">273,906</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,140</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,707</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">545,557</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Customer accounts</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">121,599</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,798</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,031</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,140</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">292,568</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
The following assets and</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> liabilities
            were significant</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> to
            Corporate, Investment</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Banking
            and Markets:</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> banks
            (net)</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,802</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading assets, financial</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> instruments
            designated at</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> fair
            value, and financial</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> investments</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">116,492</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Deposits by banks</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,646</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I></TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">65</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div>
<page><a name="p66"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review</b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">
  (continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>



<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Hong
      Kong</FONT></B></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit
      before tax by customer group</FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
      Financial Services</FONT></TD>
    <TD width=8% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,628</FONT></B>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=8% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,063</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
      Banking</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">955</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">904</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,
      Investment Banking and Markets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">922</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,603</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private
      Banking</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(178</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">129</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,517</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,830</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD width=8% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,064</FONT></B>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=8% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,638</FONT>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,674</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,703</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">546</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">659</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      expense from financial instruments designated at fair value</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on assets backing policyholders&#146; liabilities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">314</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial investments</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,334</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,247</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">805</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">536</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,566</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,299</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,059</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,154</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income before loan impairment charges and other credit risk provisions</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,507</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,145</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges and other credit risk provisions</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(146</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">220</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,361</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,365</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,867</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,558</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,494</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,807</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates and joint ventures</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,517</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,830</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit before tax</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.5</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38.2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35.8</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year-end
      staff numbers (full-time equivalent)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,931</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,552</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
      balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers (net)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83,208</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,824</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks (net)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,751</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,710</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets, financial instruments designated at fair value, and financial investments</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81,631</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,721</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">222,822</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">213,458</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,708</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,325</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">173,726</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">178,033</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD valign=top>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="3%" valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
      party only.</FONT></I></TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excluding
      Hong Kong Government certificates of indebtedness.</FONT></I></TD>
  </TR>
</TABLE>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">66</FONT></p>
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<div style="float: left; width: 48%">
<P><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong
  Kong&#146;s</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
  economy grew by 7.3 per cent in 2005, down from the growth of 8.6 per cent achieved
  in 2004. Robust domestic demand provided strong support, particularly in the
  second half of the year, and external trade maintained its rapid rate of growth.
  Despite a substantial rise of more than 3 per cent in local interest rates in
  2005, domestic demand continued to expand, reflecting a sustained improvement
  in business and consumer confidence. Increased consumer spending, spurred by
  greater job security as unemployment fell, and improving household incomes,
  became a key driver of growth in the latter part of the year. The rise in domestic
  spending more than offset the slower growth in tourists&#146; spending which
  occurred in 2005, particularly among mainland visitors, and consumer optimism
  remained unaffected by a cooling in the property market induced by the higher
  interest rate environment. Hong Kong&#146;s strong export performance also propelled
  growth, benefiting from sustained external demand and foreign importers building
  up inventories as trade talks continued on textile quotas between mainland China
  and its major trading partners. Domestic exports also picked up, reflecting
  increased local production. In 2005, inflation rose to 1.1 per cent, mainly
  driven by increased demand for property rentals.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s operations in Hong Kong reported a pre-tax profit of US&#36;4,517 million, compared with US&#36;4,830 million in 2004. IFRSs changes to the
treatment of preference share dividends led to a US&#36;387 million decrease in pre-tax profits. Excluding this, profits increased by 2 per cent. Subdued profit growth was largely attributable to a turnaround in loan impairment charges, as 2004
benefited from non-recurring releases from general provisions, and a fall in balance sheet management revenues. Pre-tax profits in Hong Kong represented around 22 per cent of HSBC&#146;s total profit at this level. In Corporate, Investment Banking
and Markets, balance sheet management revenues were negatively affected by the influence of short-term interest rate rises and a flattening yield curve. Expense growth in Corporate, Investment Banking and Markets reflected the first full-year effect
of the investment made to support business expansion. Pre-tax profits of Personal Financial Services and Commercial Banking grew by 27 per cent and 6 per cent respectively, benefiting from a sharp rise in deposit spreads as short-term interest rates
increased in a benign credit environment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is on an underlying basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of US&#36;2,628
million, 27 per cent higher than</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in 2004. This was largely due to widening deposit spreads, deposit growth and improved credit quality. During the year, HSBC placed considerable emphasis on maintaining its leadership
position and meeting customer needs in both the credit cards and insurance businesses. Market share of both spend and balances grew in respect of credit cards along with strong insurance revenue growth.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income grew by 30 per cent to US&#36;2,618 million. During 2005, interest rates in Hong Kong rose significantly, reflecting rising US dollar
interest rates. In addition, adjustments to the Hong Kong: US dollar linked exchange rate system reduced the likelihood of an upward realignment of the Hong Kong dollar, prompting a reversal of much of the inward flows from investors that had
depressed local market rates in 2004. Consequently, deposit spreads widened to more normal levels after the exceptionally low spreads experienced in 2004. Interest rate rises also helped stimulate growth in average deposit balances as investor
sentiment moved away from long-term equity-related investments into shorter-term liquid deposits. Despite the competitive deposit market, average balances grew by US&#36;2.9 billion, or 3 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The mortgage market remained highly competitive during 2005. During the first half of the year, HSBC did not aggressively compete on price but maintained a
selective approach to mortgage approvals, mainly by offering competitive rates to the existing customer base. Yields gradually improved during the year, as HSBC repriced upwards following a series of interest rates increases. Spreads declined
compared with 2004, as improvements in yields were more than offset by higher funding costs following rising interest rates. Average mortgage balances, excluding the reduction in balances under the suspended Hong Kong Government Home Ownership
Scheme (&#145;GHOS&#146;) grew by 1 per cent, despite the highly competitive environment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average credit card balances grew by 10 per cent, and HSBC&#146;s market share of card balances also increased by 550 basis points led by targeted
promotional campaigns and rewards programmes. These volume benefits were more than offset by lower spreads, mainly due to higher funding costs as interest rates rose.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fees fell by 6 per cent to US&#36;740 million, driven mainly by lower sales of unit trusts and capital guaranteed funds, partly offset by higher sales of
structured deposit products and open-ended funds. A 34 per cent fall in unit trust fee income was driven by a change in market sentiment during 2005.</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">67</FONT></P>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review</b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">
  (continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The combined effect of higher interest rates and a flattening yield curve reduced customer demand for capital guaranteed funds and longer-term equity related investment products.
Investors preferred shorter-term investment products which in turn generated lower fees. Revenues from open-ended fund sales reflected this, increasing by 32 per cent to US&#36;95 million with the introduction of 173 new funds increasing the choice
of funds available to investors. This was an important strategic initiative to position HSBC as the leading investment service provider in Hong Kong, where customers can now choose from over 300 funds.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Revenues from structured deposit products grew, with strong sales volumes aided by new products launched. The success of the Exclusive Placement Service,
launched in 2004 for HSBC </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier </FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers, continued with year-on-year revenue growth of 178
per cent. The service offers an extensive product range of yield enhancement options, re-priced daily and linked to foreign exchange or interest rates. IPO certificate of deposit offerings doubled. These were partly offset by lower revenues from
&#145;Deposit plus&#146; and &#145;Equity linked note&#146; products.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income from credit cards grew by 9 per cent, reflecting a 21 per cent increase in spending along with a 15 per cent rise in the number of cards in
circulation to four million. In stockbroking and custody services, new services were launched aimed at facilitating securities management by customers. Competitive pricing and a high quality of service on the internet led to a 15 per cent growth in
customers holding securities with HSBC.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC continued to place significant emphasis on the growth and development of its insurance business, and increased the range of products offered. Insurance
revenues grew by 20 per cent, aided by new products launched which included the &#145;Five year excel&#146; and the &#145;Three year express wealth&#146; joint life insurance and wealth products. HSBC was Hong Kong&#146;s leading online insurance
provider, offering 12 insurance products. This, coupled with competitive pricing, led to a 91 per cent growth in online insurance revenues. Medical insurance products were enhanced and heavily marketed in response to the growing public demand for
private medical protection to complement new medical reforms being introduced.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Improvements in credit conditions, which benefited from economic growth, higher property prices and lower bankruptices, underpinned a net release of loan
impairment charges and other credit risk provisions of US&#36;11 million in 2005, compared</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">with a net charge of US&#36;56 million in 2004. This was mainly driven by continued improvement in credit quality within the credit card portfolio, and a collective provision release of
US&#36;23 million in respect of prior year impairment allowances on the restructured lending portfolio. The strong housing market also enabled individually assessed allowance releases of US&#36;24 million in the mortgage portfolio. There was also a
release of US&#36;11 million in respect of collective loan impairment allowances, benefiting from the improved economic conditions highlighted above.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses fell by 4 per cent to US&#36;1,305 million. This was largely due to a change in the method by which centrally incurred costs are allocated
to the customer groups. IT development costs rose in support of future growth initiatives, and higher marketing and advertising expenditures were incurred on behalf of organic growth. Staff costs were marginally lower this year. Branch teams were
restructured to dedicate more staff to sales and customer service, and significant improvements were made to the reward structure to ensure retention of high calibre individuals. Overall, headcount in the branch network fell by 4 per cent,
reflecting operating efficiency improvements and higher utilisation of the Group Service Centres.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pre-tax profits in </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking </FONT></B><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">increased by 6 per cent to US&#36;955 million. Increased deposit spreads and a rise in lending and deposit balances led to higher net interest income, though this was partly offset by larger loan
impairment charges and the non-recurrence of loan allowance releases.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
interest income increased by 60 per cent as a result of increased deposit spreads
and growth in both assets and liabilities. The appointment of a number  of experienced
relationship managers to service key accounts, together with the establishment
of core business banking centres, contributed to growth in both deposits and
lending. Interest rate rises led to a 67 basis point increase in deposit
spreads and, together with active management of the deposit base, contributed
to increased customer demand for savings products which resulted in a 6 per cent
increase in deposit balances to US&#36;28.7 billion. The introduction of a pre-approved
 lending programme for SMEs, together with strong demand for credit in the property,
manufacturing, trading and retail sectors, contributed to a 29 per cent increase
in lending balances. However, increased competition reduced lending spreads by
43
basis points. Current account customers rose by 2 per cent to 329,000 and, together
with higher spreads, contributed to an 81 per cent increase in current account
net interest income.</FONT></P>
</div><br clear="all">
<P>&nbsp; </P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">68</FONT></P>

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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The &#145;BusinessVantage&#146; all-in-one account continued to perform strongly, with customers increasing by 23 per cent, which led to income more than doubling in 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income increased by 10 per cent to US&#36;402 million as a result of efforts to encourage cross-sales, which led to an increase in average products
per customer. Investment in HSBC&#146;s insurance business, including the establishment of a new Commercial Banking insurance division in October 2005, delivered a 10 per cent increase in insurance income. Enhanced product offerings and focused
sales efforts in the areas of currency and interest rate management products more than doubled income. Growth in the number of merchant customers following targeted marketing campaigns, together with higher consumer spending, led to a 22 per cent
increase in card income. However, these increases were partly offset by a reduced contribution from investment products, even though sales increased by 20 per cent, reflecting changes in the product mix, as demand for capital protected funds
decreased in the rising interest rate environment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions of US&#36;168 million contrasted with net recoveries in 2004, and included a significant charge
against a client in the manufacturing sector. Releases and recoveries in 2005 were lower, although impaired loans as a proportion of lending balances decreased.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses were 3 per cent higher, principally as a result of staff recruitment to support business development and expansion. This was particularly
true with respect to business with mainland China, where additional resources were focused on increasing cross-sales and insurance income. Expenditure on new marketing campaigns promoted HSBC&#146;s lower-cost delivery channels. These campaigns,
together with additional investment to increase customer access to ATMs and cheque deposit machines, grew the proportion of transactions using low cost channels to 35 per cent from 25 per cent in 2004. This released staff to concentrate on
increasing sales and offering enhanced customer service.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of
US&#36;922 million, 43 per cent lower than in 2004, primarily driven by a decline in net interest income in Global Markets and lower recoveries and releases of loan impairment allowances. In addition, operating expenses increased in line with
initiatives taken to extend the product range in Global Markets and to strengthen</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the Global Investment Banking advisory platform for Asia in Hong Kong.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A 19 per cent decline in total operating income was driven by a 74 per cent fall in balance sheet management and money market revenues due to rising
short-term US and Hong Kong interest rates and flattening yield curves.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Corporate and Institutional Banking, deposit spreads increased in line with higher local interest rates, although this was offset by lending spreads which
fell amidst fierce local competition. In Global Transaction Banking revenues increased, benefiting from the improvement in deposit spreads, together with higher deposit balances as business volumes grew from the upgraded cash management service
delivered through HSBCnet.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fees fell by 19 per cent, driven primarily by a reduction in structured finance revenues. However, a number of significant equity related transactions
were concluded. Fee income from Group Investment Businesses was boosted by sales of investment products and a US&#36;3.7 billion growth in funds under management.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from trading activities rose as new structured product capabilities were added in respect of credit, equities, interest rate and foreign exchange
trading. Higher foreign exchange derivatives revenues reflected an increased focus on sales and execution. These gains were partly offset by a decline in sales of structured product solutions to the personal and commercial businesses, as retail
investors switched to shorter deposit products in the higher interest rate environment. Losses were also incurred on the trading of Asian high-yield bonds, where revenues fell following the downgrading of the automobile sector in the first half of
2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The overall credit environment remained favourable and there was a small net release of loan impairment charges, although this was below levels seen in 2004
when HSBC benefited from corporate restructuring and refinancing in the property, industrial and telecommunications sectors.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A 20 per cent rise in operating expenses was due to the first full-year impact of the investment made in Hong Kong&#146;s Corporate, Investment Banking and
Markets businesses. Employee compensation and benefits rose by 24 per cent, in part driven by an increase in senior relationship managers recruited to extend coverage along industry sector lines. In total, over 90 people were recruited to support
the expansion. Technology and infrastructure costs rose as support and control functions added new</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">69</FONT></P>

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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review</b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">
  (continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">resources and
  improved services to facilitate business expansion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">contributed a pre-tax profit of US&#36;190 million, an
increase of 45 per cent compared with 2004. The benefits of strong growth in client assets, and consequently higher brokerage and trading income, were partly offset by the adverse effect of a flattening yield curve on income from the investment of
surplus liquidity.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
operating income was 29 per cent higher than in 2004. A 25 per cent increase
in fee income reflected higher client assets, as well as the benefits of a  strategy
to increase the level of higher fee generating discretionary managed assets,
which increased by 50 per cent during the year. Trading income increased by 39
per cent, boosted by higher volumes which reflected growth in the customer base,
and
a generally buoyant market. Revenue from bond trading increased by 13 per cent,
and from foreign exchange and sales of structured products by 6 and 21 per cent
respectively. Gains from financial investments of US&#36;16 million were mainly
from the
sale of debt instruments.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Overall, client assets increased by 17 per cent to US&#36;47.3 billion. Net new money inflows of US&#36;5.8 billion were notably strong, with recruitment of
front office staff, the success of last year&#146;s launch of the &#145;HSBC Private Bank&#146; brand, and cross-referrals with the wider Group all contributing to the growth. Marketing, successful product placement and the enhancement of the
related front office teams also aided in the increase of discretionary managed assets, with a near doubling of assets invested in the Strategic Investment Solutions product.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 14 per cent. Costs from front office recruitment, and higher expenditure on marketing in support of the growing customer
base, were partly offset by the non-recurrence of rebranding costs in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, gains on the sale of investments and properties decreased by US&#36;136 million in 2005, following significant sales in 2004. These were partly offset by increased gains on the revaluation of properties of US&#36;70 million. Net
interest income decreased as, from 1 January 2005 under IFRSs, dividends paid on certain intra-group preference shares were reclassified from non-equity minority interests to net interest income; this was partly offset by higher earnings on US
dollar denominated assets following interest rate rises in the US.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">70</FONT></P>

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<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before tax by customer group</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="1%" align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="19" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
      ended 31 December 2005</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="19" align=left><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Inter-</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial
      </FONT></B> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking
      &amp;</font></b></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">segment</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Markets</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">elimination</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong
      Kong</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income/(expense)</FONT></TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,618</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,096</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">607</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(529</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">197</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,064</FONT></B>
    </TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">402</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">431</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,674</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income/(expense)</FONT></TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">excluding
      net interest</font></TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">income</font></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">601</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">140</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(83</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">773</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income/(expense)</FONT></TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">on
      trading activities</font></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(40</FONT></B></TD>
    <TD align=left bgcolor="#cccccc"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(197</FONT></B></TD>
    <TD align=left bgcolor="#cccccc"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(227</FONT></B></TD>
    <TD align=left bgcolor="#cccccc"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      trading income/(expense)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">561</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">140</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(73</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(197</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">546</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income/(expense) from</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">financial
      instruments</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">designated
      at fair value</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(84</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">premiums</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,238</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,334</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">230</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">682</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(238</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">805</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,935</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,576</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,733</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">337</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">223</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(238</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,566</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,016</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(34</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,059</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income before</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>loan
      impairment charges</B></font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>and
      other credit risk</B></font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>provisions</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,919</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,542</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,724</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">337</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">223</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(238</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,507</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">charges/(recoveries)
      and other</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">credit
      risk provisions</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(168</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(146</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,930</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,374</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,731</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">340</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">224</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(238</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,361</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,305</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(419</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(809</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(150</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(422</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">238</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,867</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit/(loss)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,625</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">955</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">922</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(198</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,494</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit/(loss)
      before tax</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,628</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">955</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">922</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(178</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,517</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">before
      tax</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.5</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.6</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.4</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.9</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.9</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.5</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33.3</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27.2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46.9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44.5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">189.0</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38.2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
      balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">customers
      (net)</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,318</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,292</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,712</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,107</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,779</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83,208</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,244</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,625</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">133,005</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,621</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,327</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">222,822</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">105,801</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37,417</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,070</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,216</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">222</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">173,726</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">banks
      (net)<SUP>4</SUP></FONT>&nbsp; </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,164</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>
<div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">
        Trading assets, financial instruments designated at fair  value, and financial
        </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">investments<sup>4</sup></font></div></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63,813</font></b></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,373</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD valign=top>&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
  </TR>
  <TR>
    <TD width="3%" valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
           insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
      party only.</FONT></I></TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excluding
      Hong Kong Government certificates of indebtedness.</FONT></I></TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">These
      assets and liabilities were significant to Corporate, Investment Banking
      and Markets.</FONT></I></TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">71</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p72"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review </b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before
  tax by customer group </font><i><font size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</font></i>
</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="1%" align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="13" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December 2004</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="13" align=left><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inter-</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking
      &amp;</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">elimination</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong
      Kong</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income/(expense)</FONT></TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,015</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">684</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">998</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(144</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,638</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income/(expense)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">786</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">365</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">529</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(52</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,703</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income/(expense)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">476</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">659</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">assets
      backing policy-</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">holders&#146;
      liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">118</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">196</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">314</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,620</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">609</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,247</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">294</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">561</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(470</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">536</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,880</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,946</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,127</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">259</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">557</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(470</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,299</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,400</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(742</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,154</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income before</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loan
      impairment charges and</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
      credit risk provisions</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,480</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,204</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,115</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">259</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">557</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(470</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,145</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges and</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
      credit risk provisions</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(56</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">110</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">220</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,424</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,314</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,279</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">263</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">555</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(470</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,365</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,364</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(406</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(674</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(132</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(452</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">470</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,558</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      profit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,060</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">908</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,605</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,807</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit/(loss) in</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">associates
      and joint ventures</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      before tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,063</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">904</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,603</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">129</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,830</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">before
      tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.9</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.7</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.7</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.7</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39.2</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33.7</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31.9</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51.0</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81.1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35.8</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Selected
      balance sheet data</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers
      (net)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,646</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,883</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,440</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,954</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,901</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,824</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>3</SUP></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,742</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,272</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">129,986</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,490</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,968</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">213,458</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">114,302</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,226</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,903</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,264</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">338</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">178,033</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <div style="margin-left:3%; text-indent:-3%"><font size="2">The
        following assets and liabilities were significant to Corporate, Investment
        Banking and Markets:</font></div>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">banks
      (net)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,515</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left><font size="2">Trading assets, financial instruments
      designated at fair value, and financial </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">investments</font><font size="2">&nbsp;
      </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">59,703</font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,205</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD valign=top>&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
  </TR>
  <TR>
    <TD width="3%" valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
           insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
      party only.</FONT></I></TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excluding
      Hong Kong Government certificates of indebtedness.</FONT></I></TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">72</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p73"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Rest
  of Asia-Pacific (including the Middle East)</font></b></p>
<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before
  tax by customer group and by country</font></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
      Financial Services</FONT></TD>
    <TD width=8% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">377</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=8% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">336</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
      Banking</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">818</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">483</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,
      Investment Banking and Markets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,207</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">942</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private
      Banking</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,574</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,847</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Australia
      and New Zealand</FONT></TD>
    <TD width=8% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=8% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brunei</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">India</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">212</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">178</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Indonesia</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">113</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Japan</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mainland
      China</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">334</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Malaysia</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">214</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Middle
      East (excluding Saudi Arabia)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">481</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">298</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Philippines</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Saudi
      Arabia</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Singapore</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">289</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">272</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
      Korea</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taiwan</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">107</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Thailand</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">264</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">194</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,574</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,847</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">73</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p74"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review</b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">
  (continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest
      of Asia-Pacific (including the Middle East)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,412</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,060</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,340</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,041</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">860</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">494</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income from financial instruments designated at fair value</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on assets backing policyholders&#146; liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial investments</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">335</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">146</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,183</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,890</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(166</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(82</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income before loan impairment charges and other credit risk provisions</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,017</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,808</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges and other credit risk provisions</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(134</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(89</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,883</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,719</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,762</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,087</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,121</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,632</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates and joint ventures</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">453</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="1"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,574</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,847</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size="2"></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit before tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.8</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55.1</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54.8</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year-end
      staff numbers (full-time equivalent)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55,577</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,031</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
      balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers (net)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70,016</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60,663</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks (net)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,559</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,887</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets, financial instruments designated at fair value, and financial investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,348</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,065</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">142,014</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120,530</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,439</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,046</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">89,118</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,613</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><i>Third
      party only.</i></font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Mainland
  China&#146;s</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
  economy grew by 9.9 per cent in 2005. Despite ongoing monetary tightening, total
  urban fixed asset investment growth showed no sign of slowing, though investment
  in steel and real estate sectors moderated. Consumer spending also remained
  strong, with retail sales growing by 13 per cent in 2005. Producer price inflation
  slowed, but still remained above 3 per cent thanks to strong investment demand.
  In July 2005, the People&#146;s Bank of China announced that, with immediate
  effect, the arrangement by which the renminbi (&#145;RMB&#146;) was pegged to
  the US dollar would be replaced with a managed float. Initially, the exchange
  rate was set at US&#36;1 to RMB8.11, equivalent to an appreciation of approximately
  2 per cent. This had little impact on export growth, which remained very strong,
  boosting China&#146;s annual trade surplus from US&#36;32 billion in</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004 to US&#36;102 billion in 2005. Growth in food prices slowed as China's grain production increased 3 per cent in 2005. This lowered consumer price inflation to 1.8 per cent from 3.9
per cent at the end of 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Japan&#146;s</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> economy in 2005 achieved its strongest growth in five years,
and the long process of structural readjustment following the collapse in asset prices was largely completed. In particular, the excess corporate capacity, employment and debt of the past decade was eliminated, and bank impaired loans returned to
historically normal levels. After a downturn which began in mid-2004, exports began to recover vigorously in March 2005, led by strong demand from mainland China. The decline in corporate borrowing ceased, and the end of net corporate debt reduction
freed up cash which drove</FONT></P>
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<P>&nbsp;</P>
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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">stronger growth in private capital investment. The tightening of the labour market boosted employment and led to a sustained rise in real wages for the first time in five years, providing
strong support for consumer spending. The rise in the core consumer price index in November 2005 set the stage for the end of the Bank of Japan&#146;s quantitative easing policy.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Elsewhere in the region, most economies performed impressively in 2005, in particular India&#146;s. The main drivers of growth were exports, demand for
technology, and domestic consumption. Investment demand, by contrast, remained weak. Strong domestic growth and continued firmness in energy prices resulted in an increase in inflationary pressures, especially in Indonesia and Thailand, where fuel
subsidies were lowered or removed. Central banks in both these countries increased rates substantially. Elsewhere, particularly in South Korea and Taiwan, energy prices did not significantly affect headline inflation, and the benign inflationary
environment was maintained with less need for monetary tightening. Most Asian currencies ended the year strongly against the US dollar.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005 was a good year economically for the </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Middle East</FONT></B><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">, where growth was boosted by high oil prices and additional capacity in downstream oil and gas, real estate, transportation and tourism. Long-term growth was reinforced through economic
liberalisation. The result was to encourage private sector investment in both established and new sectors of the region&#146;s economy. Regional interest rates mirrored US dollar rate increases during the year without any noticeable effect on credit
growth, though inflationary pressures arose from the US dollar&#146;s weakness and general economic expansion. GDP growth is estimated by the International Monetary Fund to have been over 6 per cent in Saudi Arabia in 2005. Economies in the region
which are not as dependent on oil also performed well, with the United Arab Emirates, for example, registering strong growth in non-oil sectors such as financial services and tourism.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s operations in the Rest of Asia-Pacific reported a pre-tax profit of US&#36;2,574 million, compared with US&#36;1,847 million in 2004,
representing an increase of 39 per cent. On an underlying basis, pre-tax profits grew by 29 per cent and represented around 12 per cent of HSBC&#146;s equivalent total profit. Strong growth across the majority of countries in the region resulted in
higher revenues across all customer groups.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is on an underlying basis.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported a pre-tax profit of US&#36;377 million,
an increase of 6 per cent compared with 2004, reflecting higher net interest income led by strong asset and deposit growth, increased fee income and higher income from investments in the Middle East and mainland China. Costs in support of business
expansion rose and were broadly in line with revenue growth. Higher loan impairment charges reflected growth in credit card lending and the non-recurrence in 2005 of loan impairment provision releases in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income grew by 25 per cent to US&#36;1,208 million, reflecting strong growth across the majority of countries in the region. </FONT><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">D</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">eposit balances generally grew strongly during 2005. This was due in part to the range of new products launched during the year,
including dual currency, floating rate and higher-yielding time deposits. The number of </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">
account holders rose significantly, with a 40 per cent growth across the region generating US&#36;3.5 billion of additional balances. In mainland China, organic expansion continued, with the opening of ten new branches and sub-branches. The deposit
base grew by 80 per cent, as considerable emphasis was placed on the provision of wealth management services through the HSBC </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier</FONT></I><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif"> account service. Deposit spreads also widened as interest rates rose, contributing to higher net interest income in mainland China, Singapore and India.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the Middle East, a rise of 37 per cent in net interest income was driven by a combination of widening deposit spreads and strong loan growth, partly
offset by lower asset spreads as funding costs increased following interest rate rises.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average mortgage balances increased by 27 per cent to US&#36;16.7 billion. This growth reflected marketing campaigns in India, Malaysia and Singapore
alongside new products introduced in Australia and Korea. Higher sales volumes were also generated by direct sales forces across the region, notably in India, where mortgage balances grew by 43 per cent. The benefits of higher mortgage balances were
partly offset by lower spreads as pricing stayed highly competitive.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The credit card business continued to expand in a number of countries. Credit card spending increased by 33 per cent, contributing to a 42 per cent growth in
average card balances. Other notable developments included promotional campaigns, new product launches and a series of customer acquisition strategies including the exclusive rewards programme, &#145;Home and Away&#146;. At the end of the year, the
number of cards in circulation stood at</FONT></P>
</div><br clear="all">
<P align="right">&nbsp; </P>
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<P> <font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </P>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review </b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3 million, representing an increase of 34 per cent over 2004. In India, the number of cards in circulation exceeded one million for the first time. Higher card balances led to higher
net interest income in Indonesia, India, Taiwan, Malaysia and the Philippines.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income grew by 46 per cent to US&#36;419 million, largely attributable to strong sales of investment and insurance products, and increased account
service fees. Credit card fee incomes rose, driven by the strong growth in cardholder spending. Commissions from sales of unit trusts and funds under management were particularly strong in Singapore, India and Taiwan. Sales of investment products,
comprising unit trusts, bonds and structured notes, grew by 43 per cent to US&#36;6.5 billion, generating a 56 per cent increase in fee income. The launch of over 217 tranches of structured notes and deposit products in 11 countries across the
region achieved total sales of US&#36;952 million. Total funds under management rose by 33 per cent or US&#36;7.2 billion, led by increased marketing activity and the considerable focus placed on wealth management services during the year. HSBC Bank
Malaysia maintained its position as the leading international institutional unit trust agent in the country. Brokerage and custody fees grew, particularly in Australia, where a 13 per cent rise reflected increased stock market activity.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC continued to emphasise the expansion of its insurance business across the region. The number of policies in force increased by 27 per cent and revenues
grew by 16 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions doubled compared with 2004. This was due to the non-recurrence of a release of a general provision
in Malaysia in 2004, and a sharp rise in credit card provisions in Taiwan, reflecting deteriorating credit conditions. Growth in personal unsecured lending and credit cards across the region contributed further to the increased charge.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 29 per cent to US&#36;1,245 million in support of business growth. HSBC spent considerable amounts in the region enhancing
its existing infrastructure in order to benefit fully from the opportunities presented by the Asian growth economies. Staff costs of US&#36;469 million rose by 23 per cent, as employee numbers increased to support business growth and to increase
sales and wealth management activities. Performance-related remuneration costs were also higher as a result of the strong growth in profitability.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Marketing costs rose as major campaigns were run to support product promotions in mortgages,</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit cards, insurance and investment products. Continued emphasis was placed on brand awareness in order to generate additional business and reinforce HSBC&#146;s position as the
world&#146;s local bank across the region, and this further increased costs. Various growth initiatives required investment in technology, and the development of new distribution channels resulted in higher IT costs. Other expenses, including
professional fees and communications costs, rose in support of business expansion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increased contributions from HSBC&#146;s investments in Bank of Communications and Industrial Bank in mainland China, together with record earnings from The
Saudi British Bank, contributed to strong growth in profit from associates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported a pre-tax profit of US&#36;818 million, 45 per
cent higher than that delivered in 2004. The increase was mainly due to higher net interest income as growth in customer numbers and strong credit demand to fund infrastructure investment drove balance sheet growth. Higher contributions from Bank of
Communications and Industrial Bank in China, as well as a strong performance in The Saudi British Bank, produced higher income from associates. Lending balances increased by 16 per cent, exceeded by a 24 per cent rise in deposits.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 33 per cent to US&#36;631 million, reflecting growth in the Middle East, Singapore, mainland China, Indonesia and Taiwan. In
the Middle East, strong regional economies and significant government backed infrastructure and property projects, principally in the United Arab Emirates, contributed to a 37 per cent growth in lending balances and a 42 per cent increase in
customer account balances. Higher trade flows generated a 25 per cent increase in net interest income from trade services, while higher interest rates raised liability spreads by 118 basis points. A new Amanah term investment product was launched in
May 2005, attracting US&#36;120 million of deposits, principally from new customers seeking Shariah-compliant investment opportunities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In mainland China, strong economic growth, expansion of the branch network and the recruitment of additional sales staff resulted in a 39 per cent increase
in lending balances. Deposit balances also benefited from economic growth, increasing by 38 per cent, while deposit spreads widened by 76 basis points following increases in US interest rates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Singapore, interest rate rises prompted increased demand for savings products and</FONT></P>
</div><br clear="all">
<P>&nbsp; </P>
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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">consequently deposit balances grew by 13 per cent, while deposit spreads increased by 13 basis points. Lending balances rose by 27 per cent, following the selective recruitment of more
experienced relationship managers and a reorganisation of customers into key industrial sectors to provide greater focus on identifying service opportunities. Asset spreads decreased by 42 basis points as a result of competitive pressures and market
liquidity.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Taiwan, a loyalty campaign designed to increase deposits, together with higher current account income and an increase in deposit spreads, contributed to
an 80 per cent increase in net interest income. In Mauritius, net interest income doubled as a result of liability balance growth. In India, increased trade contributed to higher trade services net interest income and strong economic growth led to
higher demand for credit. This resulted in lending balances increasing by 72 per cent, while customer acquisition increased average current account balances by 37 per cent. Liability spreads widened by 73 basis points following interest rate rises.
In Indonesia, increased sales efforts and a more focused approach to customer relationship management contributed to an 84 per cent growth in asset balances and a 66 per cent increase in net interest income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income of US&#36;307 million was 15 per cent higher than in 2004. In the Middle East, increased trade flows led to a 17 per cent increase in trade
services income, while current account income increased by 80 per cent, benefiting from the introduction of new cash management capabilities. Short-term IPO loan funding reflecting, in part, robust regional capital market, also contributed to a 40
per cent increase in net fee income. In mainland China, a 31 per cent increase in trade customers and a significant rise in imports led to higher trade services income, while a 49 per cent increase in current account customers and higher lending
fees also contributed to an 8 per cent increase in fee income. Increased lending, current account and trade activities raised net fee income by 30 per cent in Indonesia. A number of sites, including Vietnam and Thailand, also reported strong growth,
driven by the success of HSBC&#146;s strategy of focusing on business opportunities involving international trade.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">There was a net release of loan impairment charges of US&#36;67 million, following net charges in 2004. Credit quality in the Middle East improved. In
mainland China there was a significant reduction in loan impairment charges as higher collective impairment charges were more than offset by the release of allowances against a small number of accounts and the non-recurrence of a significant charge
against a single customer in 2004. In India,</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">strong economic growth led to improved credit quality, while in Malaysia, Singapore and Indonesia, credit quality improved significantly although releases of impairment charges were lower
than in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses were 27 per cent higher than last year, broadly in line with revenue growth. In the Middle East, the recruitment of sales and support
staff substantially increased income, leading to higher incentive payments. In mainland China, revenue growth was driven by branch expansion, increased sales and support staff and higher marketing expenditure. In Malaysia, the direct sales teams
were expanded and business banking units were extended to all branches in support of the bank&#146;s growth strategy, resulting in a 16 per cent increase in costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In India, the recruitment of additional sales staff boosted customer facing staff by 85 per cent in 2005. In South Korea, staff recruitment and heightened
marketing activity supported HSBC&#146;s four recently established commercial banking centres, contributing to an increase in costs. Higher costs throughout the rest of the region largely reflected increases in sales and support staff and
initiatives to support business expansion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increased income from associates reflected strong performance in The Saudi British Bank and gains on the sale of HSBC&#146;s stake in MISR International, an
Egyptian Bank. Income from the bank&#146;s strategic investments in China, Bank of Communications and Industrial Bank, which were acquired in 2004, also increased.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of
US&#36;1,207 million, an increase of 22 per cent compared with 2004. HSBC&#146;s progress in this region was marked by positive revenue trends across most countries, with strong growth being reported in the Middle East, Malaysia, South Korea, India
and mainland China.</FONT></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
    income rose by 25 per cent to US&#36;1,769 million. Higher Corporate and Institutional
    Banking revenues reflected a 53 per cent increase in lending balances in mainland
    China, a result of strong demand for corporate credit, primarily from the
    industrial and technology sector. Deposit balances increased by 36 per cent
    and, together with a 40 basis point rise in deposit spreads, this also contributed
    to the growth in revenues.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s operations in the Middle East reported a 63 per cent rise in customer advances, primarily due to strong demand for corporate credit, driven by
government spending on regional infrastructure</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">77</FONT></P>

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<P> <font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </P>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review </b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">projects.</FONT></p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Global Transaction Banking revenues increased, as payments and cash management benefited from an increase in regional mandates which added to average
balances, together with a widening of deposit spreads, notably in Singapore, India and Thailand.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Global Markets, balance sheet management and money market revenues fell, particularly in Singapore and Japan, due to the effect of rising short-term
interest rates and a flattening of the yield curves.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fees increased by 17 per cent. In Global Transaction Banking, the expansion in business capabilities which took place in the latter part of 2004 drove an
increase in volumes, with marked improvements in Singapore, South Korea and India. Revenues from the custody business increased against the backdrop of rising local stock market indices as investment sentiment in the region improved. Additionally,
securities services in India generated higher business volumes, with assets under custody growing by US&#36;9 billion to US&#36;34 billion. In Singapore, fee income increased by 55 per cent, reflecting an increase in revenues from securities
services activities as HSBC leveraged its relationship strength and product capabilities to attract new business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the Middle East, corporate lending and trade finance activity generated higher customer volumes as regional economies strengthened from an increase in
foreign investment, tourism and higher real estate and oil prices. Global Investment Banking benefited from the resulting demand for cross-border business, with an increase in fees from advisory and project and export finance services.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from trading activities increased, in part due to higher revenues from foreign exchange and structured derivatives driven by enhanced distribution and
expanded product capabilities. In South Korea, volatility in the Korean won against the US dollar encouraged strong customer flows in foreign exchange. In Malaysia, a rise in customer demand, following the move to a managed float for the Malaysian
ringgit, improved trading volumes in foreign exchange. Global Markets in Taiwan generated higher revenues, due to improved sales of structured derivative products. Falling interest rates in the Philippines resulted in favourable price movements on
government bond portfolios. In the Middle East, HSBC&#146;s enhanced capability in structured transactions and greater focus on trading in the regional currencies drove volumes higher in a volatile market.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains from the disposal of the Group&#146;s asset management business in Australia added US&#36;8 million to other operating income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net recoveries on loan impairment charges were marginally lower than in 2004</FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">.</FONT></I></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 21 per cent to US&#36;733 million, broadly in line with the growth in operating income and reflecting higher
performance-related incentives. 2005 bore the first full-year effect of the recruitment in 2004 of over 600 additional staff, of which more than half were in Global Transaction Banking. The upgrade of corporate and support teams across the region
within Corporate and Institutional Banking resulted in some 280 additional people. The cost base was further affected by investment in HSBCnet and other technology costs incurred to support business expansion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from associates included increased contribution from HSBC&#146;s investments in Bank of Communications and Industrial Bank, which were acquired in
2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported a pre-tax profit of US&#36;78 million, an increase
of 32 per cent compared with 2004. Investment in the business over the past two years was reflected in strong growth in client assets and net new money inflows of US&#36;2.3 billion, against a backdrop of intense competition in the region. Net
operating income increased by 17 per cent, predominantly due to higher trading income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income fell by 29 per cent to US&#36;30 million compared with 2004. Balance sheet growth was mainly in Singapore and Japan, where client
deposits increased by 44 and 64 per cent respectively. Lending to customers also grew strongly, with the loan book increasing by some 26 per cent. The net interest income benefits of these were more than offset by lower treasury margins earned in
the rising interest rate environment, and the reclassification under IFRSs from 1 January 2005 of net interest income on certain derivatives to &#145;net trading income&#146;.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income increased by 62 per cent. Strong growth in bond trading and sales of structured products, which increased by 28 and 20 per cent respectively,
was compounded by the reclassification from net interest income mentioned above. Fee income was broadly in line with 2004, with the benefit of growth in client assets largely offset by the non-recurrence of exceptionally high brokerage volumes
driven by the market recovery last year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Client assets increased by 23 per cent to US&#36;13.7 billion. Front office recruitment and marketing campaigns, and inflows from the</FONT></P>
</div><br clear="all">
<P>&nbsp; </P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">78</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p79"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">operations launched in Dubai in 2005 and Malaysia in 2004, boosted asset growth in the region. Net new money of US&#36;2.3 billion was 22 per cent higher than last year, with inflows
strongest in Singapore and Japan.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by only 6 per cent, leading to a 5 percentage point improvement in the cost efficiency ratio. Front office recruitment in most
countries contributed to a small increase in staff costs, and expenditure on marketing and administrative expenses rose to support business growth.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, the Group&#146;s Service Centres continued to expand to support HSBC&#146;s productivity improvements, incurring US&#36;129 million of incremental costs, offset by higher recharges to other customer groups. Higher interest rates
led to increased earnings on centrally held investments. In Thailand, the sale of a residential property led to a gain of US&#36;11 million and in India, litigation provisions raised in 2004 were not repeated.</FONT></P>
</div><br clear="all">
<P align="right">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">79</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p80"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </P>
<p><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial
  Review </b></font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before
  tax by customer group</font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="1%" align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD colspan="19" align=center> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
      ended 31 December 2005</FONT></B></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Inter-</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial
      </FONT></B> </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking
      &amp;</font></b></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">segment</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Markets</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">elimination</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest
      of Asia-Pacific (including the Middle East)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp; </font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,208</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">631</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">614</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(125</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,412</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">419</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">307</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">498</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,340</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income/(expense)</FONT></TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">excluding
      net interest</FONT></TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B>
    </TD>
    <TD width="1%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B>
    </TD>
    <TD width="1%" align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">579</FONT></B>
    </TD>
    <TD width="1%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74</FONT></B>
    </TD>
    <TD width="1%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7</FONT></B></TD>
    <TD width="1%" align=left bgcolor="#cccccc"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD width="1%" align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">753</FONT></B>
    </TD>
    <TD width="1%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income/(expense)</FONT></TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">on
      trading activities</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B></TD>
    <TD align=left bgcolor="#cccccc"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(21</FONT></B></TD>
    <TD align=left bgcolor="#cccccc"> <B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      trading income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">558</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">860</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income from financial</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">instruments
      designated at</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">fair
      value</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">134</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">287</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(84</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">335</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,880</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,042</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,769</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">153</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">423</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(84</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,183</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(157</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(166</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income before</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">loan
      impairment charges</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
      other credit risk</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">provisions</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,723</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,033</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,769</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">153</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">423</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(84</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,017</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges and</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
      credit risk provisions</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(236</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(134</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,487</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,100</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,804</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">421</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(84</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,883</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,245</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(452</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(733</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(77</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(339</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">84</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,762</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">242</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">648</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,071</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,121</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">135</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">170</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">136</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">453</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">377</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">818</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,207</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,574</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">before
      tax</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.8</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.8</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.3</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">72.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43.8</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41.4</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80.1</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55.1</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
      balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif"><b>2</b></FONT></SUP><b>&nbsp;</b>
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers
      (net)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,433</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,694</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,431</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,347</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70,016</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,224</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,570</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76,026</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,359</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,835</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">142,014</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,250</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,612</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,102</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,092</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">89,118</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <div style="margin-left:3%; text-indent:-3%"><font size="2">The
        following assets and liabilities were significant to Corporate, Investment
        Banking and Markets: </font></div>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">banks
      (net)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,352</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <div style="margin-left:3%; text-indent:-3%"><font size="2">Trading
        assets, financial instruments designated at fair value, and financial
        investments</font></div>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,113</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,041</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
      insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I>
    </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
      party only</FONT></I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">.</FONT>
    </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">80</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p81"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=1% align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="13" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December 2004</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inter-</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking
      &amp;</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">elimination</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest
      of Asia-Pacific (including the Middle East)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">948</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">472</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">596</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,060</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">284</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">266</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">421</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,041</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">344</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">494</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">assets
      backing policyholders&#146;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
      investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">157</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">146</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,413</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">830</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,393</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,890</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims<SUP>1</SUP></FONT>&nbsp; </font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(72</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(82</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income before</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loan
      impairment charges and</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
      credit risk provisions</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,341</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">820</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,393</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,808</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges and</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
      credit risk provisions</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(117</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(20</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(89</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,224</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">800</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,440</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">132</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,719</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(949</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(350</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(598</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(72</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(198</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,087</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      profit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">275</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">450</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">842</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,632</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      before tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">336</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">483</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">942</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,847</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of HSBC&#146;s profit</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">before
      tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.6</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.3</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.1</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.8</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost
      efficiency ratio</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70.8</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42.7</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43.0</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55.0</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97.5</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54.8</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Selected
      balance sheet data<SUP>2</SUP></FONT>&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers
      (net)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,886</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,444</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,276</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,960</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60,663</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,577</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,845</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,438</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,549</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,121</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120,530</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,961</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,381</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,620</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,543</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,613</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <div style="margin-left:3%; text-indent:-3%"><font size="2">The
        following assets and liabilities were significant to Corporate, Investment
        Banking and Markets: </font></div>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</FONT></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">banks
      (net)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,119</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <div style="margin-left:3%; text-indent:-3%"><font size="2">Trading
        assets, financial instruments designated at fair value, and financial
        investments</font></div>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</FONT></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,555</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,156</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
      insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I>
    </TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
      party only</FONT></I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">.</FONT>
    </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">81</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p82"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<p><font size="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">North America</FONT></B></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before tax by country within customer group</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD colspan=4 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
<TR valign="top">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services</FONT></B></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,761</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,384</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,853</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,642</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">310</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">157</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">570</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">549</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,064</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">848</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">447</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">417</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">403</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">239</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">161</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">140</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">774</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">966</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">373</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">741</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">154</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">192</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">104</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">104</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(196</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">158</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(201</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12)</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,872</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,070</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,935</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,664</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">855</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">530</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">923</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">774</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">159</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">82</FONT>

</p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p83"></a><p><a href="#contents"><font size="2">Back to Contents</font></a> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit
      before tax</FONT></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=center><hr size="1" noshade></TD>
  <TD align=center><hr size="1" noshade></TD>
  <TD align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North America</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD width="8%" align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,887</FONT></B>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="8%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,993</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,606</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,765</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,013</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">582</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net expense from financial instruments designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">434</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment income from assets backing policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses from financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">602</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">553</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,412</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,444</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(333</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(312</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income before loan impairment charges and other credit risk provisions</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,079</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,132</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,038</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,022</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,041</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,110</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10,217</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,032</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,824</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,078</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of profit/(loss) in associates and joint ventures</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,872</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,070</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</Table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s profit before tax</FONT></TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32.8</FONT></B>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.0</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46.3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year-end staff numbers (full-time equivalent)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75,926</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69,781</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers (net)</FONT></TD>
        <TD width="8%" align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">264,934</FONT></B>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="8%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">248,616</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks (net)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,013</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,179</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets, financial instruments designated at fair value, and financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116,269</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,666</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">463,143</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">371,183</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,126</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,284</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,830</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">132,900</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
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    <td width="3%"><font size="1"> <font face="TimesNewRoman,Times New Roman,Times,serif">1 </font>&nbsp; </font></td>
    <td><font size="2"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
    party only</font></i></font></td>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Despite cooling in the fourth quarter, GDP growth in the <b>US</b> was 3.5 per cent in 2005. Consumer spending grew by a healthy 3.6 per cent in 2005 despite slowing in the fourth quarter
because of the hurricanes, higher energy costs and lower auto sales. Growth in equipment and software investment was robust, rising 11 per cent. Unemployment fell by 0.5 per cent to 4.9 per cent in 2005, with 2 million new jobs created. The Federal
Reserve&#146;s favoured inflation measure, the core personal consumption expenditure deflator, was contained, rising 2.0 per cent in 2005. Headline inflation in 2005 was higher due to increased energy prices, as the full year consumer price index
rose 3.4 per cent. The Federal Reserve raised interest rates eight times during the year, from 2.25 per cent to 4.25 per cent. 10-year bond yields and equity markets rose moderately during 2005 as the US dollar strengthened, ending</FONT></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the year at US&#36;1.18 to the euro compared with US&#36;1.35 at the end of 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Canada&#146;s</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> growth was 2.9 per cent in 2005, as strong employment growth
and, late in the year, rising earnings, boosted consumer spending. The unemployment rate fell to 6.4 per cent, the lowest level since 1976. In the second half of the year, exports rose, boosted by strong global demand. In the energy sector,
investment and profits rose strongly as oil prices soared, with the positive economic impact being most pronounced in Western Canada. Gasoline prices lifted headline inflation to a peak of 3.4 per cent in September, but it fell back sharply and core
inflation was 1.6 per cent by the year-end. Having been kept on hold for much of the year, interest rates were raised by 75 basis points between September and December. The Bank of</FONT></P>
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<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<P><font size="2">
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada has indicated that further increases may be required.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Mexico&#146;s</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> GDP growth was 3.0 per cent compared with 4.2 per cent in
2004, in line with lower external demand from the US. The fiscal accounts for the year showed a reduced deficit of 0.9 per cent, mostly from windfall earnings from high oil prices. As in 2004, high oil receipts and increasing levels of workers&#146;
remittances helped minimise the current account deficit at an estimated less than 1 per cent of GDP. The biggest achievement was the reduction in headline inflation from 5.2 per cent at the end of 2004 to 3.3 per cent in December 2005, with core
inflation finishing the year at 3.1 per cent. HSBC views macroeconomic stability as encouragingly robust ahead of what looks likely to be a keenly contested presidential election in mid-2006.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s operations in North America reported a pre-tax profit of US&#36;6,872 million, compared with US&#36;6,070 million in 2004, representing an
increase of 13 per cent. On an underlying basis, pre-tax profits grew by 12 per cent and represented around 33 per cent of HSBC&#146;s equivalent total profit. In the US, the benefits from strong deposit growth in Personal Financial Services were
partly negated by narrowing spreads on lending in a rising interest rate environment. In Commercial Banking, growth in pre-tax profits was largely driven by lending and deposit balance growth and improved liability interest margins. In Corporate,
Investment Banking and Markets, growth in revenues was offset by investment expenditure to build the required platform and infrastructure for future growth</FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">.</FONT></I></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is on an underlying basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">, including the consumer finance business,
generated a pre-tax profit of US&#36;4,761 million, 8 per cent higher than in 2004. Under IFRSs, from 1 January 2005, HSBC changed the accounting treatment for certain debt issued and related interest rate swaps. This did not change the underlying
economics of the transactions. The resulting revenues of US&#36;618 million in 2004 are excluded from the following commentary. In addition, interest income earned on mortgage balances held on HSBC&#146;s balance sheet pending sale into the US
secondary mortgage market has been reported under trading income. In 2004 this was reported in net interest income. This difference in treatment has also been excluded from the following commentary.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the US, profit before tax rose 28 per cent to US&#36;3,853 million. The rise in profit was largely</FONT></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">driven by widening deposit spreads, strong deposit and customer loan growth and higher fee income, partly offset by lower asset spreads due to higher funding costs. Loan impairment
charges fell, notwithstanding the higher charges due to the combined impacts of Hurricane Katrina and changes in bankruptcy legislation. In Mexico, excluding the transfer of some customers to the Commercial Banking segment due to alignment with
Group standards, pre-tax profits rose. This was driven by strong revenue growth from higher deposit balances and widening spreads, strong loan growth and higher fee income, partly offset by the non-recurrence in 2005 of loan impairment provision
releases in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income grew by 5 per cent to US&#36;12,753 million, largely from increases in the US and Mexico. In the US, net interest income rose by 3 per
cent largely driven by higher deposit balances and widening deposit spreads. Average loan balances grew strongly, in particular from prime and non-prime residential mortgages. With ongoing strong demand for unsecured lending, the credit card,
private label card and personal non-credit card, portfolios continued to grow. The benefits of strong asset growth were largely offset by lower spreads as interest rates rose.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additional resources were focused on the core retail banking business in the US as high priority was given to growing the deposit base. Investment in the
retail branch network continued, to ensure a presence in locations with high growth potential. During the year, 27 new branches were opened, each tailored to meet the needs of the local market. The launch of two new deposit products, HSBC&#146;s
first national savings product, &#145;Online Savings&#146;, and &#145;HSBC </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Premier</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Savings&#146;,
augmented by a 45 per cent rise in new personal account openings, led to a 4 per cent growth in average deposit balances to US&#36;26.7 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Overall, average mortgage balances including US&#36;3.3 billion held for resale were US&#36;112.1 billion, representing a 27 per cent increase. This was due
to the significant expansion of adjustable rate mortgages (&#145;ARMs&#146;) originated during 2004 in the US bank and strong growth within the mortgage services and branch-based consumer lending businesses. These volume benefits were largely offset
by narrowing spreads as yields fell due to changes in product mix and higher funding costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prime mortgages originated in 2005 were largely sold into the large government sponsored mortgage associations, reflecting a strategic decision to focus on
loans originated through the retail</FONT></P>
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<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">channel, and reduce HSBC&#146;s reliance on lower spread business generated by the network of mortgage correspondents. The improvements in retail channel sales were achieved by
capitalising on the HSBC brand, and the newly expanded branch network and customer base. As interest rates rose, demand for ARM products in 2005 declined as customers migrated towards longer-term fixed rate mortgages. ARM-originated loans fell from
67 per cent of all loans originated in 2004 to 30 per cent this year. Spreads narrowed on prime mortgages, largely because of higher funding costs, together with marginally lower yields due to the full year effect of the strong growth of
lower-yielding ARMs originated in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC continued to grow its sub-prime and near-prime mortgage portfolios, primarily within the mortgage services and branch-based consumer lending businesses.
The mortgage services business, which purchases mortgage loans from a network of correspondents, recorded strong average loan growth of 42 per cent to US&#36;39.1 billion, of which US&#36;1.7 billion related to mortgages held for resale. Continued
focus on growing the second lien portfolio, widening the first lien product offering and expanding sources for the purchase of loans from &#145;flow&#146; correspondents contributed further to the increase. Within the branch-based consumer lending
business, average mortgage balances grew by 19 per cent to US&#36;35.7 billion, reflecting a combination of increased marketing activity and higher sales volume of near-prime and ARMs, first introduced in the second half of 2004. In addition, the
consumer lending business purchased US&#36;1.7 billion of largely sub-prime mortgage loans through a portfolio acquisition programme. The benefits of higher sub-prime and near-prime balances were largely offset by lower spreads. Yields fell, due to
the combined effects of strong refinancing activity, significant amounts of older higher-yielding loans maturing, continued product expansion into the near-prime customer segments and competitive pricing pressures. The higher cost of funds due to
rising interest rates also contributed to the decline in spreads.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average loan balances within the consumer finance credit cards business rose by 7 per cent to US&#36;19.8 billion, despite the highly competitive
environment, where overall market growth remained weak. By increasing the level of marketing promotions, HSBC was able to grow organically the HSBC branded prime, Union Privilege and non-prime portfolios. The benefit of higher balances was more than
offset by higher funding costs. Yields, however, improved due to a combination of higher-</FONT></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">yielding sub-prime receivable balances, increased pricing on variable rate products and other re-pricing initiatives.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the retail services cards business, average loan balances grew by 7 per cent to US&#36;15.9 billion. This growth was driven by new loan originations and
the agreement of new merchant relationships with The Neiman Marcus Group Inc, Bon Ton Stores Inc and OfficeMax, which contributed US&#36;506 million of the overall increase. The benefit of higher loan balances was more than offset by lower spreads.
Spreads declined as a large proportion of the loan book, priced at fixed rates, was affected by higher funding costs as interest rates rose. Spreads also narrowed as changes in the product mix reflected strong growth of lower-yielding recreational
vehicle balances and external pricing pressures. Changes in contractual obligations associated with a merchant also had an adverse effect, but this resulted in lower merchant fees payable.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The vehicle finance business reported strong organic growth, with a 14 per cent increase in average loan balances, largely due to increases in the near-prime
portfolio. This growth in balances was mainly driven by a combination of higher new loan originations acquired from the dealer network, in part due to the success of the &#145;employee pricing&#146; incentive programmes introduced by a number of the
large car manufacturers, and strong growth in the consumer direct loan programme. A new strategic alliance helped grow loans further, generating US&#36;234 million of new balances. These volume benefits were largely offset by lower spreads, due to
higher funding costs and lower yields. Yields fell due to product expansion into the near-prime portfolio, coupled with competitive pricing pressures due to excess market capacity.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal non-credit card average loan balances in the consumer finance business grew by 8 per cent to US&#36;16.0 billion, reflecting the success of several
large direct mail campaigns and increased availability of this product in the US market. Improvements in underwriting processes, aided by continued improvements in the US economy, also contributed to the increase. These benefits were partly offset
by lower spreads, due to higher funding costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Mexico, net interest income rose, primarily due to strong deposit and loan growth, coupled with the widening of deposit spreads. In 2005, HSBC in Mexico
widened its competitive funding advantage, maintaining the lowest funding cost in the market. There was strong growth in consumer lending, although asset spreads declined, reflecting a</FONT></P>
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<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<P><font size="2">
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reduction in yields in an increasingly competitive market. Funding costs rose, due to higher average interest rates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
in Mexico continued to lead the market in customer deposit growth, with a 1.5
per cent increase in market share to 15.9 per cent, despite a highly  competitive
market place. This was largely due to the success of the &#145;Tu Cuenta&#146; product,
the only integrated financial services product of its kind offered locally. Since
its launch in February 2005, over 600,000 accounts have been  opened, averaging
some 2,300 new customers per day.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The continued success of HSBC&#146;s competitive fixed rate mortgage product in Mexico, helped by strong demand from first time buyers, led to average
mortgage balances increasing by 93 per cent to US&#36;522 million, and market share reached 10.7 per cent. In Mexico, HSBC continued to be the leader in vehicle finance with a market share of 26.5 per cent. A unique new internet based product
&#145;Venta Directa&#146; was launched during the year, enabling the direct sales of used cars between customers using HSBC&#146;s financing and website as the intermediary. The targeting of new customer segments and more competitive pricing drove
average vehicle finance loans higher by US&#36;228 million to US&#36;796 million, a 40 per cent increase over 2004. Average payroll loan balances more than doubled to US&#36;253 million, reflecting HSBC&#146;s unique position in the market granting
pre-approved personal loans through its ATM network. Average credit card balances were 55 per cent higher, with cards in circulation increasing by 80 per cent to over 1.1 million cards. This was largely driven by cross-selling to the existing
customer base using CRM and the successful launch of the &#145;Tarjeta inmediata&#146; or Instant credit card, which generated 109,000 new cards.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Canada, net interest income grew by 21 per cent, due to growth in average loan and deposit balances, augmented by widening deposit spreads. Branch
expansion in the consumer finance business generated higher average loan balances in real estate secured and unsecured lending. Credit card balances also grew, following the successful launch of a MasterCard programme.</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net fee income grew by 20 per cent to US&#36;3,511 million, driven by strong performances in the US and Mexico. In the US, the 23 per cent increase was mainly from retail and credit card services, the mortgage banking
business and the taxpayer financial services business. Fee income within the consumer finance credit cards business increased by 19 per cent, or US&#36;300
million, largely</FONT></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">because of increased transaction volumes, loan balance growth and improved interchange rates. Greater use of the &#145;intellicheck&#146; product, which enables customers to pay their
credit card balances over the telephone, contributed an additional US&#36;33m of revenues. Revenues from ancillary services rose US&#36;77 million, reflecting higher sales volumes, new product launches and expansion into new customer
segments.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within the US retail services business, fee income rose, mainly from lower merchant partnership payments due to changes in contractual obligations with
certain clients. In part, this reflected lower loan spreads associated with lower merchant payments.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income from the US mortgage-banking business increased. As interest rates gradually rose, refinancing prepayments of mortgages declined, with levels of
loan refinancing activity falling from 50 per cent of total loans originated in 2004 to 44 per cent in 2005. This led to lower amortisation charges and the subsequent release of temporary impairment provisions on mortgage servicing
rights. Furthermore, the value of servicing rights was better protected by an improved economic hedging programme using a combination of derivative financial instruments and investment
securities. A revised fee structure, introduced in the second half of 2004, produced a 6 per cent increase in fee income from deposit-related services in the US Bank.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within the US taxpayer financial services business, fee income grew by 12 per cent, driven by higher average loan balances and the sale of previously
written-off loan balances. HSBC is the sole provider of bank products to H&amp;R Block, the largest retail tax preparation firm in the US, and in September 2005 extended this arrangement by signing a new five-year contract. Since June 2004, HSBC has
retained in-house the clearing business for refund anticipation payments, previously carried out by a third party. This generated additional revenues of US&#36;19 million for HSBC in the US.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC in Mexico reported strong growth in fee income, driven by higher revenues from credit cards, remittances, mortgages and ATM transactions. The increase
in the number of credit cards in circulation contributed to the 85 per cent increase in credit card fee income. Fees from the &#145;Afore&#146; pension funds business continued to perform strongly, with 50 per cent growth and 394,000 new customers.
Fee income from international remittances rose by 55 per cent, partly led by the continued success of &#145;La Efectiva&#146;, HSBC&#146;s electronic remittance card. Monthly transactions exceeded one million, representing a</FONT></P>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 per cent market share and a near seven-fold increase since December 2002. Strong sales of insurance products resulted from increased cross-selling through the branch network and
combining sales with other Personal Financial Services products containing insurance components. Mutual fund balances grew by 58 per cent, partly attributable to the successful launch of new funds targeting different market segments, along with
strong cross-sales among HSBC&#146;s extensive customer base.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income in 2005 was in line with 2004. In the US mortgage banking business revenues increased, largely as a result of more originations and sales
related income, which reflected improved gains on each individual sale and a 41 per cent increase in the volume of originated loans sold. In addition, a higher percentage of ARM loans that previously would have been held on balance sheet were sold
in 2005. This was partly offset by lower gains on Decision One sales in the mortgage services business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The increase in other income was largely due to the US. Losses from sales of properties repossessed after customers default on their mortgage payments, which
are recorded as a reduction in other income, were US&#36;96 million lower than in 2004. This was attributable to improvements in the process by which fair market value is determined at the time of repossession, and to a reduction in the number of
properties falling into repossession as credit quality improved.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions of US&#36;5,086 million were marginally lower than in 2004. In the US, charges were lower
notwithstanding the adverse effect of Hurricane Katrina and higher bankruptcy filings following changes in bankruptcy legislation. Partly offsetting these impacts was the non-recurrence of US&#36;47 million charges from adopting Federal Financial
Institutions Examination Council charge-off policies relating to retail and credit card balances in 2004. Excluding these factors, the lower charge reflected favourable credit conditions in the US. Higher levels of secured lending, continued
targeting of higher credit quality customers and improvements in underwriting contributed to the reduction. In Mexico loan impairment charges rose in line with higher lending volumes and the non-recurrence in 2005 of loan impairment provision
releases in 2004, while underlying credit quality remained stable. In Canada, charges were in line with prior year, as higher charges in the consumer lending business due to loan growth were offset by provision releases in the core bank
business.</FONT></P>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses grew by 6 per cent to US&#36;7,382 million, largely in the US and Mexico. In the US, costs increased by 3 per cent, as staff and marketing
costs rose in the consumer finance business to support revenue growth. Acquisition costs were incurred following the Metris purchase. In the credit cards business, higher marketing spend was incurred on the non-prime portfolios and investment in new
initiatives. Higher marketing expenses were also incurred following changes in contractual obligations associated with the General Motors&#146; co-branded credit card portfolio in July 2004, but these were partly offset by improved income through
lower account origination fees.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the US Bank, costs grew to support business expansion and new branch openings. Brand awareness programmes in the second and fourth quarters increased
marketing costs, and expenditure was incurred on promoting the online savings product. The benefit of these initiatives was reflected in a significant increase in customer awareness of the HSBC brand. Within the retail brokerage business, cost
increases reflected more stringent regulatory requirements.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Mexico, operating expenses grew by 21 per cent, driven by a combination of higher staff, marketing and IT costs. Staff costs grew by 12 per cent,
reflecting increases incurred to improve customer service levels within the branch network and bonus costs in line with increased sales. Marketing costs grew to support the credit cards business, evidenced by the 80 per cent increase in the number
of cards in circulation. IT costs rose as new systems to meet Group standards, such as the WHIRL credit card platform, were rolled out. In Canada, operating expenses grew due to the opening of new branches within the consumer finance business, and
expansion of the mortgage and credit cards businesses.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s pre-tax profits increased by 23 per cent to
US&#36;1,064 million, primarily due to lending growth and improved liability interest spreads.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 23 per cent to US&#36;1,449 million. In the US, deposit growth, particularly among small businesses, contributed to a 20 per
cent increase in net interest income. The recruitment of additional sales and support staff and expansion on both the East and West coasts led to a 15 per cent increase in deposits and a 16 per cent increase in lending balances, with income from
commercial real estate lending increasing by 27 per cent. HSBC achieved particularly strong growth in the SME market and maintained its market leading</FONT></P>
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<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<P><font size="2">
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
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    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">position in small business administration lending in New York state. Following its launch in the first half of 2005, the &#145;Select Investor&#146; product, which offers competitive
tiered interest rates, attracted US&#36;420 million of deposits. &#145;Business Smart&#146;, a product offering free checking and other value offerings to commercial customers, performed strongly following its launch at the end of 2004, attracting
41,000 new customers and balances of over US&#36;1.0 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Canada, net interest income increased by 16 per cent, as higher oil and other natural resource prices led to strong economic growth and low interest rates
increased demand for lending products. Average lending balances increased by 20 per cent, as leasing balances grew by 33 per cent and commercial real estate lending rose by 19 per cent. Average deposit and current account balances increased by 21
per cent and 24 per cent respectively, reflecting the buoyant economy, the launch of HSBCnet in Canada and more brand advertising. Both asset and liability spreads were broadly in line with 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Mexico, the transfer of a number of customers from Personal Financial Services increased both revenues and costs. Net interest income increased by 42 per
cent, due in part to a 22 per cent increase in Commercial Banking customers. Deposit balances grew by 38 per cent as a result of expansion into the SME market, while deposit spreads increased by 76 basis points following interest rate rises. Loan
balances rose by 21 per cent, principally in the services and commerce sectors, though competitive pricing led to a tightening of lending spreads. The &#145;Estimulo&#146; combined loan and overdraft product, which was launched at the end of 2004,
performed strongly, attracting balances of US&#36;155 million.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other income lines, including net fee income, increased by 11 per cent to US&#36;541 million. In Mexico, marketing campaigns, tariff reductions and the
promotion of business internet banking, together with increased customer numbers, contributed to a 31 per cent increase in payment and cash management fees, while card fees increased following the launch of a credit card as part of the
&#145;Estimulo&#146; suite of products. Trade services fee income increased by 63 per cent as a result of customer acquisition and increased cross-sales to existing customers, nearly doubling the bank&#146;s market share in a growing market. In the
US, higher gains on the sale of properties and investments contributed to a 4 per cent increase in other income.</FONT></P>
</div>
<div style="float: right; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges were US&#36;13 million, following net releases in 2004. Significant releases in Canada were more than offset by higher charges,
driven by lending growth, in the US and Mexico. In Canada, improved credit quality led to a US&#36;34 million net release of loan impairment provisions. In the US, credit quality remained high in the favourable economic conditions, with impaired
loans as a proportion of assets decreasing by 49 basis points. In Mexico, growth in the lending portfolio led to a US&#36;49 million increase in loan impairment charges, although underlying credit quality improved.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 13 per cent to US&#36;913 million, driven by increases in the US and Mexico. In the US, expansion in the SME and MME markets
and in the commercial mortgage sector led to a 17 per cent increase in staff numbers. New MME offices were opened in Philadelphia and New Jersey, following the establishment of offices in Los Angeles and San Francisco in 2004. The launch of
&#145;Select Investor&#146; and promotion of &#145;Business Smart&#146; led to higher marketing costs. In Mexico, operating expenses increased by 29 per cent, due to an 11 per cent increase in staff numbers to support business growth, higher
incentive payments reflecting strong income growth, and increased &#145;Estimulo&#146; marketing expenditure.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of
US&#36;774 million, 22 per cent lower than in 2004. The overall increase in revenue was exceeded by higher expenses, which reflected the full year cost of the expanded operations in the US and the continuing investment in a number of specific
initiatives designed to build stronger execution and delivery capabilities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income rose by 12 per cent. In Mexico, net income more than doubled, due to the strong performance in balance sheet management, which
benefited from higher volumes and successful strategic positioning against a rising short-term interest rate environment, with an overall flattening of the yield curve in the first part of 2005. In the latter half of the year, positions were
effectively managed to take advantage of the decline in local rates. In the US and Canada, balance sheet management and money market revenues declined by US&#36;353 million, as rising US dollar short-term interest rates led to further flattening of
the yield curve.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income from the payments and cash management business in the US grew by 65 per cent, principally due to an 82 per cent growth in
balances.</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net fees increased by 25 per cent, primarily due</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">88</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p89"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">to higher volumes in Global Investment Banking, reflecting positive momentum from an extension of the product range, particularly in debt capital markets, where earnings grew by 67 per
cent. Equity capital markets revenue improved from a low base and higher income streams were generated from a regular flow of new deals from asset-backed securities. Global Transaction Banking fees rose, reflecting higher customer volumes in
payments and cash management, particularly in Mexico.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income from trading activities increased, due in part to higher revenues in the US from credit trading, following losses in 2004, and a tightening of credit
spreads. Business lines in which HSBC has invested, such as equities and structured derivatives, also showed strong year-on-year gains. In addition, foreign exchange and derivatives trading was facilitated by the introduction of the Group&#146;s
standard derivatives system in Mexico.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">There was a reduction of US&#36;28 million in the net release of loan impairment allowances, primarily due to the non-recurrence of a number of large
releases. New impairment allowances against corporate clients remained broadly in line with last year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 45 per cent to US&#36;1,511 million. In 2005, the proportionately greater investment in North America compared with other
regions reflected HSBC&#146;s commitment to strengthen global reach by developing its presence in this region. HSBC continued to invest throughout the year in expanding product capabilities, particularly in structured derivatives, equities,
research, mortgage-backed securities and advisory, and the build out of specialist sector teams in the US and Mexico. Nearly half of the incremental cost was attributable to this investment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Staff costs rose by 43 per cent, reflecting the full year of recruitment in the latter part of 2004 and selective hiring in 2005, which resulted in an
increase of 870 staff in Corporate, Investment Banking and Markets in North America.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-staff costs grew correspondingly and included the expense incurred in building critical infrastructure and investment in new technology.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> contributed a pre-tax profit of US&#36;104 million, an
increase of 55 per cent on 2004, driven by growth in client assets and the balance</FONT></P>
</div>
<div style="float: right; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sheet, and the expansion of Wealth and Tax Advisory Services (&#145;WTAS&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 13 per cent. Lending balances rose by over 30 per cent as clients borrowed on a secured basis to make alternative
investments. Mortgage lending also grew, supported by the launch of a &#145;Tailored Mortgage&#146; product during the year. Spreads on current accounts increased by 40 basis points, reflecting the benefit of interest rate increases during the
year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A number of smaller trust accounts were sold in 2005, generating one-off income of US&#36;9 million. This was partly offset by the non-recurrence of gains
from financial investments arising from the sale of seed capital investments in 2004. WTAS expanded its presence in New York, Philadelphia, Los Angeles, San Francisco and Virginia through the recruitment of fee-generating staff, and grew organically
through referrals, contributing to an increase of 15 per cent in fee income.</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Client assets grew by 12 per cent to US&#36;46.2 billion, contributing to the rise in fee and other operating income. US&#36;4.2 billion of net new money reflected client acquisition in the US and in Mexico, following the
launch of Private Banking there in 2004. This was partly offset by the divestment of trust accounts referred to above. The &#145;Strategic Investment Solutions&#146; product, launched in March 2004, was markedly successful in attracting new funds.
Discretionary managed assets invested in this product reached US&#36;0.9 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses of US&#36;334 million were 13 per cent higher than last year. The recruitment of front office staff in Private Banking, and new
fee-generating staff in WTAS, added to the cost base. This was partly offset by headcount savings through restructuring and the sale of the trust account business referred to above.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increased activity at HSBC&#146;s North American technology centre led to an increase in both costs and net operating income in </FONT><B><FONT size=2
face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">, as higher network and systems maintenance costs and development expenditure to meet increased technological
requirements were recharged to other customer groups. Movements in the fair value of own debt and the associated swaps designated at fair value led to a US&#36;401 million increase in total operating income.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">89</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p90"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<p><font size="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss)
    before tax by customer group</font> <font size="2">
  </font>
</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=7 align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year ended 31 December 2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="19" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD height="20" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</font></b></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Inter-</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking &amp;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">segment</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Markets</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">elimination</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North America</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2">  <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    interest income/</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">(expense)</FONT></font></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,753</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,449</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">842</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(115</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(232</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,887</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income/
(expense) .</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,511</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">425</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">626</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">203</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(159</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,606</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    income excluding</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">net interest income</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">160</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">168</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">371</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest
        income/</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">(expense)
    on trading</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">activities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">210</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">225</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(21</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">232</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">642</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2">  <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    trading</font> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">income/
    (expense)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">370</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">393</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">232</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,013</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
              income from financial</font> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">instruments
    designated</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">at
    fair value</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">402</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">434</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses
from</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">financial investments</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">64</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    earned insurance </font>premiums</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">603</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">602</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">285</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">205</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,279</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,170</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,563</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,990</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,186</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">436</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,407</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,170</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,412</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(334</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(333</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
                    operating income </font></b>before
                loan impairment</FONT></B></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">charges and other</FONT><font size="2"> &nbsp;<b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit
    risk provisions</font></b></font></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,229</font></b>   </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,990</font></b>    </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,186</font></b>    </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">436</font></b>      </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,408</font></b>    </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,170</font></b>   </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b>&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>

      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,079</font></b>   </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment
        charges</font><font face="TimesNewRoman,Times New Roman,Times,serif">and
    other credit risk</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;provisions</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,086</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,038</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,143</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,977</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,246</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">438</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,407</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,170</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,041</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,382</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(913</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,511</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(334</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,247</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,170</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10,217</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit/(loss)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,761</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,064</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">735</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">104</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">160</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,824</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
              of profit in associates </font><FONT face="TimesNewRoman,Times New Roman,Times,serif">and
              joint ventures</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit/(loss) before tax</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,761</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,064</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">774</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">104</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,872</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s
profit</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">before tax</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22.7</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.7</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.5</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.8</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32.8</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.8</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45.9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69.1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76.6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88.6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46.3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
                balance sheet</font></b> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2">  <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">customers (net)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">212,058</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,700</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,250</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,926</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">264,934</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">247,928</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,821</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">168,524</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,870</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">463,143</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,401</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,324</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,514</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,590</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,830</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2">  <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
              and advances to</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">banks (net)<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,658</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
              assets,
financial</font> <font face="TimesNewRoman,Times New Roman,Times,serif">instruments
designated at</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">  <font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;fair
              value, and financial investments<SUP>3</SUP></font>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">112,000</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,561</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">These assets and liabilities were significant to Corporate, Investment Banking and Markets.</FONT></I></TD></TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">90</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p91"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=center><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Year
        en</font></font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ded
    31 December 2004</font><font size="2">&nbsp; </font> </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=right><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</font></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=right><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
  <TD align=left><b><font size="2">&nbsp;</font></b></TD>
</TR>
<TR valign="top">
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>   </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inter-</FONT>       </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
</TR>
<TR valign="top">
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>    </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>   </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking &amp;</FONT>        </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>      </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment</FONT>      </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
</TR>
<TR valign="top">
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>      </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</FONT>      </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>      </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>        </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">elimination</FONT>  </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>        </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
</TR>
<TR valign="top">
        <TD align=left><b>
    <FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North America</FONT></b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    interest </font><FONT face="TimesNewRoman,Times New Roman,Times,serif">income/(expense)</FONT></font></TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,915</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,147</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">870</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">166</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(105</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="7%" align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,993</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>
</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income/(expense).</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,885</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">302</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">491</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">176</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(89</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,765</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">221</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">339</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">582</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
    less losses from </font><FONT face="TimesNewRoman,Times New Roman,Times,serif">financial
    investments</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">553</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">553</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">129</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,065</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(986</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,661</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,623</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,917</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">358</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">871</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(986</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,444</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(312</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(312</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net operating income</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">before loan impairment</FONT></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2">  &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">charges
    and other credit risk provisions</font></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,349</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,623</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,917</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">358</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">871</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(986</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,132</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment
charges</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">and
    other credit risk</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,120</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,022</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,229</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,632</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">360</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">870</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(986</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,110</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,845</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(784</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,024</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(292</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,073</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">986</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,032</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating profit/(loss)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,384</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">848</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">981</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(203</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,078</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">  <font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
                of profit/(loss)
in</font> <font face="TimesNewRoman,Times New Roman,Times,serif">associates and
joint </font></font><FONT face="TimesNewRoman,Times New Roman,Times,serif">ventures</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit/(loss) before tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,384</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">848</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">966</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(196</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,070</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s
profit</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">before tax</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.5</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1.0</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.0</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48.3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53.4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81.6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">123.2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Selected balance sheet data<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and
    advances to</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">customers (net)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">191,727</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,850</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,166</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,871</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">248,616</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">228,451</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,407</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">106,713</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,538</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">371,183</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,165</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,167</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,745</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,822</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">132,900</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              following assets and</font> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">liabilities
    were significant</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> &nbsp;&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">to
              Corporate, Investment</font> <font face="TimesNewRoman,Times New Roman,Times,serif">Banking
    and Markets:</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances
to</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">banks (net)</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,817</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
              assets, financial</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">instruments
    designated at</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">  &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">fair
    value, and financial investments</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,700</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,887</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
</TR><TR>
  <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I></TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">91</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p92"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<p><font size="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">South America</FONT></B></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit/(loss) before tax by country within customer group</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD colspan="4" align=center><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
    ended 31 December</font> </TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD colspan="4" align=right><hr size="1" noshade></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services</FONT></B></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">206</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">167</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT></TD>
        <TD align=left bgcolor="#cccccc"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">185</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">147</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">
<B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT></TD>
        <TD align=left bgcolor="#cccccc"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">109</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4)</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">
<B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT></TD>
        <TD align=left bgcolor="#cccccc"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">440</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">406</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">281</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">244</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">
<B><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
</TABLE>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">92</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p93"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<p>
<font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before tax</font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD colspan="3" align=center> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
            ended 31 December</font>      <font size="2">&nbsp;</font>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South America</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,750</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,310</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">459</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">409</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income from financial instruments designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">186</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment income on assets backing policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses from financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">746</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">596</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,859</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,578</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(691</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(459</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income before loan impairment charges and other credit risk provisions</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,168</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,119</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(554</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(267</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,614</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,852</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,967</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,413</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">439</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of profit in associates and joint ventures</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">440</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s profit before tax</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62.1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66.7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year-end staff numbers (full-time equivalent)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,282</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,108</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected balance sheet data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers (net)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,307</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,228</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks (net)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,282</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,624</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets, financial instruments designated at fair value, and financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,579</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,857</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,734</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,368</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,252</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">680</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,545</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,958</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font size="2"><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">1</font></font></td>
    <td><font size="2"> <i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third
    party only.</font></i></font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Brazil</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">, the cyclical slowdown
  which began in late 2004 continued throughout 2005, with full-year GDP growth of 2.3 per cent compared with 4.9 per cent in 2004. This modest performance was the result of tight monetary policy, political uncertainty and the appreciation of the
  Brazilian real. External demand provided support, with exports growing by 23 per cent in 2005 to record levels, helping to create trade and current account surpluses of US&#36;45 billion and US&#36;14 billion respectively, and increasing net
  international reserves by 96 per cent to US&#36;54 billion. The tight monetary policy, with real interest rates among the highest in the world at 10.5 per cent, slowed inflation from 7.6 per cent in 2004 to 5.7 per cent in 2005, in line to achieve
  the Central Bank&#146;s 4.5 per cent inflation target for 2006. Having established its anti-inflationary credentials, the Central Bank cut interest rates by 175 basis points</FONT></P>
</div>
  <div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">between September and the end of 2005 in order to stimulate growth and ease the pressure on the real.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Argentina</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, the recovery from the crisis of 2001 continued in 2005, helped by a favourable external environment and the success of the offer to exchange replacement discount bonds issued in June for defaulted debt. Average GDP growth was
9.1 per cent in 2005. Fiscal performance remained strong, with the public sector posting an overall surplus of approximately 3.3 per cent of GDP. This surplus helped to offset the expansionary effect on money supply growth of the large foreign
exchange interventions of the Central Bank, which continued to pursue a nominal rate policy of near stability against the US dollar despite strong upward pressure on the Argentine peso. This policy was supported by newly introduced controls on
capital inflows. Inflation remained a concern, however, having accelerated to</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">93</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p94"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="2" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">&nbsp;(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.3 per cent in December 2005. Following the example of Brazil, at the end of the year the authorities decided to make an early repayment of Argentina&#146;s US&#36;9.8 billion debt owed
to the International Monetary Fund.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s operations in South America reported a pre-tax profit of US&#36;647 million, compared with US&#36;440 million in 2004, representing an increase
of 47 per cent. On an underlying basis, pre-tax profits grew by 28 per cent and represented around 3 per cent of HSBC&#146;s equivalent total profit. Growth was achieved, in part, as a result of a US&#36;89 million gain on the sale of Brazil&#146;s
property and casualty insurance business. HSBC in Argentina benefited from a strong economic recovery and certain one-off items including the receipt of compensation bonds.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is on an underlying basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal Financial Services</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported a pre-tax profit of US&#36;206 million,
an increase of 76 per cent, partly as a result of gains on the sale of the Brazilian property and casualty insurance business. The remaining increase was driven by strong loan growth in vehicle finance and personal lending, together with record
credit card sales. The cost efficiency ratio improved by 5 percentage points, even though higher income was partly offset by increased costs to support business expansion and develop alternative sales channels. The investment in alternative channels
led to a 15 per cent increase in direct sales volumes to over 3.2 million, with particularly strong growth in personal lending, cards and insurance. Loan impairment charges increased, reflecting lending growth in Brazil and an increase in
delinquency rates in the consumer finance business. In 2005, the reporting of the Brazilian insurance business transferred from &#145;Other&#146; to Personal Financial Services. Profit before tax increased by US&#36;16 million as a result, though
individual account lines showed much larger variances: where appropriate, these are noted below.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income rose by 35 per cent compared with 2004. Consumer demand for credit remained strong, fuelled by lower unemployment across the region and
declining inflation in Brazil. This contributed to significant growth in personal lending, vehicle finance loans and credit cards.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Brazil, HSBC continued to position itself for future growth, investing in infrastructure to ensure the delivery of integrated solutions to customers.
Enhancements to distribution, together with marketing campaigns and promotions, including partnerships with motor finance dealers, drove a 49 per cent rise in vehicle finance loans.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A combination of increased customers and targeted marketing initiatives contributed to 40 per cent growth in personal lending. Personal lending balances also
benefited from the successful launch in the first half of 2005 of pension-linked loans offering attractive rates of interest, with repayments drawn directly from the borrower&#146;s pension income. Balances of pension-linked loans increased to
US&#36;110 million, partly as a result of an agreement to acquire the pension-linked loan production of Banco Schahin, a small local bank.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The cards business continued to expand, due to both the continued strength of consumer expenditure and the development of a private label card with Petrobras
gas stations, launched in 2004. During 2005, HSBC improved its competitive position, issuing over a million credit cards and having over two million in circulation, an increase of 21 per cent. Card utilisation grew and cardholder spending increased,
while average card balances rose by 30 per cent to US&#36;373 million. Credit card spreads increased as HSBC repositioned its card proposition by increasing interest rates to fall broadly in line with the bank&#146;s major competitors.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Argentina, considerable focus was placed on pre-approved sales mailings and developing direct sales channels. Net interest income more than doubled,
driven by a 59 per cent increase in asset balances. The strong demand for credit resulted in personal unsecured lending more than doubling. Credit cards in circulation increased by 25 per cent, following a discount campaign launched in June 2005 and
the launch of a private label card with C&amp;A which contributed to a 53 per cent increase in card balances. Savings and deposit balances increased by 34 per cent, reflecting the improved economic environment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income decreased by 21 per cent, driven by both the inclusion of HSBC&#146;s Brazilian insurance business, previously reported in the
&#145;Other&#146; business segment, and IFRSs related changes to the reporting of effective interest rates, which together led to a 52 per cent fall in fees. These decreases were mitigated by higher current account, credit card and lending fees.
Recruitment of new customers, particularly through the payroll portfolio, led to a 21 per cent rise in HSBC&#146;s current account base which, together with revised tariffs, increased account service fees by 21 per cent. Growth in lending volumes
and the introduction of a new pricing structure contributed to a 36 per cent increase in credit-related fee income. Higher credit card spending and additional performance-driven fees from credit card companies generated a 72 per cent increase in
credit card fee income. In Argentina, net</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">94</FONT></P>

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<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">fee income increased by US&#36;27 million, reflecting a 29 per cent increase in credit card fees and a 29 per cent increase in current account fee income, driven by increased transaction
volumes in a recovering economy.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The sale of HSBC&#146;s Brazilian property and casualty insurance business, HSBC Seguros de Automoveis e Bens Limitada, to HDI Seguros S.A., led to the
recognition of an US&#36;89 million gain, reported in other operating income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions increased to US&#36;515 million, reflecting strong growth in unsecured lending. Credit quality in
Brazil remained stable in the majority of product lines, but there was a 5 per cent increase in impaired loans as a proportion of assets in the consumer finance business. The consumer finance sector experienced increased credit availability, which
led to indebtedness exceeding customers&#146; repayment capacity, increasing delinquencies. However, tightening of credit approval policies and improvements in the credit scoring model led to an improvement in the charge as a proportion of assets in
the fourth quarter. Credit quality in Argentina improved, reflecting generally better economic conditions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses increased by 27 per cent. In Brazil, the acquisition of Valeu Promotora de Vendas and CrediMatone S.A. led to a significant increase in
average staff numbers, though by the end of 2005 staff numbers were 2 per cent lower than at December 2004, following a restructuring of the consumer finance business. The increased average number of full-time employees, the impact of a mandatory
national salary increase and the transfer of the Brazilian insurance business from the &#145;Other&#146; business segment contributed to a 25 per cent increase in Brazilian staff costs. Other expenses grew to support business expansion and the
development of direct sales channels, while transactional taxes increased by 21 per cent, driven by higher operating income. In Argentina, costs were 3 per cent up on 2004 as increased performance-related remuneration and union agreed salary
increases led to higher staff costs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported pre-tax profits of US&#36;185 million, 2 per
cent higher than 2004. In Brazil, pre-tax profits increased by 12 per cent as asset growth drove higher revenues, which were mitigated by increased loan impairment charges and higher costs. In Argentina, pre-tax profits declined by 31 per cent, as
significant loan recoveries were not repeated.</FONT></P>
</div>
<div style="float: right; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income increased by 49 per cent, driven by asset growth. In Brazil, a growing economy and a 30 per cent rise in customer numbers led to
increases in both assets and liabilities. Overdraft balances grew by 41 per cent as both the number and the average size of facilities grew, contributing US&#36;40 million of additional income. Overdraft spreads increased by 3 percentage points as a
result of increases in the rate charged to new borrowers. The continuing success of </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Giro f&aacute;cil</FONT></I><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, a revolving loan and overdraft facility, resulted in a 13 per cent increase in customer numbers which, together with an increase in facility utilisation, resulted in a 77 per cent increase in balances. Invoice financing balances
rose by 30 per cent, benefiting from both increased marketing and higher sales to Losango clients, approximately a third of whom now have a commercial banking relationship with HSBC.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposit balances in Brazil increased by 21 per cent, reflecting initiatives to incentivise staff to prioritise sales of liability products. However,
competitive pressures contributed to a 5 percentage points decrease in spreads on loans and advances to customers, while deposit spreads were 13 basis points lower. In Argentina, deposits from commercial customers increased by 42 per cent,
reflecting the continuing economic recovery, while loans and overdrafts more than doubled and current account balances increased by 38 per cent. HSBC increased its market share in both loans and deposits.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income was 14 per cent lower than 2004, driven by IFRSs changes to accounting for effective interest rates, which reduced fee income by 40 per cent.
Excluding this effect, net fee income increased, due to higher fees from payments and cash management, current accounts, and lending in Brazil. Current account fees increased by 26 per cent, reflecting tariff increases, improved collection
procedures and higher transaction volumes, while lending fees benefited from higher business volumes. In Argentina, the launch of a commercial banking call centre in the first half of 2005 enhanced the customer service proposition. This, together
with the recruitment of additional relationship managers, supported a 14 per cent increase in customer numbers and, as a result, current account fee income increased by 21 per cent. Improvements in the Argentinian economic climate contributed to
increased trade flows which, together with the establishment of a dedicated trade service sales team, led to a 22 per cent increase in trade services income.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges and other credit risk provisions were US&#36;55 million, following a small net release in 2004. In Brazil, asset growth contributed
to a US&#36;47 million increase in charges. Impaired loans</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">95</FONT></P>

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<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D
I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="2" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial
      Review</FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">&nbsp;(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">as a proportion of assets increased by 3 percentage points in the SME portfolio, in line with overall market performance, and MME credit quality also declined slightly. In Argentina, net
recoveries decreased as significant releases from amounts recognised at the time of the sovereign debt default and pesification were not repeated. However, underlying credit quality improved substantially and impaired loans as a percentage of assets
more than halved.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses of US&#36;368 million were 19 per cent higher than in 2004, though the cost efficiency ratio improved by 3 percentage points as income
grew faster than costs. Staff numbers in Brazil increased by 34 per cent following a recruitment drive initiated in the second half of 2004 to support expansion of the SME business. Higher incentive payments, reflecting increased income, and union
agreed pay increases also contributed to an increase in staff costs. New marketing campaigns, including the award winning &#145;30, 60, 90 Dias de Apuros&#146; campaign focusing on invoice financing, increased advertising and marketing costs.
Expenses in Argentina increased by 24 per cent, driven by higher staff costs, reflecting pay rises agreed with local unions, together with a 9 per cent increase in headcount in support of business expansion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate, Investment Banking and Markets </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported a pre-tax profit of
US&#36;146 million, an increase of 12 per cent, driven by higher net interest income in Argentina and a decline in loan impairment charges in Brazil.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income at US&#36;313 million decreased by 7 per cent compared with 2004. In Argentina, a reduction in funding costs in Global Markets was
augmented by the positive impact of an appreciating CER (an inflation-linked index) on holdings of government bonds. Continuing economic growth and improved market confidence stimulated demand for credit, resulting in a 67 per cent growth in
balances. Brazil reported a decrease in balance</FONT></P>
</div>
<div style="float: right; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sheet management and money market revenues as a result of high short-term interest rates and an inverted yield curve.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading activities generated higher income as Global Markets in Brazil benefited from a wider product range and the addition of new delivery capabilities.
This investment and the relatively buoyant local market resulted in higher business volumes, particularly in foreign exchange. In Argentina, Global Markets income rose in line with increased trading activity in response to the sovereign debt
swap.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Brazil, a US&#36;15 million net release of loan impairment charges compared favourably with a net charge in 2004. A recovery in the energy sector was
accompanied by the non-recurrence of allowances raised against two specific corporate accounts in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating expenses of US&#36;138 million were 8 per cent lower than in 2004, primarily due to a reduction in profit share and bonus payments in Brazil. This
was partly offset by higher centralised support function staff costs, driven by pay rises agreed with local unions. In Argentina, operating expenses were broadly in line with 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private Banking</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> reported a pre-tax profit of US&#36;1 million, a modest
increase on 2004. The business was reorganised in 2005, with the transfer of smaller accounts to Personal Financial Services in Brazil, following a resegmentation of the customer base.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Brazil, HSBC&#146;s insurance business was reclassified from </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New
Roman,Times,serif">Other</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> to Personal Financial Services. As a result, operating income decreased by US&#36;106 million and operating expenses were US&#36;90 million lower. In
Argentina, the receipt of compensation bonds and other items related to the pesification in 2002 led to a US&#36;17 million increase in profit before tax.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">96</FONT></P>

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<div style="page-break-before:always"></div><page><a name="p97"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit
      before tax
  by customer group</font> </p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="19" align=center><font size="2"> <b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
    ended 31 Decem</font><font face="TimesNewRoman,Bold,Times New
Roman,Times,serif">ber 2005</font></b> </font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan="19" align=right><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font>
    <hr size="1" noshade>    <font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</font></b></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Inter-</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking &amp;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">segment</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Markets</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">elimination</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South America</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,463</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">475</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(327</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,750</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD width=1% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">329</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income
excluding</font> &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">net interest income</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">99</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    interest expense on</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">trading activities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(17</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">310</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net trading income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">409</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
              income from
financial</font> <font face="TimesNewRoman,Times New Roman,Times,serif">instruments </font><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">designated</font> <font face="TimesNewRoman,Times New Roman,Times,serif">at
fair value</font></font></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">186</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses
from</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">financial investments</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">669</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">746</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">135</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,790</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">621</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">313</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,859</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(632</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(45</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(691</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp;<b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
                operating
income</font> <font face="TimesNewRoman,Bold,Times New Roman,Times,serif">before
loan</font></b>&nbsp;<b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">impairment</font></b> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">charges and other</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit risk provisions</FONT></B></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,158</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">608</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">268</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">119</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,168</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> &nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
              impairment
charges</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">and
other credit </font> <font face="TimesNewRoman,Times New Roman,Times,serif">risk</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(515</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(55</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(554</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,643</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">553</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">283</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,614</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,437</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(368</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(138</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(14</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,967</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">206</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">185</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">145</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">110</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of profit
in associates</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">and joint ventures</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">206</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">185</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">109</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s
profit</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">before tax</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.0</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.7</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.5</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66.6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60.5</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.5</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93.3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62.1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Selected
balance sheet</font></b> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">data</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances
to</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">customers (net)</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,773</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,390</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,143</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,307</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,270</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,240</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,608</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,610</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,734</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,670</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,964</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,589</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">101</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,545</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances
to</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">banks (net)<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,731</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
              assets,
financial</font> <font face="TimesNewRoman,Times New Roman,Times,serif">instruments
designated at</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp;&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">fair
              value, and financial</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,799</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">803</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claims incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I></TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">These assets and liabilities were significant to Corporate, Investment Banking and Markets.</FONT></I></TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">97</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p98"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<p><font size="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
        Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Profit before
tax by customer group </font><i><font size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</font></i> </p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=center><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Year
        en</font></font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ded
    31 December 2004</font><font size="2">&nbsp; </font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</font> </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inter-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking &amp;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">segment</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">elimination</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South America</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest income</FONT></TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">900</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">267</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">127</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,310</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net fee income/(expense)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">341</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(75</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">459</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading income/(expense)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment
income</font> <font face="TimesNewRoman,Times New Roman,Times,serif">on
    assets backing</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">policyholders&#146; liabilities</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains less losses
from</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">financial investments</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net earned insurance</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">premiums</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">148</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">596</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operating income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,457</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">435</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">296</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">389</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,578</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net insurance claims<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(143</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(25</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(47</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(244</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(459</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
              operating income</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">before
    loan impairment</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">charges
    and other </FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; <font face="TimesNewRoman,Times New Roman,Times,serif">credit</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">risk provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,314</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">410</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">249</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">145</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,119</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
              impairment
charges</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">and
other credit risk</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(268</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(267</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net operating income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,046</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">417</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">242</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">146</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,852</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating expenses</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(953</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(258</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(133</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(68</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,413</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating profit</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">439</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of profit
in associates</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and joint ventures</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">440</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share of HSBC&#146;s
profit</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">before tax</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency ratio</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">72.5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53.4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66.7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Selected balance sheet data<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances
to</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">customers (net)</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,521</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,525</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,843</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">337</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,228</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,829</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,438</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,736</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,331</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,368</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,458</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,229</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,150</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">110</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,958</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              following assets
and</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">liabilities
were significant</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">to
Corporate, </FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> &nbsp; <font face="TimesNewRoman,Times New Roman,Times,serif">Investment</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banking and Markets:</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances
to</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">banks (net)</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,779</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
              assets,
financial</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">instruments
designated at</font></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
        <TD align=left><font size="2"> &nbsp; &nbsp;<font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">fair
    value, and financial </font></font><FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,009</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">549</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net insurance claim incurred and movement in policyholders&#146; liabilities.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Third party only.</FONT></I></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">98</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p99"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="Arial,Arial,Helvetica,sans-serif"> <b>Critical
          accounting policies<br>
    </b><i><font size=2>(audited
    information)</font></i></font></td>
  </tr>
  <tr>
    <td><hr noshade align="center" width="100%" size="2">
    </td>
  </tr>
</table>

<P><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
<B>Introduction</B></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
The results of HSBC are sensitive to the accounting policies, assumptions and
estimates that underlie the preparation of its consolidated financial statements.
The accounting policies used in the preparation of the consolidated financial
statements are described in detail in Note 2 on the Financial Statements.</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>When
      preparing the financial statements, it is the directors&#146; responsibility
      under UK company law to select suitable accounting policies and to make
  judgements and estimates that are reasonable and prudent.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      accounting policies that are deemed critical to HSBC&#146;s IFRSs results
      and financial position, in terms of the materiality of the items to which
      the policy is applied, or which involve a high degree of judgement and
  estimation, are discussed below.</FONT></font></P>
<P><FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif"><b>Impairment of loans</b></FONT></P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    accounting policy for losses in relation to the impairment of customer loans
  and advances is described in Note 2(f) on the Financial Statements.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Losses
      in respect of impaired loans are reported in HSBC&#146;s income statement under the caption &#145;Loan impairment charges and other credit risk
provisions&#146;. Any increase in these losses has the effect of reducing HSBC&#146;s
profit for the period by a corresponding amount (while any decrease in impairment
charges or reversal of impairment charges would have the opposite
effect).</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Losses for impaired loans are recognised promptly when there is objective evidence that impairment of a loan or portfolio of loans has occurred. Impairment
losses are calculated on individual loans and on loans assessed collectively. Losses expected from future events, no matter how likely, are not recognised.</FONT></font></P>
<P><FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif"><b>Individually assessed loans</b></FONT></P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At each balance sheet date, HSBC assesses on a case-by-case basis whether there is any objective evidence that a loan is impaired. This procedure is applied to all accounts that are
considered individually significant. In determining impairment losses on these loans, the following factors are considered:</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    aggregate exposure to the customer;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        viability of the customer&#146;s business model and the capacity to
        trade
successfully out of</font></td>
  </tr>
</table>
</div>

<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
    difficulties and generate sufficient cash flow to service  debt obligations;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
    amount and timing of expected receipts and recoveries;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
    likely dividend available on liquidation or bankruptcy;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        extent of other creditors&#146; commitments ranking ahead of, or </font><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>pari
        passu</font></i><font size=2> with,
        HSBC and the likelihood of other creditors continuing to support the
    company;</font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        complexity of determining the aggregate amount and ranking of all creditor
        claims and the extent to which legal and insurance uncertainties are
    evident;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        realisable value of security (or other credit mitigants) and likelihood
        of
successful repossession;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        likely deduction of any costs involved in recovery of amounts
outstanding;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        ability of the borrower to obtain, and make payments in, the currency
        of
the loan if not local currency; and</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">when
    available, the secondary market price of the debt.</font></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Impairment
      losses are calculated by discounting the expected future cash flows of
      a loan at its original effective interest rate, and comparing the resultant
      present value with the loan&#146;s current carrying amount. The carrying
      amount of impaired loans on the balance sheet is reduced through the use
  of an allowance account.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>HSBC&#146;s
      policy requires a review of the level of impairment allowances on individual
      facilities above materiality thresholds at least half-yearly, or more regularly
      when individual circumstances require. This will normally include a review
      of collateral held (including re-confirmation of its enforceability) and
  an assessment of actual and anticipated receipts.</FONT></font></P>
<P><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
<b>Collectively assessed loans</b></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Impairment is assessed on a collective basis in two different scenarios:</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        loans subject to individual assessment, to cover losses which have been
    incurred but have not yet been identified; and</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        homogeneous groups of loans that are not considered individually
significant.</font></td>
  </tr>
</table>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
<p>&nbsp;</p>

</font>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">99</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p100"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C&nbsp; </font></td>
  </tr>
</table>

<p><font size="3" face="Arial,Helvetica,sans-serif"><b>Financial
Review </b></font><font size=2 face="Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
<P><FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif"><b>Incurred but not yet identified impairment</b></FONT></P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Individually assessed loans for which no evidence of loss has been identified are grouped together according to their credit risk characteristics for the purpose of calculating an
estimated collective loss. This arises from impairment at the balance sheet date which will only be individually identified in the future.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The collective impairment allowance is determined after taking into account:</FONT></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> historical
        loss experience in portfolios of similar credit risk characteristics
      (for example, by industry sector, loan grade or product);</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the estimated
        period between impairment</font> <font size=2>occurring
        and the loss being identified and</font> <font size=2>evidenced by the establishment
        of an</font> <font size=2>appropriate
    allowance against the individual</font> <font size=2>loan; and</font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>management&#146;s
        experienced judgement as to</font> <font size=2>whether
        current economic and credit conditions</font> <font size=2>are such that the actual level
        of inherent losses is</font> <font size=2>likely
    to be greater or less than that suggested by</font> <font size=2>historical experience.</font></font></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The period between a loss occurring and its identification is estimated by local management for each identified portfolio.</FONT></font></P>
<P><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
<b>Homogeneous groups of loans</b></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
For homogeneous groups of loans that are not considered individually significant,
two alternative methods are used to calculate allowances on a portfolio basis:</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>When appropriate
        empirical information is</font> <font size=2>available,
        HSBC utilises roll-rate methodology.</font> <font size=2>This
        methodology employs a statistical analysis</font> <font size=2>of
      historical trends of the probability of default</font> <font size=2>and the amount of consequential
      loss, assessed</font> <font size=2>at
      each time period for which the customer&#146;s</font> <font size=2>contractual payments are overdue.
      The</font> <font size=2>estimated
      loss is the difference between the</font> <font size=2>present value of expected future cash flows,</font> <font size=2>discounted
      at the original effective interest rate</font> <font size=2>of the portfolio, and the carrying amount of the</font> <font size=2>portfolio.
      Other historical data and current</font> <font size=2>economic conditions are also evaluated when</font> <font size=2>calculating
      the appropriate level of allowance</font> <font size=2>required to cover inherent loss. In certain highly</font> <font size=2>developed
      markets, sophisticated models also</font> <font size=2>take into account behavioural and account</font> <font size=2>management
    trends as revealed in, for example,</font> <font size=2>bankruptcy and rescheduling statistics.</font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> In other
      cases, when the portfolio size is small</font></td>
  </tr>
</table>
</div>

<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">or when
        information is insufficient or not reliable enough to adopt a roll-rate
        methodology, HSBC adopts a formulaic approach which allocates progressively
        higher percentage loss rates in line with the period of time for which
        a customer&#146;s loan is overdue. Loss rates are calculated from the
      discounted expected future cash flows from a portfolio.</font></td>
  </tr>
</table>
<p><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2> Roll rates, loss rates and the expected timing of future recoveries are regularly benchmarked
    against actual outcomes to ensure they remain appropriate.</font></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The portfolio approach is applied to accounts in the following portfolios:</FONT></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>low value,
        homogeneous small business</font> <font size=2>accounts
    in certain jurisdictions;</font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> residential
      mortgages less than 90 days overdue;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>credit
        cards and other unsecured consumer</font> <font size=2>lending
    products; and</font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">motor vehicle
    financing.</font></td>
  </tr>
</table>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>These portfolio allowances are generally
reassessed monthly and charges for new allowances, or reversals of existing allowances, are calculated for each separately identified portfolio.</FONT></font></p>

<FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif"><b>Loan write-offs</b><BR>
</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans (and the related impairment allowance accounts) are normally written
    off, either partially or in full, when there is no realistic prospect of
    recovery of these amounts and, for collateralised loans, when the proceeds
  from realising the security have been received.</font></P>
<P><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
  <b>Reversals of impairment</b></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    If the amount of an impairment loss decreases in a subsequent period, and
    the decrease can be related objectively to an event occurring after the impairment
    was recognised, the excess is written back by reducing the loan impairment
  allowance account accordingly. The reversal is recognised in the income statement.</font></P>
<P><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
  <b>Assets acquired in exchange for loans</b></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Non-financial assets acquired in exchange for loans in order to achieve an
    orderly realisation are recorded as assets held for sale and reported in &#145;Other
    assets&#146;. The asset acquired is recorded at the lower of its fair value
    (less costs to sell) and the carrying amount of the loan (net of impairment
    allowance) at the date of exchange. No depreciation is provided in respect
    of assets held for sale. Any subsequent write-down of the acquired asset
  to fair</font></P>
</font></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
<p>&nbsp;</p>

</font>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">100</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p101"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<div style="float: left; width: 48%">

<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value less costs to sell is recorded as an impairment loss and included in the income statement. Any subsequent increase in the fair value less costs to sell, to the extent this does not
exceed the cumulative impairment loss, is recognised in the income statement.</FONT></P>
<FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif"><b>Renegotiated loans</b><BR>
</FONT><font size="3">
</font>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retail loans, which are generally subject to collective impairment assessment, whose terms have been renegotiated, are no longer considered to be past due but are treated as new loans
only after the minimum required number of payments under the new arrangements have been received.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Loans subject to individual impairment assessment, whose terms have been renegotiated, are subject to ongoing review to determine whether they remain
impaired or are considered to be past due.</FONT></font></P>
<font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><B>Goodwill impairment</B><BR>
</font><font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    HSBC&#146;s accounting policy for goodwill is described in Note 2(o) on the
  Financial Statements.</font></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Goodwill arises on business combinations,
    including the acquisition of subsidiaries, joint ventures or associates,
    when the cost of acquisition exceeds the fair value of HSBC&#146;s share
    of the identifiable assets, liabilities and contingent liabilities acquired.
    By contrast, if HSBC&#146;s interest in the fair value of the identifiable
    assets, liabilities and contingent liabilities of an acquired business is
    greater than the cost to acquire, the excess is recognised immediately in
  the income statement.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Goodwill is allocated to cash-generating
    units for the purpose of impairment testing, which is undertaken at the lowest
    level at which goodwill is monitored for internal management purposes. Impairment
    testing is performed annually by comparing the present value of the expected
    future cash flows from a business with the carrying amount of its net assets,
  including attributable goodwill.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Significant management judgement
    is involved in two aspects of the process of identifying and evaluating goodwill
  impairment.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>First, the cost of capital assigned
    to an individual cash-generating unit and used to discount its future cash
    flows can have a significant effect on its valuation. The cost of capital
    percentage is generally derived from an appropriate Capital Asset Pricing
    Model, which itself depends on inputs reflecting a number of financial and
    economic variables including the risk-free rate in the country concerned
  and a premium to reflect the inherent risk</FONT></P>
</font></div>

<div style="float: right; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
of the business being evaluated. These variables are established on the basis
of management judgement.</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Second,
      management judgement is required in estimating the future cash flows of
      the cash-generating units. These values are sensitive to the cash flows
      projected for the periods for which detailed forecasts are available, and
      to assumptions regarding the long-term sustainable pattern of cash flows
      thereafter. While the acceptable range within which underlying assumptions
      can be applied is governed
by the requirement for resulting forecasts to be compared with actual performance
      and verifiable economic data in future years, the cash flow forecasts necessarily
      and appropriately reflect management&#146;s view of future business
prospects.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>When
      the analysis demonstrates that the expected cash flows of a cash-generating
      unit have declined and/or that its cost of capital has increased, the effect
      will be to reduce the estimated fair value of the cash-generating unit.
      If this results in an estimated recoverable amount that is lower than the
      carrying value of the cash-generating unit, a charge for impairment of
      goodwill will be recorded,
thereby reducing by a corresponding amount HSBC&#146;s profit for the year. Goodwill
is stated at cost less accumulated impairment losses.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Goodwill
  on acquisitions of joint ventures or associates is included in &#145;Interests in associates and joint ventures&#146;.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>At
      the date of disposal of a business, attributable goodwill is included in
      HSBC&#146;s share of net assets in the calculation of the gain or loss
      on
disposal.</FONT></font></P>
<P><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
<B>Valuation of financial instruments</B></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
HSBC&#146;s accounting policy for valuation of financial instruments is described
in Note 2(d) on the Financial Statements.</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>All financial instruments are recognised initially at fair value. The fair value of a financial instrument on initial recognition is normally the transaction
price, i.e. the fair value of the consideration given or received. In certain circumstances, however, the initial fair value may be based on other observable current market transactions in the same instrument, without modification or repackaging, or
on a valuation technique whose variables include only data from observable markets.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Subsequent to initial recognition, the fair values of financial instruments measured at fair value that are quoted in active markets are based on bid prices
for assets held and offer prices liabilities. When independent prices are not available, fair values are determined by using valuation techniques which</FONT></font></P>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
<p>&nbsp;</p>
</font>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">101</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p102"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C&nbsp; </font></td>
  </tr>
</table>
<p><font size="3" face="Arial,Helvetica,sans-serif"><b>Financial
        Review </b></font><font size=2 face="Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>

<div style="float: left; width:48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">refer to observable market data. These include comparison with similar instruments where market observable prices exist, discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The main factors which management considers when applying a model are:</FONT></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the likelihood
        and expected timing of future</font> <font size=2>cash
        flows on the instrument. These cash flows</font> <font size=2>are usually governed by the
        terms of the</font> <font size=2>instrument,
        although management judgement</font> <font size=2>may be required in situations where the ability</font> <font size=2>of
        the counterparty to service the instrument in</font> <font size=2>accordance with the contractual terms is in</font> <font size=2>doubt;
    and</font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>an appropriate
        discount rate for the instrument.</font> <font size=2>Management
        determines this rate, based on its</font> <font size=2>assessment of the appropriate
        spread of the rate</font> <font size=2>for
    the instrument over the risk-free rate.</font></font></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>When valuing instruments by reference to comparable instruments, management takes into account the maturity, structure and rating of the instrument with
which the position held is being compared.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>When valuing instruments on a model basis using the fair value of underlying components, management considers, in addition, the need for adjustments to take
account of a number of factors such as bid-offer spread, credit profile, servicing costs of portfolios and model uncertainty. These adjustments are based on defined policies which are applied consistently across HSBC.</FONT></font></P>
</div>
<div style="float: right; width: 48%">

<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>When unobservable market data have a significant impact on the valuation of derivatives, the entire initial change in fair value indicated by the valuation
model is not recognised immediately in the income statement but is recognised over the life of the transaction on an appropriate basis or is recognised in the income statement when the inputs become observable, or when the transaction matures or is
closed out.</FONT></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Financial
          instruments measured at fair value through profit or loss comprise
          financial instruments held for trading and financial instruments designated
          at fair value. Changes in their fair value directly impact HSBC&#146;s
      income statement in the period in which they occur.</font> </font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>A
          change in the fair value of a financial instrument which is classified
          as &#145;available-for-sale&#146; is recorded directly in equity until
          the financial instrument is sold, at which point the cumulative change
          in fair value is charged or credited to the income statement. For those
          debt and equity securities classified as available-for-sale, consideration
          as to whether any such assets should be written down to reflect an
          impairment is taken into account in the fair value of the relevant
          security. Any impairment in the value of debt and equity securities
          held as available-for-sale is reported in the income statement and
          hence reduces
HSBC&#146;s operating profit for the period.</font></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      table below summarises HSBC&#146;s trading portfolios by valuation methodology
  at 31 December 2005:</FONT></font></P>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
</font>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td colspan="3" align=center><font face="TimesNewRoman,Times New Roman,Times,serif"> <b><font size=2>Assets</font></b><font size="2">&nbsp;</font> </font></td>
    <td align=left>&nbsp;</td>
    <td colspan=3 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Liabilities</b></font></td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=left><hr noshade size=1>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=left><hr noshade size=1>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Trading</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=left>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Trading</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>securities</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>securities</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>purchased</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Derivatives</b> </font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>sold</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Derivatives</b> </font></td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>%</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=left><div align="right"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>%</b></font><font face="TimesNewRoman,Times New Roman,Times,serif"> </font></div>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>%</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=left><div align="right"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>%</b></font><font face="TimesNewRoman,Times New Roman,Times,serif"> </font></div>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Fair
          value based on:</b></font></td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=left>&nbsp;</td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=left>&nbsp;</td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=left>&nbsp;</td>
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Quoted
        market prices</font></td>
    <td width="9%" align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>87.6</b></font></td>
    <td width="2%" align=right>&nbsp;</td>
    <td width="9%" align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>6.0</b></font></td>
    <td width="2%" align=right>&nbsp;</td>
    <td width="9%" align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>96.0</b></font></td>
    <td width="2%" align=right>&nbsp;</td>
    <td width="9%" align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>5.7</b></font></td>
    <td width="2%" align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Internal
        models with significant observable market parameters<sup>1</sup></font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>12.4</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>91.5</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>4.0</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>92.4</b></font></td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Internal
        models with significant unobservable market parameters</font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>&#150;</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>2.5</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>&#150;</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>1.9</b></font></td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=right>&nbsp;</td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=right>&nbsp;</td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=right>&nbsp;</td>
    <td align=right><hr noshade size=1>
    </td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>100.0</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>100.0</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>100.0</b></font></td>
    <td align=right>&nbsp;</td>
    <td align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>100.0</b></font></td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr noshade size=2>
    </td>
    <td align=right>&nbsp;</td>
    <td align=right><hr noshade size=2>
    </td>
    <td align=right>&nbsp;</td>
    <td align=right><hr noshade size=2>
    </td>
    <td align=right>&nbsp;</td>
    <td align=right><hr noshade size=2>
    </td>
    <td align=right>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><i>Including
    instruments valued on the basis of comparable instruments.</i></font></td>
  </tr>
</table>


<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">102</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p103"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="2" face="Arial,Arial,Helvetica,sans-serif"><b>IFRSs
      compared with US GAAP</b></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>2005</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2004</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Net income</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US GAAP</font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>14,703</B></font></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,506</font></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>15,081</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,918</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Shareholders&#146; equity</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US GAAP</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>93,524</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    90,082</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>92,432</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    85,522</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
HSBC provides details of its net income and shareholders&#146; equity calculated
in accordance with US GAAP, which differs in certain respects from IFRSs. Differences
in net income and
shareholders&#146; equity are explained in Note 47 on the Financial Statements
on pages 375 to 402.</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="2" face="Arial,Arial,Helvetica,sans-serif"> <b>Future
      accounting developments</b></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>

<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
At 31 December 2005, HSBC adopted all IFRSs or interpretations that had been
issued by the International Accounting Standards Board and endorsed by the EU
with the exception of the &#145;Amendments to IAS 39 and IFRS 4 &#150; Financial
Guarantee Contracts&#146;.</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Financial
      guarantee contracts are currently accounted for under IAS 37 &#145;Provisions, Contingent Liabilities and Contingent Assets&#146; as
      contingent liabilities and are disclosed as off-balance sheet items. Under
      the amendment, the issuer of a financial guarantee contract should classify
      such a contract as a financial instrument liability in accordance with
      IAS 39. An exception is made for
issuers of guarantees deemed to be insurance contracts, who, subject to certain
      conditions, may irrevocably elect to account for such contracts as financial
      liabilities under IAS 39 or as insurance contract liabilities under IFRS
  4.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>HSBC is required to adopt this amendment for the year ending 31 December 2006 and is currently assessing the impact this will have both in the Group and the
parent company.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      Financial Accounting Standards Board (&#145;FASB&#146;) has issued the
      following accounting standards, which will become fully effective in future
  financial statements.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In
      May 2005 the FASB issued Statement of Financial Accounting Standards (&#145;SFAS&#146;) No. 154 &#145;Accounting Changes and Error Corrections&#146;. In
many, but not all aspects, SFAS 154 converges with IAS 8 &#145;Accounting Policies, Changes in Accounting Estimates and Errors&#146; in
the accounting and reporting of accounting changes and corrections of errors.
SFAS 154 is effective for fiscal years beginning after 15 December 2005. Adoption
is not expected to have</FONT></font></P>
</div>
<div style="float: right; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
a material impact on the US GAAP information in HSBC&#146;s financial
statements.</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In
      June 2005, the FASB Emerging Issues Task Force (&#145;EITF&#146;) issued EITF 04-5 &#145;Determining whether a General Partner, or General Partners as a
Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights&#146;. EITF 04-5 has a presumption that the general partner in a limited partnership or similar entity, such as a limited liability company, has
control unless the limited partners have substantive kick-out rights or participating rights. The guidance contained in the EITF is effective after 29 June 2005 for all new partnerships formed and for existing partnerships that are modified after
that date, and for all other existing partnerships it is effective no later than the beginning of the first reporting period beginning after 15 December 2005. The impact of EITF 04-5 on the US GAAP information in HSBC&#146;s
financial statements is
not expected to be material.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In
      November 2005 the FASB released FASB Staff Position FSP FAS 115-1 &#145;The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments&#146; which supersedes the guidance provided by EITF 03-1 &#145;The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments&#146;. FSP FAS 115-1 clarifies when an investment is considered impaired, whether
that impairment is other than temporary, and the measurement of an impairment loss. FSP FAS 115-1 is effective for fiscal years beginning after 15 December 2005. Adoption is not expected to have a material impact on the US GAAP information in
HSBC&#146;s financial statements.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>SFAS
      155 &#145;Accounting for Certain Hybrid Financial Instruments&#146; was
      issued by the FASB in February 2006. SFAS 155 permits fair value measurement
      for any hybrid financial instrument that contains an embedded derivative
      that would otherwise require bifurcation. An irrevocable election may be
      made to initially and subsequently measure such a hybrid financial instrument
      at fair value, with changes
in fair value recognised through income. Such election needs to be supported
      by concurrent documentation. SFAS 155 is effective for financial years
      beginning after 15 September 2006, with early adoption permitted. HSBC
      is currently considering the impact that adoption of SFAS 155 will have
  on its US GAAP financial statements.</FONT></font></P>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
<p>&nbsp;</p>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">103</FONT></P>
</font>
<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page>
<p><a name="p104"></a></p>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial <FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Review</FONT> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Average balance sheet and net</FONT></B>
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">interest income</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="2" noshade></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average balances and the related interest are shown for the domestic operations of HSBC&#146;s principal commercial banks by geographic region with all other commercial banking and investment banking balances and transactions included in &#145;Other operations&#146;.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
</div>
<div style="float: right; width: 48%">
<p>&nbsp;</p>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest margin numbers are calculated by dividing net interest income as reported in the income statement by the average interest earning assets from
which interest income is reported within the &#145;Net interest income&#146; line of the income statement. Interest income and interest expense arising from trading assets and liabilities and the funding thereof is included within &#145;Net trading
income&#146; in the income statement.</FONT></P>
</div><br clear="all">
<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Assets</font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>       </TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>&nbsp;&nbsp;  </font></TD>
        <TD align=center><font size="2">&nbsp;</font></TD>
        <TD colspan="5" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT><font size="2">&nbsp;&nbsp;       </font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">income</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Yield</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Yield</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD></TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Short-term funds and loans and advances to banks</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=35% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,875</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">774</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.54</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,173</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">669</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.77</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
                Private Banking</font> <font face="TimesNewRoman,Times New Roman,Times,serif">Holdings
    (Suisse)</font></font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,606</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.33</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,644</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.37</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,829</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">387</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.30</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,007</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">960</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.69</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,061</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">288</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.57</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,328</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">221</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.65</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> <font face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,904</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,058</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.87</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,172</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">538</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.91</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              Hongkong and Shanghai</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
              Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,667</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">351</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.01</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,180</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">198</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.16</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,767</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.77</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,348</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.67</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,262</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.40</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,619</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.79</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,579</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">151</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.22</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,323</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.41</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,115</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.93</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,163</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.08</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,994</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">228</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.62</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,771</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">227</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.02</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,305</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">565</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.10</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,954</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">237</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.13</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">264</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.65</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.20</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,023</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">456</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.04</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,515</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">329</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.69</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">131,251</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,643</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.54</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131,447</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,637</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.77</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trading assets<sup>2</sup></FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,183</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,147</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.93</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,663</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">365</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.67</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">369</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.52</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              Hongkong and Shanghai</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></div></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,209</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">298</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.66</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,487</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.06</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">145</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.76</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,447</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.11</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,177</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.12</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Markets Inc</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,543</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">421</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.65</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,957</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">173</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.86</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">843</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.18</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.26</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,661</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">232</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.10</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,703</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,023</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.57</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 113.</FONT></I></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div align="center"><BR>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">104</FONT><br><BR>

</div>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p105"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Assets </FONT><I><FONT size=2 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>       </TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>     </TD>
        <TD align=center><font size="2">&nbsp;</font></TD>
        <TD colspan="5" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT> </TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Balance</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">income</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Yield</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Yield</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD></TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances to customers</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=35% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">203,568</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,223</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.00</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">170,939</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,521</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.57</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
                Private Banking</font> Holdings (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,795</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.64</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,700</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.45</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41,977</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,710</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.07</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,149</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,892</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.49</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,951</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,086</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.91</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,276</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,055</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.37</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,893</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,323</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.02</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,234</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">882</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.82</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> <font face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43,971</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,061</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.69</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,901</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,406</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.36</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              Hongkong and Shanghai</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46,652</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,659</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.70</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,775</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,781</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.84</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,380</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">325</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.04</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,937</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">278</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.63</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,038</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">635</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.33</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,425</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">418</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.63</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">86,800</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,594</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.44</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,659</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,936</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.76</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">118,215</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,307</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.26</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">114,393</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,146</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.49</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,491</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,439</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.05</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,603</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,099</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.86</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,983</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,210</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.12</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,095</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">878</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.85</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,447</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,647</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35.54</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,726</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,527</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.31</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">914</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">122</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.35</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">903</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.18</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,203</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,352</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.97</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,713</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,113</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.12</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">679,278</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47,904</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.05</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">597,428</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,148</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.39</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial investments</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35,787</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,297</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.62</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,488</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">824</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.66</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Private Banking</font> Holdings (Suisse)</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,725</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">299</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.43</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,828</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">303</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.80</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,482</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">143</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.19</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,957</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">240</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.45</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,445</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">815</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.48</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,924</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">507</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.42</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              Hongkong and Shanghai</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,508</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">924</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.13</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,798</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">779</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.30</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,100</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">592</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.92</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,902</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">537</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.38</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,182</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.47</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,156</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.46</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,311</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.36</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,104</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.45</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,262</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">864</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.49</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,213</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">884</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.85</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,945</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.60</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,153</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">166</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.00</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,951</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.94</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,814</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.31</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,995</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">583</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.67</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,822</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">395</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.33</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,328</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">324</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.92</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">843</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.18</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">218</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.55</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">169</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.10</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,769</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">881</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.96</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,485</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">564</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.23</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">172,008</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,167</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.17</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160,656</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,471</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.41</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 113.</FONT></I></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">105</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p106"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial <FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Review</FONT> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Assets </FONT><I><FONT size=2 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>
        </TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=center><font size="2">&nbsp;</font></TD>
        <TD colspan="5" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Balance</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">income</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Yield</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Yield</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD></TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other interest-earning assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=35% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,748</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">543</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.68</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,629</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">361</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.18</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
                Private Banking</font> <font face="TimesNewRoman,Times New Roman,Times,serif">Holdings
    (Suisse)</font></font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,831</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">416</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.52</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,611</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">146</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.92</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,811</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">442</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.51</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,533</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.82</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.70</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">813</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.09</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,310</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">443</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.42</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,926</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">316</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.87</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,836</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">200</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.14</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,757</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">179</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.76</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">283</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.83</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">153</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.96</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">371</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.85</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.10</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,444</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.98</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">784</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.32</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,063</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.25</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">651</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.83</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">641</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.81</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">233</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.43</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,186</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.35</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">336</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.49</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">558</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">162</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29.03</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">284</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.68</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.65</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(49,322</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,001</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(46,751</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,040</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,884</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">380</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.25</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,153</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">193</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.96</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total interest-earning assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">275,977</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,837</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.38</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">255,412</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,522</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.90</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
                Private Banking</font> Holdings (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,957</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,082</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.61</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,783</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">653</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.53</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,099</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,682</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.67</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96,310</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,520</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.65</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,553</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,081</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.24</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,342</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,074</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.50</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">64,958</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,447</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.77</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,669</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,614</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.62</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">128,693</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,485</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.49</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">132,007</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,337</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.53</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78,255</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,802</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.86</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69,102</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,796</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.05</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,612</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">423</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.91</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,739</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">361</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.66</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,982</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">808</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.39</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,348</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">485</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.69</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111,085</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,652</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.99</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88,426</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,017</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.54</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124,223</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,595</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.94</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119,197</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,376</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.22</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35,198</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,635</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.65</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,990</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,242</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.28</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,159</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,038</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.64</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,982</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,678</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.84</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,637</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,697</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27.11</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,186</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,231</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.29</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,440</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">154</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.69</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,371</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.53</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,593</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">676</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.05</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,523</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,449</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.41</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">999,421</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,094</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.01</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">976,387</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,472</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Summary</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total interest-margin assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">999,421</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,094</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.01</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">976,387</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,472</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets<sup>2</sup></FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">292,404</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,232</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.47</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial assets designated at fair value<sup>3</sup></FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,247</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">405</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.66</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment provisions</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12,469</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12,958</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-interest-earning assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">207,337</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">285,912</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets and interest income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,940</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,731</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.51</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,249,341</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,472</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.04</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp; </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">106</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p107"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Assets </FONT><I><FONT size=2 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Distribution of average total assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width=17% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30.1</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28.3</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Private Banking Holdings (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations (including consolidation adjustments)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 113.</FONT></I></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">107</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p108"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial <FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Review</FONT> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Total equity and
liabilities</FONT></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT><font size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font> </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT><font size="2">&nbsp;</font>     </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">expense</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">expense</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deposits by banks</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=17% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,673</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,037</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.17</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,950</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">412</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.53</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
              Private Banking</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Holdings
              (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">886</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.26</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,446</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.87</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,935</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">582</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.25</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,162</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">526</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.37</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,876</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.25</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">685</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.04</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              Hongkong and Shanghai</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,430</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.38</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,139</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.24</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,973</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">168</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.38</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,505</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.71</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">238</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.10</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.04</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">888</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.04</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,104</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.08</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,251</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.75</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,833</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.93</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">926</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.67</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">392</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.04</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,051</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.66</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">914</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.25</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,355</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.23</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">914</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.24</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.21</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">140</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.71</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,962</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.33</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,182</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">206</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.84</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,555</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,666</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.58</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76,464</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,539</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.01</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Customer accounts</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">186,996</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,359</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.87</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">169,501</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,986</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.35</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
              Private Banking</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Holdings
              (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,908</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">622</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.12</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,339</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">377</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.17</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,538</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">611</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.49</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,072</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">575</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.61</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51,460</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">874</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.70</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,944</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">290</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.57</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95,496</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,322</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.38</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92,579</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">392</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.42</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48,997</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,293</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.64</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,625</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">891</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.09</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,123</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">157</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.56</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,744</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">151</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.63</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,696</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">207</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.38</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,978</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.00</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,795</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,385</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.28</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,813</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">680</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.29</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,635</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">475</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,191</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">351</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.93</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,272</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.27</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,157</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">377</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.38</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,790</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,859</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.23</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,787</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">842</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.55</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">903</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.10</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">898</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.01</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,816</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,273</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.84</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56,494</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">918</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.62</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">589,425</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,653</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.66</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">552,122</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,917</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.80</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 113.</FONT></I></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">108</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p109"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Total equity and
liabilities </FONT><I><FONT size=2 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>         <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=center></TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">expense</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">expense</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial liabilities designated at fair value &#150;</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">own debt issued</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=17% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,928</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">496</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.56</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee"></TD>
        <TD width=6% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,919</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.52</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,469</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">96</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.54</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,146</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,098</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.90</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">288</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.94</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,750</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,037</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.09</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp; </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp; </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt securities in issue</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,620</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,817</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.35</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,320</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,103</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.19</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,271</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">314</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,250</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">434</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.67</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,330</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.31</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,524</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">163</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.63</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,523</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.48</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,266</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.37</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,192</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">437</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.90</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,523</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">315</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.83</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,313</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">229</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.31</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">572</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.80</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">261</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.07</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,537</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,073</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,125</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">376</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.38</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75,913</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,399</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.48</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101,269</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,751</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.72</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,963</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">268</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.37</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,994</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">165</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.75</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,585</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">285</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.22</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,566</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.76</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">401</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.71</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">360</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.06</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14.29</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.37</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,834</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">90</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.32</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,136</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.29</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">176,079</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,775</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.42</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">204,671</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,136</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.00</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other interest-bearing liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,924</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">547</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.29</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,504</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">870</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.85</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
              Private Banking</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Holdings
              (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,247</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">130</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.06</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,505</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.52</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,154</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">220</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.55</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,117</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">601</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.99</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,299</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">361</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.81</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,298</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">258</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.00</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,228</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.93</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,161</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.89</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
              Hongkong and Shanghai</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Banking
    Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,981</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.17</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,495</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.63</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,725</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">460</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.35</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,972</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">228</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.76</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">137</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.92</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">195</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.54</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">767</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.00</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">407</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.91</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,287</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,332</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.02</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,618</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">324</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.57</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">856</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.40</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">938</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.13</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Markets Inc</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,718</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.56</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,652</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">460</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.64</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,258</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.38</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">195</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.69</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,264</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">86</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.80</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">565</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.32</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.43</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.94</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(62,593</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,958</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(64,040</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,301</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,287</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">629</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.08</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,901</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,779</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.88</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see on page 113.</FONT></I></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">109</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p110"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b>Financial <FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Review</FONT> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Total equity and
liabilities </FONT><I><FONT size=2 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT>         <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=center></TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">expense</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">expense</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total interest-bearing liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD width="15%" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">278,131</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,087</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.27</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">253,275</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,371</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.52</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> HSBC
              Private Banking Holdings (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,041</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">772</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.08</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,290</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">442</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.08</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">71,115</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,732</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.44</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,601</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,136</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.65</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,667</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">470</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.42</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,152</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">421</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.16</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56,087</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,024</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.83</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54,056</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">357</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.66</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
                Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">105,907</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,659</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.57</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117,404</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,038</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.88</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">

      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font> </TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai</font> Banking Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,218</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,236</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.01</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64,415</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,443</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.24</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,070</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.57</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,298</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">163</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.59</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,351</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">289</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.79</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,489</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.38</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">105,339</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,088</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.88</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,389</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,454</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.81</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116,164</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,933</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.25</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">112,973</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,964</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.62</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,380</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">789</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.51</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,516</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">544</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.13</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Markets Inc</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,718</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.56</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,563</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">701</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.45</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,165</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">573</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.78</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,832</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">574</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.63</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,810</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,137</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14.43</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,626</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,010</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.24</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,056</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.88</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,453</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.17</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(17,224</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,373</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,174</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(396</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">907,995</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,760</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.17</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">879,158</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,371</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.20</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Summary</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total interest-margin liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">907,995</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,760</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.17</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">879,158</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,371</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.20</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading liabilities</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211,059</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,024</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.38</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Financial liabilities
designated at fair value (excluding own debt issued)</FONT></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,787</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-interest-bearing current accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,509</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56,043</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity and other non-interest-bearing liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">307,590</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">314,140</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity and liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,940</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,784</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.25</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,249,341</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,371</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.55</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Net interest margin</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width=17% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.08</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.41</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Private Banking Holdings (Suisse)</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.03</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.82</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.30</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.44</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.79</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.99</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.19</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.08</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.74</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.00</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.96</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.80</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.56</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.46</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.69</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.31</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.90</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.97</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.74</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.40</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.41</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.65</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.82</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.44</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.29</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.87</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.18</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other operations<SUP>7</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.03</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.14</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.19</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">For footnotes, see page 113.</FONT></I></TD>
        <TD align=left><hr size="2" noshade></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">110</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p111"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Analysis
    of changes in net interest income</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
    table allocates changes in net interest income between volume and rate for
2005 compared with 2004. Changes due to a combination of volume</FONT></p>
</div>
<div style="float: right; width: 48%">

<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and rate, and
    the effect of reclassifying items on the adoption of IAS 32 and IAS 39 at
1 January 2005, are allocated to rate.</FONT></p>
</div><br clear="all">



<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Interest
    income</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>2005
    compared with 2004</B></font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Increase/(decrease)</B></font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Volume</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rate</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Short-term funds and loans and advances to banks</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width=16% align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">774</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(64</FONT></B></TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169</FONT></B></TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">669</font></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Banking Holdings (Suisse)</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">387</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(339</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(234</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">960</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">288</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">221</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Corporation</font></div></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,058</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">167</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">353</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">538</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">351</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">99</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">198</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">151</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">228</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(47</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">227</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Brazilian operations<SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">565</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">164</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">164</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">237</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">456</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(76</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">203</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">329</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,643</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,011</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,637</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trading assets</FONT></B><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,023</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances to customers</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,223</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,817</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">885</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,521</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Banking Holdings (Suisse)</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,710</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(174</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,892</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,086</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(46</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,055</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,323</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">394</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">882</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,061</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">585</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,406</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,659</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">478</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">400</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,781</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">325</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">278</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">635</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">147</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">418</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,594</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,197</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,461</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,936</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,307</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">439</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(278</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,146</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,439</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,099</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,210</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">205</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">878</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Brazilian operations<SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,647</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">879</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">241</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,527</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">122</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,352</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(266</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">505</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,113</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47,904</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,230</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,526</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,148</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade></TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left><FONT size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> <I>For
    footnotes, see page 113.</I></font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>

  <P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">111</FONT>
  </p>
    <hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p112"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P>
<FONT size=1 face="Univers,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT>
</P>
<P><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size="2">
    <FONT face="UniversLT55,Arial,Helvetica,sans-serif">Interest income </FONT><I><FONT size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=5 align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>2005
    compared with 2004</B></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=5 align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Increase/(decrease)</B></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Volume</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rate</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial investments</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width="16%" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,297</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">487</FONT></B></TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(14</FONT></B></TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">824</font></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Banking Holdings (Suisse)</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">299</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(59</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">303</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">143</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(85</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">240</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">815</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">247</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">507</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">924</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(99</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">244</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">779</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">592</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(27</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">537</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">864</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(71</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">884</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">166</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">583</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">395</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Brazilian operations<SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">324</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">225</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">881</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">308</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">564</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,167</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">387</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,309</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,471</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deposits by banks</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,037</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">87</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">538</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">412</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Banking Holdings (Suisse)</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">582</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(100</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">156</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">526</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">168</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Brazilian operations<SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(133</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">138</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">206</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,666</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(38</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,165</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,539</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif">
<I>For footnotes, see page 113.</I></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">112</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p113"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Interest expense</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=5 align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>2005
    compared with 2004</B></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=5 align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Increase/(decrease)</B></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD height="20" align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Volume</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rate</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Customer accounts</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width="16%" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,359</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">411</FONT></B></TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">962</FONT></B></TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,986</font></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Banking Holdings (Suisse)</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">622</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">189</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">377</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">611</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">64</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(28</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">575</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">874</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">581</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">290</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,322</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">918</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">392</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,293</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">133</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">269</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">891</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">157</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">151</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">207</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,385</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">602</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">680</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">475</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">351</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(97</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(92</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">377</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Brazilian operations<SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,859</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">728</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">289</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">842</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,273</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(190</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">545</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">918</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,653</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">670</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,066</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,917</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial liabilities designated at fair value &#150; own debt issued</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,037</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt securities in issue</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,817</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">96</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">618</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,103</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">314</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(53</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(67</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">434</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(77</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">163</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD rowspan="2" align=left>&nbsp;</TD>
        <TD rowspan="2" align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD rowspan="2" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right></TD>
        <TD rowspan="2" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(437</FONT></B></TD>
        <TD rowspan="2" align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD rowspan="2" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD rowspan="2" align=right>&nbsp;</TD>
        <TD rowspan="2" align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">437</font></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</font></TD>
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Hongkong and Shanghai Banking Corporation</font></div></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">315</FONT></B></TD>
        <TD align=right></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">229</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,073</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">487</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">210</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">376</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,399</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(689</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,337</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,751</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">268</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">165</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">285</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">113</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Brazilian operations<SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other operations</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">90</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(146</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,775</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(857</FONT></B></TD>
        <TD align=left><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,496</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,136</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>

<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Footnotes to &#145;Average balance sheet and net interest income&#146;</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Brazilian operations comprise HSBC Bank Brasil S.A.-Banco M&uacute;ltiplo and subsidiaries, plus Banco Lloyds TSB S.A. and Losango Promotora de Vendas Limitada.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Interest income on trading assets is reported as &#145;Net trading income&#146; in the consolidated income statement in 2005.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Interest income on financial assets designated at fair value is reported as &#145;Net income from financial instruments designated at fair value&#146; in the consolidated income
statement.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Further analysis is given on page 179.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Further analysis is given on page 180.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Interest expense on financial liabilities designated at fair value is reported as &#145;Net income on financial liabilities designated at fair value&#146; in the consolidated
income statement other than interest on own debt.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes eliminations (see note (iii)).</FONT></I></TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">113</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p114"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P>
<FONT size=1 face="Univers,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT>
</P>
<P><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Notes</FONT></B>
</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">(i)</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Average balances are based on daily averages for the principal areas of HSBC&#146;s banking activities with monthly or less frequent averages used elsewhere.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In 2004 &#145;Loans accounted for on a non-accrual basis&#146; and &#145;Loans on which interest has been accrued but suspended&#146; were included in &#145;Loans and advances
to banks&#146; and &#145;Loans and advances to customers&#146;. Interest income on such loans was included in the consolidated income statement to the extent to which it had been received.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">(iii)</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Balances and transactions with fellow subsidiaries are reported gross in the principal commercial banking and consumer finance entities within &#145;Other interest-earning
assets&#146; and &#145;Other interest-bearing liabilities&#146; as appropriate and the elimination entries are included within &#145;Other operations&#146; in those two categories.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">(iv)</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Other than as noted in (iii) above, &#145;Other operations&#146; comprise the operations of the principal commercial banking and consumer finance entities outside their domestic
markets and all other banking operations.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">(v)</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In 2004 non-equity minority interests were included within shareholders&#146; equity and other non interest-bearing liabilities and the related coupon payments were included
within &#145;Profit attributable to minority interests&#146;.</FONT></I></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">114</FONT></P>

<hr noshade align="center" width="100%" size="2">



<div style="page-break-before:always"></div><page><a name="p115"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Risk management</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="2" noshade></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<I>(Audited IFRS 7 information)</I></font></TD>
</TR>
</TABLE>
<P><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All HSBC&#146;s
    activities involve analysis, evaluation,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">acceptance
    and management of some degree of risk</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">or
    combination of risks. The most important types of risk are credit risk (which
    includes country and cross-border risk), liquidity risk, market risk, residual
    value risk, reputational risk, operational risk and insurance risk. Market
  risk includes foreign exchange, interest rate and equity price risk.</font> </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    risk management policies are designed</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
    identify and analyse these risks, to set appropriate risk limits and controls,
    and to monitor the risks and adherence to limits by means of reliable and
    up-to-date administrative and information systems. HSBC regularly reviews
    its risk management policies and emerging best practice. Individual responsibility
    and accountability, instilled through training, are designed to deliver a
    disciplined, conservative and constructive culture of risk management and
  control.</font></P>
<P>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Group Management Board, under authority delegated by the Board of Directors,
    formulates high level Group risk management policy. A separately constituted
    Risk Management Meeting monitors risk and receives reports which allow it
    to
review the effectiveness of HSBC&#146;s risk management policies.</font></P>
<P>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    management of all risks that are significant</font>&nbsp; <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
    HSBC is discussed below. The insurance businesses manage their own credit,
    liquidity and market risk along with insurance risk, so these risks are discussed
  separately from those relating to the operations&#146; section.</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Credit
      risk management</font></b></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><hr size="2" noshade>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><I>(Audited
      IFRS 7 information)</I></font></TD>
  </TR>
</TABLE>
<P><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit risk
    is the risk of financial loss if a customer or counterparty fails to meet
    an obligation under a contract. It arises principally from lending, trade
    finance, treasury and leasing business. HSBC hasfinance, treasury and leasing
    business. HSBC has standards, policies and procedures dedicated to controlling
    and monitoring
risk from all such activities.</font></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within
    Group Head Office, a separate function, Group Credit and Risk, is mandated
    to provide high-level centralised management of credit risk for HSBC worldwide.
    Group Credit and Risk is headed by a Group General Manager who reports to
  the Group Chief Executive. Its responsibilities include the following:</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="3%">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Formulating
        credit policies. These are embodied</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
        the HSBC standards with which all HSBC&#146;s</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">

<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">operating
        companies are required to comply in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">formulating
        and recording in dedicated manuals</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">their own more detailed credit
        policies and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">procedures.
        All such credit policies and</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">procedures are monitored by Group Credit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
    Risk.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Establishing
        and maintaining HSBC&#146;s large</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
        exposure policy. This policy delineates</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s maximum exposures
        to individual</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers,
        customer groups and other risk</FONT> <FONT size=2 face="TimesNewRoman,Times
New Roman,Times,serif">concentrations in an approach which is designed</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
        be more conservative than internationally</FONT> <FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">accepted regulatory standards. All HSBC&#146;s</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">operating
    companies are required to comply</FONT> <FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">with the policy.</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Issuing
        lending
guidelines to HSBC&#146;s operating</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">companies
on the Group&#146;s attitude towards, and</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">appetite for, lending
to, </font><i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">inter
alia</font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">,
specified</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">market
sectors and industries. Each HSBC</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">operating
company and major business unit is</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">required to base its
own lending guidelines on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
standards, regularly update them and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">disseminate them to all credit
and lending</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">executives.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undertaking
        an independent review and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">objective
        assessment of risk. Group Credit and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Risk assesses all commercial
        non-bank credit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">facilities
        originated by HSBC&#146;s operating</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">companies in excess of designated
        limits, prior</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
        the facilities being committed to customers.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
        companies may not confirm credit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">approval
        without this concurrence. Renewals</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and reviews of commercial non-bank
        facilities</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">over
    designated levels are subject to the same</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">process.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Controlling
        exposures to banks and other</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
        institutions. HSBC&#146;s credit and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">settlement risk limits to counterparties
        in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">finance
        and government sectors are approved</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">centrally to optimise the use
        of credit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">availability
        and avoid excessive risk</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">concentration. A dedicated unit within Group</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
        and Risk controls and manages these</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">exposures globally using centralised systems</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
    automated processes.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Managing
        exposures to debt securities by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">establishing
        controls in respect of the liquidity</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">of securities held for trading
        and setting issuer</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">limits
        for securities held-to-maturity. Separate</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">portfolio limits are established
        for asset-backed</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">securities
    and similar instruments.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Controlling
        cross-border exposures. A dedicated</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">unit
    within Group Credit and Risk uses</font></td>
  </tr>
</table>
</div><br clear="all">
<p>&nbsp;</p>
<div align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">115</FONT></div>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p116"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial Review<font size="2"> </font></FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">centralised
        systems to manage country and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">cross-border
        risk through the imposition of</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">country limits with sub-limits
        by maturity and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">type
        of business. Country limits are determined</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">by taking into account economic
        and political</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">factors,
        and applying local business knowledge.</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Transactions with countries
        deemed to be high</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk
    are considered on a case-by-case basis.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Controlling
        exposures to selected industries.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group
        Credit and Risk controls HSBC&#146;s</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">exposures to the shipping, aviation
        and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">automobile
        sectors, and closely monitors</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">exposures to other industries such as insurance</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        real estate. When necessary, restrictions are</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">imposed on new business, or exposures in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    operating companies are capped.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maintaining
        and developing HSBC&#146;s risk</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ratings
        in order to categorise exposures</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">meaningfully and facilitate
        focused management</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        the attendant risks. Historically, HSBC&#146;s risk</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">rating framework has consisted
        of a minimum of</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">seven
        grades, taking into account the risk of</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">default and the availability
        of security or other</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
        risk mitigation. A more sophisticated risk-</FONT><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">rating framework for banks and
        other customers,</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">based
        on default probability and loss estimates</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">and comprising up to 22 categories,
        is being</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">progressively
    implemented across the HSBC Group and
        is already operative in most major</FONT> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        units. This new approach will</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">increasingly allow a more granular
        analysis of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk
        and trends. Rating methodology is based</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">upon a wide range of financial
        analytics together</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">with
        market data-based tools which are core</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">inputs to the assessment of
        counterparty risk.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Although
        automated risk-rating processes are</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">increasingly in use, for the
        larger facilities</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ultimate
        responsibility for setting risk grades</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">rests in each case with the
        final approving</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">executive.
        Risk grades are reviewed frequently</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and amendments, where necessary,
        are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">implemented
      promptly.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reviewing
        the performance and effectiveness of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">operating
    companies&#146; credit approval processes. Regular
        reports are provided to Group Credit</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        Risk on the credit quality of local portfolios</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">and corrective action is taken
      where necessary.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reporting
        to certain senior executives on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">aspects
        of the HSBC loan portfolio. These</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">executives, as well as the Group
        Management</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Board,
        the Risk Management Meeting, the</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">Group Audit Committee and the Board of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors
        of HSBC Holdings, receive a variety</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
    regular reports covering:</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="3%">&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk concentrations
    and exposure to industry sectors;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">large customer
    group exposures;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">emerging
    market debt and impairment allowances;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">large impaired
    accounts and impairment allowances;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">specific
        segments of the portfolio: real estate, automobiles, insurance, aviation
    and shipping, as well as ad hoc reviews;</font> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">country
    limits, cross-border exposures and impairment allowances; and</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">causes
        of unexpected
loss and lessons learned.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Managing
        and directing credit-related systems initiatives. HSBC has a centralised
        database of large corporate, sovereign and bank facilities and is constructing
        a database comprising all Group credit assets. A systems-based credit
        application process for bank lending is operational in all jurisdictions
        and an electronic corporate credit application system is deployed in
    all of the Group&#146;s major businesses.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Providing
        advice and guidance to HSBC&#146;s operating companies in order to promote
    best practice throughout the Group on credit-related matters such as:</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">regulatory
    developments;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">implementing
    environmental and social responsibility policies;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk modelling
    and portfolio collective impairment allowances;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">new products;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">training
    courses; and</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit-related
    reporting.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acting
        on behalf of HSBC Holdings as the primary interface for credit-related
        issues with external parties including the Bank of England, the FSA,
        rating agencies, corporate analysts, trade associations and counterparts
    in the world&#146;s major banks and non-bank financial institutions.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td colspan="3">&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Each
        operating company is required to implement credit policies, procedures
        and lending guidelines which conform to HSBC Group standards, with credit
        approval authorities delegated from the Board of Directors of HSBC Holdings
        to the
relevant Chief Executive Officer. In each major</font></td>
    </tr>
</table>
</div>
<br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">116</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p117"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">subsidiary,
    management includes a Chief Credit and Risk Officer who reports to the local
    Chief Executive Officer on credit-related issues. All Chief Credit and Risk
    Officers have a functional reporting line to the Group General Manager, Group
    Credit and Risk. Each operating company is responsible for the quality and
    performance of its credit portfolios and for monitoring and controlling all
    credit risks in its portfolios, including those subject to central approval
    by Group Credit and Risk. This includes managing its own risk concentrations
    by market sector, geography and product. Local systems are in place throughout
    the Group to enable operating companies to control and monitor exposures
  by customer and counterparty.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Special attention is paid to problem loans. When appropriate, specialist units are established by HSBC&#146;s operating companies to provide customers with
support in order to help them avoid default wherever possible, thereby maximising recoveries for HSBC.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Regular audits of operating companies&#146; credit processes are undertaken by HSBC&#146;s Internal Audit function. Audits include a consideration of the
completeness and adequacy of credit manuals and lending guidelines; an in-depth analysis of a representative sample of accounts; an overview of homogeneous portfolios of similar assets to assess the quality of the loan book and other exposures; and
a check that Group standards and policies are adhered to in the extension and management of credit facilities. Individual accounts are reviewed to ensure that risk grades are appropriate, that credit and collection procedures have been properly
followed and that, when an account or portfolio evidences deterioration, impairment allowances are raised in accordance with the Group&#146;s established processes. Internal Audit discuss with management risk ratings they consider to be
inappropriate, and their subsequent recommendations for revised grades must then be assigned to the facilities concerned.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Collateral and other credit enhancements</FONT></B></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Loans and advances<font size="1"> </font></FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><I>(Audited
IFRS 7 information)</I></font></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When appropriate, operating companies are required to implement guidelines on the acceptability of specific classes of collateral or credit risk mitigation, and determine valuation
parameters. Such parameters are expected to be conservative, reviewed regularly and supported by empirical evidence. Security structures and legal covenants are subject to regular review to ensure that they continue to fulfil their intended purpose
and remain in line with local market practice. While collateral is an</FONT></P></div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">important mitigant to credit risk, it is HSBC&#146;s policy to establish that loans are within the customer&#146;s capacity to repay rather than to rely excessively on security. In
certain cases, depending on the customer&#146;s standing and the type of product, facilities may be unsecured. The principal collateral types are as follows:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in the
        personal sector, mortgages over</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">residential
      properties;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in the
        commercial and industrial sector, charges</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">over
      business assets such as premises, stock and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">debtors;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in the
        commercial real estate sector, charges</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">over
      the properties being financed; and</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in the
        financial sector, charges over financial</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">instruments
      such as debt securities and equities</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">in support of trading facilities.</font></td>
  </tr>
</table>

<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Other securities </FONT><I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt securities, treasury and other eligible bills are
generally unsecured with the exception of asset backed securities and similar instruments, which are secured by pools of financial assets.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The ISDA Master Agreement is HSBC&#146;s preferred agreement for documenting derivatives activity. It provides the contractual framework within which dealing
activity across a full range of over-the-counter (&#145;OTC&#146;), products is conducted and contractually binds both parties to apply close-out netting across all outstanding transactions covered by an agreement, if either party defaults or
following other pre-agreed termination events. It is common for the parties to execute a Credit Support Annex (&#145;CSA&#146;) in conjunction with the ISDA Master Agreement, a practice HSBC encourages. Under a CSA, collateral is passed between the
parties to mitigate the market contingent counterparty risk inherent in the outstanding positions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding receipt in cash,
securities or equities. Daily Settlement Limits are established for each counterparty, to cover the aggregate of all settlement risk arising from HSBC&#146;s investment banking and markets transactions on any single day. Settlement risk on many
transactions, particularly those involving securities and equities, is substantially mitigated when effected via Assured Payment Systems, or on a delivery versus payment basis.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">117</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p118"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial Review<font size="2"> </font></FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan="2">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Maximum
    exposure to credit risk</font></b></TD>
</TR>
<TR valign="bottom">
  <TD colspan="2">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Maximum
      exposure
to credit risk before collateral held or other credit enhancements</font></TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maximum exposure</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD colspan="2" align=right><font size="2">&nbsp;</font>        <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<I>(Audited IFRS 7 information)</I>
          </font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in course of collection from other banks</FONT></TD>
        <TD width="10%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,300</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">212,705</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury
    and other eligible bills</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,746</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt
    securities</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">117,659</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans
      and advances</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82,300</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial assets designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,513</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury
      and other eligible bills</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt
    securities</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,705</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans
      and advances</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">755</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,928</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174,822</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury
    and other eligible bills</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,041</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt
      securities</font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">149,781</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=left></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Endorsements
    and acceptances</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,973</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,981</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial guarantees and other credit related contingent liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66,805</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan commitments and other credit related commitments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,216</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,443,210</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width:48%">
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Concentration
  of exposure</font></b></p>
<p><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Loans and advances</font></p>
<p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances
  are well spread across both industry sectors and jurisdictions.</font></p>
<p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
    constant exchange rates, and excluding the US&#36;44 billion grossing adjustment
    to meet IFRSs requirements, gross loans and advances to customers (excluding
    the finance sector and settlement accounts) grew by US&#36;71 billion, or
    12 per cent, during 2005. On the same basis, personal lending comprised 63
    per cent of HSBC&#146;s loan portfolio and 63 per cent of the growth in loans
    in
2005.</font></p>
<p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Including
    the financial sector and settlement accounts, personal lending represented
    US&#36;420 billion, or 56 per cent, of total loans and advances to customers
    at 31 December 2005. Within this total, secured residential mortgages were
    US&#36;234 billion and, at 31 per cent, of total advances to customers, the
  Group&#146;s largest single concentration.</font></p>
<p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    and financial lending, including settlement accounts, comprised 44 per cent
    of gross lending to customers at 31 December 2005. The largest single industry
    concentrations were in non-bank financial institutions and commercial real
    estate lending, each of which amounted to 7 per cent of total gross lending
  to customers, broadly in line with 2004.</font></p>
</div>
<div style="float: right; width:48%">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade lending grew strongly in 2005, particularly in the retail and services industries. This, together with the
IFRS grossing change mentioned above, increased commercial and financial lending by just over 2 percentage points to 17 per cent of total gross loans and advances. Within this category of lending, no individual industry exceeded 4 per cent of total
gross lending.</FONT></p>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Advances to banks are widely distributed, principally to major institutions, and with no single exposure more than 5 per cent of total advances to
banks.</FONT></P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Financial investments</FONT><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total financial investments were broadly in line with 2004. Investments of US&#36;96 billion in corporate debt and other securities were the largest single concentration of these, rising
to 53 per cent of overall investments from 45 per cent at 31 December 2004. Nearly three quarters of these holdings, which were spread across a wide range of issuers, as well as geographically, were in debt securities issued by banks and other
financial institutions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investments in governments and government agencies of US&#36;76 billion were 42 per cent of overall financial investments, broadly in line with 2004. One
third of these investments were held in treasury and other eligible bills.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">118</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p119"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The insurance businesses have a diversified portfolio of debt securities designated at fair value (US&#36;5 billion) and debt securities classified as
financial investments (US&#36;9 billion).</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Securities held for trading</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total securities within trading assets were US&#36;150 billion. The largest single class of these assets is governments and government agency assets,</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">which amounted to US&#36;72 billion, or 48 per cent of overall trading securities. This included US&#36;13 billion of treasury and other eligible bills.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate debt and other securities were US&#36;55 billion or 37 per cent of overall trading securities. In percentage terms this was broadly in line with
2004. Included within this were US&#36;17 billion of debts securities issued by banks and other financial institutions.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P><B><FONT size=3 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross loans and advances by industry sector</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Constant</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">currency</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Grossing/</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Underlying</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31 December</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">effect</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">offsetting</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">change</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances to customers</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><b>
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal:</FONT></b></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Residential
    mortgages</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">222,464</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,701</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,103</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">233,866</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong Government Home</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Ownership Scheme</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,383</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(717</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,680</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    personal</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160,005</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,267</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,192</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">181,930</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total
    personal</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">387,852</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11,954</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,578</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">420,476</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><b>
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate and commercial:</FONT></b></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial
and</font> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">international
trade</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101,876</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6,171</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,626</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,471</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">130,802</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    real estate</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,469</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,222</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">199</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,369</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51,815</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    property-related</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,749</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(761</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,353</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">855</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,196</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Government</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,527</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(388</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">622</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,543</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,218</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,151</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,993</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,606</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,914</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,678</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total
    corporate and commercial</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">231,772</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13,535</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,406</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,066</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">278,709</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><b>
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial:</FONT></b></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
    financial institutions</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,329</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,679</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,840</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8,458</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50,032</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Settlement
    accounts</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,819</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(497</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11,180</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,142</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total
    financial</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,148</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,176</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,840</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(19,638</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52,174</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total loans and advances to customers</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">685,772</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,665</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,246</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51,006</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">751,359</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances to banks</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,466</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,694</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11,798</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,974</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total gross loans and advances</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">829,238</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(35,359</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,246</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,208</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">877,333</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.</FONT></I>    </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Under IAS32 there are restrictions on the ability to offset, for presentational purposes, loans and advances in respect of customers who maintain both deposit and borrowing
relationships with HSBC. This represents the amounts &#145;grossed up&#146; at 31 December 2005 to isolate underlying charges on the net basis on which HSBC continues to treat such loans and advances for the purpose of credit risk
management.</FONT></I></TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary below analyses the underlying changes in lending noted in the table above, measured against the position at 31 December 2004. On this basis, total loans and advances to
customers grew by 8 per cent, and total gross loans and advances increased by 5 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages increased by 9 per cent to US&#36;234 billion and comprised 31 per cent of total gross loans to customers (including the finance sector
and settlement accounts) at 31 December 2005. Growth was particularly strong in the UK, where residential mortgages increased by 17 per cent to US&#36;68 billion, and in North America, where</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">mortgages increased by US&#36;5 billion to US&#36;118 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In North America, mortgage growth was concentrated in HSBC Finance in the US, where a continued focus on expanding the secured lending portfolio through the
correspondent and branch based businesses generated an 18 per cent increase in mortgage lending. There was also a continued focus on junior lien loans through portfolio acquisitions and purchasing newly originated loans through flow correspondents.
This was partly offset by a reduction in the US bank, as newly originated prime mortgages were sold into the secondary market. In Canada,</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">119</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p120"></a><p><a href="#contents"><font size="2">Back
      to Contents</font></a></p>



<P>
  <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial Review<font size="2"> </font></FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>

<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">branch expansions
    in the consumer finance business delivered a 17 per cent increase in mortgage
  lending.</font></p>
<p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential
    mortgage balances in Hong Kong were broadly flat, in what remained a highly
    competitive market. There was a net repayment in mortgages under the Hong
    Kong GHOS, under which new advances remained suspended. In the rest of Asia-Pacific,
    an increase of 22 per cent in mortgage lending was driven by operations in
    the Middle East, India, Taiwan, South Korea, mainland China and Singapore,
  in each of which growth was over 30 per cent.</font></p>
<p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
    personal lending increased by 17 per cent to US&#36;182 billion, and represented
    24 per cent of total gross loans to customers at 31 December 2005. The acquisition
    of Metris in December 2005 increased personal loans by US&#36;5 billion,
    or 3 percentage points of the growth in 2005. Including and in part due to
    this, some 75 per cent of growth was in North America. Organic growth within
    the US in HSBC branded prime, Union Privilege and non-prime portfolios, partly
    offset by the continued decline in certain older acquired portfolios, also
    contributed to the increase. The US vehicle finance business reported strong
    organic growth, principally in the near-prime portfolios. This came from
    newly originated loans acquired through the dealer network, growth in the
    consumer direct loan programme and expanded distribution through alliance
    channels. Growth in personal non-credit card lending
reflected HSBC&#146;s increasing the availability of this product in the second
half of 2004, as a result of an improving US economy, as well as the success
of several large direct mail campaigns launched in 2005.</font></p>
<p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
    Europe, the charge-off of substantially provided personal loans against provisions
    masked the underlying growth in lending: Other personal lending net of impairment
    reserves grew by 13 per cent. In the UK, growth in credit card and other
    unsecured lending was driven by pricing and marketing initiatives, against
    the backdrop of subdued consumer spending. In Turkey, credit card lending
    rose markedly,
also helped by marketing campaigns.</font></p>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the Rest of Asia-Pacific, continuing expansion of the credit card base and higher utilisation of cards by existing customers, together with successful
marketing, contributed to a 25 per cent increase in lending. In South America, marketing and new product launches, combined with improved consumer sentiment, contributed to underlying growth of 26 per cent in Brazil.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to the corporate and commercial sectors grew by 12 per cent during 2005, predominantly in the Commercial Banking customer group.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Europe, corporate and commercial advances increased by 10 per cent, reflecting customer demand for credit, as well as new customer acquisition,
particularly in the property, distribution and services sectors. In Hong Kong, an 11 per cent increase was mainly in the property and manufacturing sectors, in part reflecting the benefit of economic expansion in mainland China. This was also
reflected in the Rest of Asia-Pacific, where strong regional economies, and significant government-backed infrastructure and property projects, also contributed to the 16 per cent increase overall. In North America, a 15 per cent increase was driven
by lending to finance real estate projects and construction, as well as increases in most other sectors and industries.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following tables analyse loans by industry sector and by the location of the principal operations of the lending subsidiary or, in the case of the
operations of The Hongkong and Shanghai Banking Corporation, HSBC Bank, HSBC Bank Middle East and HSBC Bank USA, by the location of the lending branch.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">120</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p121"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=2 face="Arial,Arial,Helvetica,sans-serif">Loans
and advances to customers by industry sector and by geographical region</FONT> </p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=10 align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD colspan="13" align=center><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005 </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=left><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross loans</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">by industry</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">loans and</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">sector as a</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia-</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">advances to</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">% of total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Kong</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">customers</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">gross loans</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Residential
    mortgages</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,923</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,812</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,641</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">118,298</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">192</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">233,866</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31.1</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Hong
            Kong Government</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Home
    Ownership Scheme</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,680</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,680</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Other
    personal</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55,672</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,978</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,178</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100,116</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,986</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">181,930</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24.2</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">129,595</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,470</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,819</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">218,414</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,178</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">420,476</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55.9</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate and commercial</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Commercial,
    industrial and</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;international trade</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76,687</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,736</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,286</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,199</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,894</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">130,802</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.4</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    real estate</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,071</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,557</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,081</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,911</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">195</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51,815</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    property-related</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,603</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,147</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,426</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,937</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,196</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.0</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Government</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,821</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">303</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,147</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,502</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">445</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,218</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.1</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41,944</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,922</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,716</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,960</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,136</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,678</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.7</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150,126</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,665</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,656</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41,509</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,753</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">278,709</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37.1</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
    financial</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;institutions</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35,305</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,966</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,202</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,431</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">128</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50,032</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.7</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Settlement
    accounts</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,002</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">505</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">175</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">416</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,142</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.3</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,307</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,471</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,377</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,847</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">172</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52,174</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.0</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total gross loans and advances</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;to customers<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">316,028</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83,606</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70,852</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">270,770</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,103</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">751,359</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Percentage of Group loans and</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances
    by geographical</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;region</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.2%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.1%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.4%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36.0%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.3%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,068</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">506</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">936</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,045</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">891</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,446</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans as a percentage of</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;gross
    loans and advances to</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;customers</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.6%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.6%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.3%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.5%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.8%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.5%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment allowances</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;outstanding
    against loans</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;and
    advances</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,491</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">398</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">836</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,836</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">796</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,357</FONT></B>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment allowances</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;outstanding
    as a percentage</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;of
    impaired loans</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68.9%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78.9%</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">89.3%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144.3%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">89.2%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">99.2%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.</FONT></I>    </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Included within this total is credit card lending of US&#36;66,020 million.</FONT></I> </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included in personal lending in North America are the following balances relating to the US:</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages &#150; HSBC Bank USA</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,170</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,683</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages &#150; HSBC Finance</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,359</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,612</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Motor vehicle finance</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,792</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,284</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">MasterCard/Visa credit cards</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,795</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,300</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private label cards</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,488</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,684</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other unsecured personal lending</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35,545</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,448</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">194,149</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">173,011</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">121</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p122"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=12 align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances to customers by industry sector and by geographical region </FONT></B><I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">(continued)</FONT></I>
        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD colspan="13" align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">At
    31 December 2004</font>     </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=left><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross loans</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by industry</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans and</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sector as a</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">advances to</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">% of total</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">gross loans</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Residential
    mortgages</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,546</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,990</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,860</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">112,861</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">207</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">222,464</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.5</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Hong
              Kong Government </FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Home</font></font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;&nbsp;&nbsp;<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Ownership
    Scheme.</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,383</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,383</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    personal</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,920</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,105</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,079</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,463</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,438</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160,005</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128,466</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,478</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,939</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">193,324</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,645</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">387,852</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate and commercial</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
    industrial and</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;international trade</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,018</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,132</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,177</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,599</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,950</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101,876</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    real estate</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,917</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,388</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,232</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,798</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,469</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    property-related</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,850</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,959</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,350</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,518</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">72</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,749</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Government</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,663</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">615</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,432</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,868</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">949</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,527</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,185</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,294</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,015</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,718</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">939</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,151</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">118,633</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,388</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,206</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,501</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,044</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">231,772</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
    financial</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,901</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,932</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,297</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,090</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,329</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Settlement
    accounts</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,476</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">596</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">305</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,431</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,819</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,377</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,528</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,602</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,521</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,148</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total gross loans and</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances
            to customers<SUP>2</SUP></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">282,476</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,394</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,747</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">254,346</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,809</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">685,772</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Percentage of Group loans and</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances
    by geographical</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;region</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41.2%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.6%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.0%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37.1%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.1%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans<SUP>3,4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,039</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,160</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,875</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">657</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,427</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans as a percentage of</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;gross loans and advances<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.9%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.9%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.4%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8%</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions outstanding</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;against loans and advances<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,036</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">320</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">785</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,364</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">512</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,017</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions outstanding</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;as
    a percentage of impaired</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;loans<SUP>3,4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66.8%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.0%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67.7%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">112.6%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77.9%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80.6%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.</FONT></I>    </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Included within this total is credit card lending of US&#36;56,222 million.</FONT></I> </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Net of suspended interest.</FONT></I></TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Included in North America are impaired loans of US&#36;3,782 million and specific provisions of US&#36;3,443 million in HSBC Finance; excluding HSBC Finance, specific provisions
outstanding as a percentage of impaired loans was 54.6 per cent</FONT></I><I><FONT size=1 face="Arial,Italic,Arial,Helvetica,sans-serif">.</FONT></I>   </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">122</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p123"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left></TD>
        <TD colspan="13" align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">At
    31 December 2003<SUP>1</SUP></font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=left><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross loans</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by industry</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans and</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sector as a</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">advances to</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">% of total</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">gross loans</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Residential
    mortgages</font></TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,721</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,664</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,101</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77,754</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">224</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">165,464</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30.4</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong Government Home</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Ownership Scheme</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,290</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,290</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    personal</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,041</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,420</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,135</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,173</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,376</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134,145</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93,762</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,374</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,236</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">152,927</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,600</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">305,899</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate and commercial</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
    industrial and</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;international trade</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,468</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,966</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,892</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,907</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,435</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,668</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    real estate</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,517</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,548</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,149</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,785</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,088</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    property-related</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,416</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,075</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,597</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,994</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,140</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Government</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,462</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">927</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,450</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,104</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">647</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,590</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,239</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,754</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,735</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,619</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">683</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44,030</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97,102</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,270</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,823</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,409</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,912</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">191,516</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
    financial</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;institutions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,226</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,921</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,027</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,839</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,091</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Settlement
    accounts</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,068</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">556</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">188</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,767</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,594</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,294</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,477</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,215</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,606</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,685</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total gross loans and advances</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;to customers<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215,158</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,121</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,274</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197,942</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,605</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">543,100</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Percentage of Group loans and</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances
    by geographical</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;region</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39.7%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.8%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.1%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36.4%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans<SUP>5</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,701</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,671</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,538</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,444</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,050</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans as a</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;percentage
    of gross loans and</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances to customers<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.6%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.1%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.8%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.4%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.8%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions outstanding</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;against loans and advances<SUP>5</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,554</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">629</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">981</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,184</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">530</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,878</FONT>
        </TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions outstanding</FONT></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;as
    a percentage of non-</font></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;performing
            loans<SUP>5</SUP>
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62.3%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37.6%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63.8%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95.2%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76.1%</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">72.3%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Figures presented in this table were prepared in accordance with UK GAAP.</FONT></I>   </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.</FONT></I>    </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Included within this total is credit card lending of US&#36;48,634 million.</FONT></I> </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Net of suspended interest.</FONT></I>  </TD>
</TR>
<TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Included in North America are non-performing loans of US&#36;4,380 million and specific provisions of US&#36;4,448 million in HSBC Finance; excluding HSBC Finance, specific
provisions outstanding as a percentage of non-performing loans was 69.2 per cent.</FONT></I>    </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">123</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p124"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=12 align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances to customers by industry sector and by geographical region </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(continued)</FONT></I>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="13" align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">At
    31 December 2002<SUP>1</SUP></font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=left><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross loans</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by industry</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans and</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">sector as a</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">advances to</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">% of total</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">customers</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">gross loans</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Residential
    mortgages</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,719</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,839</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,507</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,666</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">253</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96,984</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26.9</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong Government Home</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Ownership Scheme</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,255</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,255</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    personal</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,748</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,066</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,900</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,836</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,562</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.4</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,467</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,160</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,407</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,502</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,265</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">152,801</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate and commercial</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
    industrial and</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;international trade</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44,424</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,173</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,582</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,773</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,063</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,015</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.8</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    real estate</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,887</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,336</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,701</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,297</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,267</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    property-related</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,970</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,805</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,031</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,515</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,347</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Government</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,164</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">719</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">933</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,575</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">562</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,953</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,712</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,612</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,950</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,835</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">565</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,674</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,157</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,645</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,197</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,995</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,262</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">173,256</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47.8</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
    financial institutions</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,221</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,055</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">931</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,231</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,487</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.6</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Settlement
    accounts</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,622</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">347</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">192</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,224</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,385</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,843</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,402</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,123</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,455</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,872</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total gross loans and advances</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;to customers<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">168,467</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">71,207</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,727</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,952</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,576</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">361,929</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Percentage of Group loans and</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances
    by geographical</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;region</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.5%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.7%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.7%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22.1%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,495</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,724</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,055</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,773</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">476</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,523</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans as a</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;percentage
    of gross loans and</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;advances to customers<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7%</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.4%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.3%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.9%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions outstanding</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;against
    loans and advances</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,774</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">688</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,321</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,482</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">341</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,606</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions outstanding</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;as
    a percentage of non-</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;performing loans<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61.7%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39.9%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64.3%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">83.6%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">71.6%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62.8%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Figures presented in this table were prepared in accordance with UK GAAP.</FONT></I>   </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other commercial loans include advances in respect of agriculture, transport, energy and utilities.</FONT></I> </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Included within this total is credit card lending of US&#36;9,950 million.</FONT></I>  </TD>
</TR>
<TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Net of suspended interest.</FONT></I>  </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">124</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p125?"></a>
<p><a href="#contents">Back to Contents</a></p>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD colspan=3 align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December 2001<SUP>1</SUP>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Gross loans</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Gross
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    by industry</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Rest of
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    loans and
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    sector as a</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Hong
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Asia-
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    North
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    South
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    advances to
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    % of total</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Europe
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Kong
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Pacific
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    America
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    America
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    customers
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    gross loans</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Personal</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Residential
    mortgages</font></TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    27,282
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;        </TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    23,125
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;        </TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,134
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;        </TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    22,126
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;        </TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    548
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;        </TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    78,215
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;        </TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    24.6</font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong Government Home</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &nbsp;&nbsp;&nbsp;Ownership Scheme</font></TD>
        <TD align=right><b><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></b></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,123
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,123
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2.6</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    personal</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    21,065
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,227
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,616
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,273
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,280
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    39,461
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12.4</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    48,347
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    37,475
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,750
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,399
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,828
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    125,799
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    39.6</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Corporate and commercial</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
    industrial and</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &nbsp;&nbsp;&nbsp;international trade</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38,476
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,662
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,226
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,018
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,720
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    70,102
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    22.1</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    real estate</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,475
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,474
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,395
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,877
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    77
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    26,298
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8.3</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    property-related</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,630
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,710
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,169
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,011
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    69
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,589
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4.6</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Government</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,393
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    543
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">900</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    728
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    775
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,339
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1.7</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    20,510
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,349
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,457
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,230
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    617
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    37,163
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11.7</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,484
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    29,738
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    22,147
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    23,864
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,258
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    153,491
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    48.4</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
    financial</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &nbsp;&nbsp;&nbsp;institutions</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,329
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,546
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">752</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,572
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">118
      </font>   </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    26,317
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8.3</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Settlement
    accounts</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,361
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    223
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">189</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,984
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,761
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3.7</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    13,690
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,769
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">941</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    21,556
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">122</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38,078
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12.0</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total gross loans and advances</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">to customers<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    136,521
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    68,982
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    32,838
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    73,819
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,208
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    317,368
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    100.0</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Percentage of Group loans and</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">advances by geographical</FONT></font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">region</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    43.0%
        </font></TD>
        <TD align=left>&nbsp; </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    21.7</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10.3
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    23.3
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1.7
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    100.0
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,682
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,028
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,723
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    672
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">544</font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,649
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Non-performing loans as a</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">percentage of gross loans and</FONT></font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">advances to customers<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2.7
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2.9
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8.3</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    0.9
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10.4
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3.0
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Specific provisions outstanding</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">against loans and advances</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,204
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    856
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,786
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    289
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    365
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,500
        </font></TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Specific provisions outstanding</font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">as a percentage of non-</FONT></font></TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left> </TD>
        <TD align=left>&nbsp;   </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">performing loans<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    59.8
        </font></TD>
        <TD align=left>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    42.2
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    65.6
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    43.0
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    67.1
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    57.0
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font> </TD>
        <TD align=left>&nbsp;   </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    1</font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Figures presented in this table were prepared in accordance with UK GAAP.</I>    </font></TD>
</TR>
<TR>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Other commercial loans include advances in respect of agriculture, transport,
    energy and utilities.</I>   </font></TD>
</TR>
<TR>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    3</font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Included within this total is credit card lending of US&#36;8,289 million.</I>   </font></TD>
</TR>
<TR>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    4</font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Net of suspended interest.</I>   </font></TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
125</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p126"></a>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P align="left"><font size="3" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
<B>Loans and advances to customers by principal area within Rest of Asia-Pacific
and South America</B></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD colspan=6 align=left><div align="center"><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances (gross)</FONT></B></font></div></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Commercial,</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>international</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Residential</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Other</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Property-</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>trade and</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>mortgages</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>personal</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>related</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>other</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Total</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>At 31 December 2005</b> <i>(audited)</i></font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Australia and New Zealand</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,912</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>694</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,588</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,698</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,892</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    India</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,139</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>545</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>104</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,819</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,607</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Indonesia</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>13</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>338</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>921</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,280</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Japan</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>14</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>139</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>696</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,352</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,201</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Mainland China</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>358</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,210</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,426</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,005</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Malaysia</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,223</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>871</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>496</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,925</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6,515</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Middle East</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>258</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,320</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,448</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>9,403</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>13,429</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Singapore</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,811</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,395</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,441</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,249</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>9,896</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    South Korea</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,585</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>460</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>31</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,219</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,295</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Taiwan</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,094</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,057</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>14</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>727</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,892</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Thailand</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>23</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>220</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>75</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>958</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,276</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>211</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,128</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>396</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,829</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,564</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total of Rest of Asia-Pacific</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>17,641</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11,178</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,507</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>33,526</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>70,852</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Argentina</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>147</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>31</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,000</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,182</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Brazil</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>187</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,838</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>206</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,432</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,663</B></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>41</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>215</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>258</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total of South America</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>192</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,986</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>278</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,647</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>10,103</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December 2004</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Australia and New Zealand</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,935</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    635</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,580</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,761</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,911</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    India</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    778</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    371</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    56</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,440</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,645</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Indonesia</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    166</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    769</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    956</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Japan</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    106</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    689</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,532</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,339</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Mainland China</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    256</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    794</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,329</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,389</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Malaysia</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,029</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    670</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    407</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,611</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,717</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Middle East</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    129</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,982</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,414</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,327</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,852</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Singapore</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,137</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,027</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,262</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,258</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,684</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    South Korea</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,834</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    189</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,559</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,588</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Taiwan</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,509</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    762</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    805</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,076</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Thailand</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    178</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    75</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,134</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,415</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    201</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    983</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    290</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,701</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,175</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total of Rest of Asia-Pacific</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,860</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,079</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,582</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    30,226</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    61,747</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Argentina</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    37</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    69</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    21</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,372</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,499</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Brazil</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    170</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,369</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    158</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,411</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,108</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    27</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    175</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    202</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total of South America</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    207</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,438</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    206</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,958</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,809</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan=4 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=4 align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and advances to banks by geographical region</B></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Impairment</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>allowances</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2001-2004:
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Gross</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    provisions
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Rest of</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>loans and</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    for bad and
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Hong</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Asia-</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>North</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>South</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    doubtful
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Europe</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Kong</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Pacific</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>America</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>America</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>to banks</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    debts)
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>At 31 December 2005</b> <i>(audited)</i></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>44,369</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>42,751</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>19,559</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>14,013</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,282</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,974</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(9</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December 2004</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    56,063</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    45,710</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,890</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    24,179</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,624</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    143,466</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (17
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December 2003</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51,806</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38,639</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,948</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,885</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,922</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    117,200</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (24
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December 2002</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    39,398</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    33,359</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10,708</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10,391</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,665</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    95,521</font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (23
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December 2001</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    40,665</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    42,516</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,253</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,979</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,252</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    104,665</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (22
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
126</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p127"></a>
<p><a href="#contents">Back to Contents</a></p>
<P>
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Credit quality</FONT></B></P>
<P>
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">Loans and advances</FONT></P>
<P>
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Distribution of loans and advances by credit quality <I>(Audited IFRS 7 information)</I></FONT></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan="3" align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>At
    31 December 2005</B></font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>customers</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>banks</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances:</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; neither
    past due nor impaired</FONT></font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>731,116</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,930</B></font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; past
    due but not impaired</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,797</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>22</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; impaired</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11,446</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>22</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>751,359</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,974</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Distribution of loans and advances neither past due nor impaired </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7
information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
The credit quality of the portfolio of loans and advances that were neither past
due nor impaired at
31 December 2005 can be assessed by reference to the Group&#8217;s standard credit
grading system. The following information is based on that system:</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>customers</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>banks</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Grades:</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp;&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">1 &#150; 3:
    satisfactory risk</FONT></font></TD>
        <TD width="10%" align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>705,036</B></font></TD>
        <TD width="2%" align=right><font size="2">&nbsp;</font></TD>
        <TD width="10%" align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,324</B></font></TD>
    <TD width="2%" align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">4 &#150; watch
    list and special mention</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>19,950</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>555</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">5 &#150; sub-standard
    but not impaired</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6,130</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>51</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>731,116</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,930</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Grades 1 and 2 include corporate facilities demonstrating financial condition, risk factors and capacity to repay that are good to excellent, residential
mortgages with low to moderate loan to values ratios, and other retail accounts which are not impaired and are maintained within product guidelines.</FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Grade 3 represents satisfactory risk and includes corporate facilities that require closer monitoring, mortgages with higher loan to value ratios than grades
1 and 2, all non-impaired credit card exposures, and other retail exposures which operate outside product guidelines without being impaired.</FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Grades 4 and 5 include corporate facilities that require various degrees of special attention and all retail exposures that are progressively between 30 and
90 days past due.</FONT></font></P>
<P><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances which were past due but not impaired </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7
information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances which were past due at 31 December 2005 but not impaired were
as follows:</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Loans and</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>customers</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>banks</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Past due up to 29 days</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,837</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>22</B></font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Past due 30 &#150; 59 days</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,743</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Past due 60 &#150; 89 days</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>583</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7,163</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>22</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Past due 90 &#150; 179 days</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,368</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Past due over 180 days but less than 1 year</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>266</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,797</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>22</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<I>This ageing analysis includes loans and advances less than 90 days past due
that have collective impairment allowances set aside to cover credit losses on
loans which are in the
early stages of arrears.</I></font></P>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
127</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p128"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
There are a variety of
reasons why certain loans designated as &#145;past due&#146; are not regarded
as impaired. Unless other information is available to indicate to the contrary,
all loans less than 90 days past due are not considered impaired. It is also
not unusual for short-term trade finance facilities to extend beyond 90 days
past due for reasons that do not reflect any concern on the creditworthiness
of the counterparty, such as delays in documentation. In addition, past due loans
secured in full by cash collateral are not considered impaired and, where appropriate,
neither are residential mortgages in arrears by more than 90 days where the value
of collateral is sufficient to repay both the debt and all potential interest
for
at least one year.</font></P>
<font size="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Impaired loans and advances </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I><BR>
<P>
  <FONT face="TimesNewRoman,Times New Roman,Times,serif">For individually assessed accounts, loans are treated as impaired as soon as there is objective evidence that an impairment loss has been incurred. The criteria used by HSBC to determine
that there is objective evidence of an impairment loss include, </FONT><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">inter alia</FONT></I><FONT face="TimesNewRoman,Times New Roman,Times,serif">:</FONT></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><font size="2">&#8211;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</FONT></font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">known cash
        flow
difficulties experienced by the borrower;</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2">&#8211;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">overdue
    contractual payments of either principal or interest;</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2">&#8211;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">breach
    of loan covenants or conditions;</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2">&#8211;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the probability
        that the borrower will enter bankruptcy or other financial reorganisation;
    and</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2">&#8211;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">a downgrading
    in credit rating by an external credit rating agency.</FONT></td>
  </tr>
</table>



<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Accounts
    in portfolios of homogeneous loans are treated as impaired once facilities
    are 90 days or more overdue. Further information on impaired loans is provided
below in &#145;Impairment assessment&#146;.</FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The
      total gross amount of impaired loans and advances to customers as at 31
      December 2005 was US&#36;11,446 million, of which US&#36;4,960 million
      related to
individually impaired loans and advances and </FONT></font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;6,486
million related to portfolios of homogeneous loans and advances. The following
table presents an analysis of individually impaired loans by industry sector
and by
geographical region:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD colspan="13" align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
      <B>At 31 December 2005</B>        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Gross</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>impaired</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Gross</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>loans by</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>impaired</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>industry</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Rest of</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>loans and</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>sector as a</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Hong</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Asia-</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>North</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>South</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>advances to</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>% of total</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Europe</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Kong</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Pacific</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>America</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>America</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>customers</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>gross loan</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Personal</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>655</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>256</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>119</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,035</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>20.9</B></font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Commercial and corporate</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,562</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>198</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>629</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>338</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>198</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,925</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>79.1</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total impaired loans and</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;advances to customers</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,217</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>454</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>748</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>343</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>198</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,960</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>100.0</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The types of collateral
or other security held are described above in &#145;Collateral and other credit
enhancements&#146;.</font></P>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
128</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p129"></a>
<p><a href="#contents">Back to Contents</a></p>
<P>
  <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans and advances
  measured at amortised cost &#150; net total credit risk<br>
</FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></P>
<P>
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances against which HSBC had legally enforceable rights to offset with financial liabilities at 31 December 2005 were as follows:</FONT></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Amount for</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>which HSBC</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>had a legally</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Carrying</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>enforceable</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Net total</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>amount</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">right to offset</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit risk</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances to customers</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>751,359</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(48,495</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>702,864</B></font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances to banks</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,974</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(51</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>125,923</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>877,333</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(48,546</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>828,787</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    1   </font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Against financial liabilities with the same counterparty.</I>    </font></TD>
</TR>
<TR>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Excluding the value of any collateral or security held.</I>      </font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Debt securities</FONT><font size="2">
<P>
  <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt securities and other bills by rating agency designation<br>
</FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></P>
<P>
  <FONT face="TimesNewRoman,Times New Roman,Times,serif">The following table
  presents an analysis of debt and similar securities, other than loans, by rating
  agency designation at 31 December 2005, based on Standard and Poor&#146;s ratings
or their equivalent:</FONT></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD width=3% align=left><font size="2">&nbsp;

        </font></TD>
        <TD width=49% align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Treasury</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Other</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Debt</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>bills</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>eligible bills</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>securities</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Total</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AAA</FONT></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>16,798</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>381</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>113,429</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>130,608</B></font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    AA &#150; to AA +</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,089</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>264</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>62,684</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>66,037</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    A &#150; to A +</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11,147</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>110</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>46,538</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>57,795</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Lower than A &#150;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,287</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>202</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>23,359</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>26,848</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Unrated</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,563</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>27,135</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>29,698</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>36,884</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>957</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>273,145</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>310,986</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Of which issued by:</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    governments</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>19,634</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>91,279</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>110,913</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    local authorities</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>16,646</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>10,516</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>27,162</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    corporates</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>84</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>63,384</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>63,475</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>597</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>873</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>107,966</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>109,436</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Of which classified as:</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    trading assets</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,649</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>97</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>117,659</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>130,405</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    financial instruments
designated at fair value</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>53</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,705</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,758</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    available-for-sale securities</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>23,974</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>860</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>141,699</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>166,533</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    held-to-maturity investments</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>208</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,082</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,290</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities with short-term ratings are reported against the long-term rating of the issuer of the short-term debt securities. If major rating agencies
have different ratings for the same debt securities, the securities are reported against the lower rating.</FONT></font></P>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
129</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p130"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial assets
other than loans and advances measured at amortised cost &#150; net total credit
risk<br>
</FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial assets against which HSBC had legally enforceable rights to offset
with financial liabilities at 31 December 2005 were as follows:</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Amount for</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>which HSBC</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>had a legally</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Carrying</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>enforceable</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Net total</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>amount</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">right to offset</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">credit risk</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Trading assets</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Treasury and other eligible bills</FONT></font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,746</B></font></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD width=2% align=left><font size="2">&nbsp;

        </font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,746</B></font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>117,659</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>117,659</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>29,806</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(19</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>29,787</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>52,495</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(7,411</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>45,084</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>212,706</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(7,430</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>205,276</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial assets designated at fair value</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Treasury and other eligible bills</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>53</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>53</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,705</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(464</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,241</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>124</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>124</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>631</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>631</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6,513</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(464</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6,049</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>73,928</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(46,060</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>27,868</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial investments</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Treasury and other similar bills</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>25,042</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>25,042</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>149,781</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>149,781</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>174,823</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;
        </font></TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>174,823</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other assets</font></TD>
        <TD align=left><hr size="1" noshade>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><hr size="1" noshade>

        </TD>
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=left><hr size="1" noshade>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Endorsements and acceptances</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7,973</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(9</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7,964</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>475,943</B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(53,963</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>421,980</B></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    1   </font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Against financial liabilities with the same counterparty.</I>    </font></TD>
</TR>
<TR>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    2   </font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Excluding the value of any collateral or security held.</I>      </font></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p><font size="2" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><B>Impairment
      assessment</B>
</font></p>
<P><font size="2">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">Loans and advances </FONT><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
It is HSBC&#146;s policy that each operating company makes allowance for impaired
loans promptly when required and on a consistent basis in accordance with Group
guidelines.</font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      rating process for credit facilities extended by its operating entities
      is designed to highlight exposures which require closer management attention
      because of their greater probability of default and potential loss. Amendments
      to risk grades, when necessary, are implemented promptly, with management
      particularly focusing on facilities to borrowers and portfolio segments
      classified
below satisfactory grades. Management also regularly evaluates the adequacy of
      the established allowances for impaired loans by conducting a detailed
      review of the loan portfolio, comparing performance and delinquency statistics
      with historical trends and assessing the impact of current economic conditions.
The criteria that HSBC uses to determine that there is objective</FONT></font></P>
</div>
<div style="float: right; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
evidence that an impairment loss has occurred include:</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">contractual
        payments of principal or interest</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> which
      become 90 days overdue;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">breach
    of loan covenants, conditions or other</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> terms;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">known cash
        flow difficulties experienced by the</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> borrower;
      and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">a significant
        downgrading in credit rating set by</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> an
      external credit rating agency.</font></td>
  </tr>
</table>


<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Two types of impairment allowance are in place: individually assessed and collectively assessed. These are discussed below.</FONT></font></P>
<P><font size="2">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">Individually assessed allowances<br>
</FONT><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Impairment allowances on individually assessed accounts are determined by an
evaluation of the exposure to loss on a case-by-case basis. This procedure is
applied to all individually significant accounts and all other accounts that
do not qualify for, or are not subject to, the portfolio-based</font></P>
</div>
<font size="2">

<br clear="all">
<P align="center">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">130</FONT></P>
</font>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p131"></a>
<p><a href="#contents">Back to Contents</a></p>
</font>
<div style="float: left; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
approach outlined below. In determining allowances on individually assessed accounts,
the following factors are considered:</font></P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> </FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      aggregate exposure to the customer;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the viability
        of the customer&#146;s business model</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">and
        the capacity to trade successfully out of</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">financial difficulties and generate
        sufficient cash</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">flow
    to service debt obligations;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the amount
    and timing of expected receipts and</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> recoveries;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the likely
    dividend available on liquidation or</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> bankruptcy;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the extent
        of other creditors&#146; commitments</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">ranking
        ahead of, or pari passu with, HSBC and</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">the likelihood of other creditors
        continuing to</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">support
    the company;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the complexity
        of determining the aggregate</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">amount
        and ranking of all creditor claims and</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">the extent to which legal and
        insurance</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">uncertainties
    are evident;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">the realisable
        value of security (or other credit</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">mitigants)
    and likelihood of successful</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">repossession;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the likely
        deduction of any costs involved in</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> recovering
      amounts outstanding;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">the ability
        of the borrower to obtain and make</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">payments
        in the relevant foreign currency if</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">loans are not in local currency;
    and</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">when available,
        the secondary market price for</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> the
      debt.</font></td>
  </tr>
</table>

<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Group
      policy requires the level of impairment allowances on individual facilities
      that are above materiality thresholds to be reviewed at least half-yearly,
      and more regularly when individual circumstances require. The review normally
      encompasses collateral held (including re-confirmation of its enforceability)
      and an assessment of actual and anticipated receipts. For significant commercial
      and
corporate debts, specialised loan &#145;work-out&#146; teams with experience
in insolvency and specific market sectors are used to assess likely losses on
significant individual exposures.</FONT></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Individually calculated impairment allowances are only reversed when the Group
has reasonable and objective evidence of a reduction in the established loss
estimate.</font></P>
<P><font size="2">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">Collectively assessed allowances<br>
</FONT><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Collectively assessed allowances are made in respect of (i) losses incurred in
portfolios of homogeneous</font></P>
</div>
<div style="float: right; width:48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
assets and (ii) losses which have been incurred but have not yet been identified
on loans subject to individual assessment for impairment.</font></P>
<P><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Homogeneous groups of loans<br>
</FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Two approaches are available to calculating impairment allowances when homogeneous
groups of assets such as credit card loans, other unsecured consumer lending,
motor vehicle financing and residential mortgage loans are reviewed collectively
on a portfolio basis:</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When appropriate
        empirical information is</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">available,
        the Group uses roll rate methodology</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">(a statistical analysis of historical
        trends of the</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">probability
        of default and amount of</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">consequential loss, assessed
        at each time period</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">for
        which payments are overdue), other</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">historical data and an evaluation
        of current</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">economic
        conditions to calculate an appropriate</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">level of impairment allowance
        based on</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">inherent
        loss. In certain highly developed</FONT> <FONT face="TimesNewRoman,Times New
Roman,Times,serif">markets, sophisticated models also take into</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">account
        behavioural and account management</FONT> <FONT face="TimesNewRoman,Times New
Roman,Times,serif">trends such as those indicated by bankruptcy</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      restructuring statistics. Roll rates are</FONT> <FONT face="TimesNewRoman,Times New
Roman,Times,serif">regularly benchmarked to ensure they remain</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">appropriate.</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When portfolios
        are less than US&#36;20 million in</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">size,
        or when information is insufficient or not</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">sufficiently reliable
        for roll rate methodology to</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">be
        adopted, the Group uses a simpler method</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">based on similar principles
        which assesses</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">impairment
      based on historical experience and</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">current economic conditions.</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The portfolio
      approach is applied to accounts in the following portfolios:</FONT></td>
    </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">low value,
        homogeneous small business</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> accounts
      in certain jurisdictions;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">residential
        mortgages that have not been</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">individually
    assessed or are less than 90 days</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">overdue (except in HSBC Finance);</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
        cards and other unsecured consumer</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> lending
      products; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> motor
      vehicle financing.</font></td>
  </tr>
</table>
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;These
    portfolio allowances are generally</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  assessed monthly and charges for new allowances, or releases of existing allowances,
  are calculated for each separately identified portfolio.</font></p>
</div>
  <font size="2">

  <br clear="all">
  <P align="center">
    <FONT face="UniversLT55,Arial,Helvetica,sans-serif">131</FONT></P>
  </font>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p132"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><font size="2">
<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Incurred but not yet identified impairment<br>
</FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Impairment allowances for incurred but not yet identified losses relate to loans
that are impaired at the balance sheet date but which will not be individually
identified as such until some time in the future. HSBC requires each operating
company to estimate such impairment losses by taking into account:</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">historical
        loss experience in portfolios of similar</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">risk
      characteristics, for example, by industry</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">sector, loan grade or product;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the estimated
        period between a loss being</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">incurred
        and that loss being evidenced by the</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">establishment of an individually
        assessed</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">impairment
      allowance against that loss; and</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">management&#146;s
        experienced judgement as to</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">whether
        the current economic and credit</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">conditions are such that the
        actual level of</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">inherent
        losses is likely to be greater or less than</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">that suggested by historical
      experience.</FONT></font></td>
  </tr>
</table>

<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The estimated period between a loss occurring and its identification (as evidenced by the establishment of an individual impairment allowance for that loss)
is determined by local management for each identified portfolio. In general, the periods used vary between four and twelve months although, in exceptional cases, longer periods are warranted.</FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">In normal circumstances, historical experience is the most objective and accurate framework used to assess inherent loss within each portfolio. Historical
loss experience is generally benchmarked against the average annual rate of losses over at least five years. In certain circumstances, economic conditions are such that historical loss experience provides little or no guide to the inherent loss in a
given portfolio. In such circumstances, management uses its experienced judgement to determine an appropriate impairment allowance.</FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The basis on which impairment allowances for incurred but not yet identified losses is established in each reporting entity is documented and reviewed by
senior Group credit management to ensure conformity with Group policy.</FONT></font></P>
<P><font size="2">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">Cross-border exposures </FONT><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited
IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Management assesses the vulnerability of countries to foreign currency payment
restrictions when considering impairment allowances on cross-border exposures.
This assessment includes an
analysis of the economic and political factors
existing at the time. Economic factors include the level of external indebtedness, the debt
service burden and access to </font></P>
</div>
<div style="float: right; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">external sources
    of funds to meet the debtor country&#146;s financing requirements. Political
    factors taken into account include the stability of the country and its government,
  threats to security, and the quality and independence of the legal system.</font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Impairment allowances are applied to all qualifying exposures within these countries unless these exposures are:</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performing,
        trade-related and of less than one</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> year&#146;s
      maturity;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">mitigated
        by acceptable security cover which is,</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">other
      than in exceptional cases, held outside the</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">country concerned;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">represented
        by securities held for trading</FONT><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">purposes
        for which a liquid and active market</FONT> <FONT
face="TimesNewRoman,Times New Roman,Times,serif">exists, and which are measured
      at fair value</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">daily;</FONT></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performing
        facilities with principal (excluding</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> security)
      of US&#36;1 million or below; or</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</FONT></td>
    <td><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">performing
        facilities with maturity dates shorter</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">than
      3 months.</FONT></font></td>
  </tr>
</table>
<P><font size="2">
<FONT face="UniversLT55,Arial,Helvetica,sans-serif">Loan write-offs </FONT><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans (and the related impairment allowances) are normally written off, either
partially or in full, when there is no realistic prospect of recovering these
amounts and when the proceeds from realising security have been received. Unsecured
consumer facilities are normally written off between 150 and 210 days overdue.
In HSBC Finance, this period is generally extended to 300 days overdue (270 days
for real estate secured
products).</font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">In almost no cases does the write-off period exceed 360 days overdue. The only exception arises when certain consumer finance accounts are deemed collectible
beyond this point. In the event of bankruptcy, write-off can occur earlier.</FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">US
      banks typically write off problem lending more quickly than is the practice
      in the UK. This means that HSBC&#146;s reported levels of credit risk elements
      and associated allowances are likely to be higher than those of comparable
US banks.</FONT></font></P>
<P><font size="2">
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Impairment allowances </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 </FONT></I></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><I>information)</I></font></P>
<font size="2"><P>
  <FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">When impairment losses occur, HSBC reduces the carrying amount of loans and advances and held-to-maturity financial investments through the use of an allowance account. When impairment of
available-for-sale financial assets occurs, the carrying amount of the asset is reduced directly.</FONT></P>
</font></div><font size="2"><br clear="all">

<P align="center">&nbsp;</P>
<P align="center"><FONT size="2" face="UniversLT55,Arial,Helvetica,sans-serif">132</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p133"></a>
<p><a href="#contents">Back to Contents</a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=2 align=left><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
    Movement in allowance accounts for total loans and advances
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I>&nbsp;
        </font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2005</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Individually</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Collectively</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>assessed</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>assessed</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Total</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 1 January</font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,881</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs transition at 1 January</font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(247</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 1 January</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,728</B>
        </font></TD>
        <TD width=2% align=left>&nbsp;

        </TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,906</B>
        </font></TD>
        <TD width=2% align=left>&nbsp;

        </TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,634</B>
        </font></TD>
        <TD width=2% align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts written off</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(1,102</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(7,941</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(9,043</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Recoveries of loans and advances written off in previous years</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>199</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>295</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>494</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Charge to income statement</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>518</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7,342</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7,860</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Exchange and other movements</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(664</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>85</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(579</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At 31 December</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,679</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,687</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11,366</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif"> Impairment
    allowances against loans and advances to customers</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2005</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2004</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    %</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total impairment allowances to gross lending</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Individually assessed impairment allowances</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.36</B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Collectively assessed impairment allowances</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.18</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#150;</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total provisions to gross lending<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Specific provisions</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1.56</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    General provisions</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    0.39</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">&nbsp;

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.54</B></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1.95</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
1</font></TD>
        <TD><font size="1">
    <I><FONT face="TimesNewRoman,Times New Roman,Times,serif">Net of reverse repo transactions and settlement accounts</FONT></I><FONT face="TimesNewRoman,Times New Roman,Times,serif">.</FONT>        </font></TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
133</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p134"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>
<FONT size="2" face="UniversLT55,Arial,Helvetica,sans-serif">Movement in impairment allowances by industry segment and by geographical region</FONT></P>
<div style="float: left; width: 48%">
<P>
  <FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">The following tables
  show details of the movements in HSBC&#146;s impairment allowances by location
of lending office for each of the past five years.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">A discussion of the material movements in the loan impairment charges by region follows these tables.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD colspan="11" align=center>    <font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005 </FONT></B><I><FONT face="TimesNewRoman,Times New Roman,Times,serif">(Audited IFR</FONT></I><i><font face="TimesNewRoman,Times New Roman,Times,serif">S 7 information)</font></i>&nbsp;         </font> </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
        </TD>
        <TD align=left>&nbsp;
        </TD>
        <TD align=left>
        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Rest of</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Hong</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Asia-</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>North</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>South</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Europe</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Kong</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Pacific</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>America</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>America</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>Total</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Impairment allowances at 1 January</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,851</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>504</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>960</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,733</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>586</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>12,634</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts written off</font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(345</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(157</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(79</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(83</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(9</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(673</B>
        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(67</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(23</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(11</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(15</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(1</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(117</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(3</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(10</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(13</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(108</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(6</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(62</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(18</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(194</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(14</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(2</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(6</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(486</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(508</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(2,267</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(112</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(227</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(4,447</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(485</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(7,538</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(2,804</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(294</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(329</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(5,103</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(513</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(9,043</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
    <FONT face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts
    written off in previous </FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">years</font></font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>10</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>17</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>37</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>76</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>9</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>47</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>33</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>89</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>9</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>18</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>62</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>31</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>61</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>99</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>49</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>302</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>84</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>45</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>82</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>192</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>91</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>494</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net charge/(release) to income statement<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(5</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(2</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(7</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>354</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>199</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(72</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>31</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>76</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>588</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>59</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(6</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>56</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(14</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(1</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>9</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(6</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(21</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(32</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(1</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>27</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(26</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(25</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>614</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>605</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,602</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>203</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>4,363</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>471</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6,644</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,984</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>146</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>136</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,040</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>554</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7,860</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Foreign exchange and other movements</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(616</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(3</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(12</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(26</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>78</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>(579</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Impairment allowances at 31 December</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,499</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>398</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>837</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,836</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>796</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11,366</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Impairment allowances against banks:</font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; individually
    assessed</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>&#150;</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>9</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Impairment allowances against customers:</font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; individually
    assessed</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,575</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>173</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>500</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>309</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>126</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2,683</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; collectively
              assessed<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1,916</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>225</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>336</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,527</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>670</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>8,674</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Impairment allowances at 31 December</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>3,499</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>398</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>837</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>5,836</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>796</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>11,366</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>%</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Impairment allowances against customers</font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">as a percentage of loans and advances to</FONT></font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">customers:</FONT></font></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; individually
    assessed</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.50</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.21</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.71</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.11</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.25</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.36</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; collectively
    assessed</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.61</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.27</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.47</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2.04</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>6.63</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.16</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.11</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>0.48</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.18</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2.15</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>7.88</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>1.52</B>
        </font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top><font size="1">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>&nbsp; &nbsp; &nbsp;     </font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>See table below &#145;Net impairment charge to income statement by geographical
    region&#146;.</I>   </font></TD>
</TR>
<TR>
        <TD valign=top><font size="1">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>&nbsp; &nbsp; &nbsp;     </font></TD>
        <TD><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">
    <I>Collectively assessed impairment allowances are allocated to geographical
    segments based on the location of the office booking the allowance. Consequently,
    the collectively assessed impairment allowances booked in Hong Kong may cover
    assets booked in branches located outside Hong Kong, principally in the Rest
    of Asia-Pacific, as well as those booked in Hong Kong.</I>  </font></TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
134</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p135"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Movement in provisions
by industry segment and by geographical region</font> </p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font></td>
    <td colspan="11" align=center><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td colspan="11" align=left><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
        of</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        at 1 January</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,435</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,055</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,181</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,461</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">583</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,715</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
        transition adjustment at 1 January</font></td>
    <td width=7% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</font> </td>
    <td width=2% align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td width=7% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(34</font> </td>
    <td width=2% align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td width=7% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(21</font> </td>
    <td width=2% align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td width=7% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font> </td>
    <td width=7% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</font> </td>
    <td width=2% align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td width=7% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(58</font> </td>
    <td width=2% align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=left></td>
    <td align=left>&nbsp;</td>
    <td align=left></td>
    <td align=left>&nbsp;</td>
    <td align=left></td>
    <td align=left>&nbsp;</td>
    <td align=left></td>
    <td align=left>&nbsp;</td>
    <td align=left></td>
    <td align=left>&nbsp;</td>
    <td align=left></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts
        written off</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
        industrial and international trade</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(298</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(35</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(164</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(73</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(53</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(623</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Real
        estate</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(30</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(55</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(106</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
        financial institutions</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(20</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Other
        commercial</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(209</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(33</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(42</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(204</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(498</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Residential
        mortgages</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(52</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(488</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(561</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Other
        personal</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(770</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(125</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(171</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,639</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(331</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7,036</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade></td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,331</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(302</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(403</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,410</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(398</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8,844</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries
        of amounts written off in previous</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> years</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
        industrial and international trade</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">73</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">118</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Real
        estate</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
        financial institutions</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Other
        commercial</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Residential
        mortgages</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Other
        personal</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">41</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">453</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">659</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">136</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">70</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">581</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">913</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Net
        charge to profit and loss account<sup>1</sup></font>&nbsp; </font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Banks</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
        industrial and international trade</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">180</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(56</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(44</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">179</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Real
        estate</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">21</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(28</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
        financial institutions</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">18</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Governments</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Other
        commercial</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(65</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(29</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(37</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(168</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Residential
        mortgages</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">485</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">482</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Other
        personal</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,035</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">120</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">142</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,680</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">239</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,216</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">General
        provisions</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(162</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(223</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(48</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(63</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(498</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,023</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(220</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">102</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,022</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,195</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
        exchange and other movements</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">551</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(24</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">638</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        at 31 December</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,812</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">522</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">943</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,714</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">568</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,559</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        against banks:</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
        provisions</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        against customers</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
        provisions</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,036</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">320</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">785</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,364</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">512</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,017</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
        provisions<sup>2</sup></font>&nbsp; </font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">762</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">202</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">155</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,350</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">56</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,525</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        at 31 December</font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,812</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">522</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">943</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,714</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">568</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,559</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
</td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        against customers as a percentage </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">of
        loans and advances to customers</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
        provisions</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.43</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.40</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.27</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.72</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.56</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.46</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
        provisions</font></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.27</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.25</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.25</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.53</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.72</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.37</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">At
        31 December</font></font></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.70</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.65</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.52</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.25</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.28</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.83</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;    </td>
    <td align=right><hr width="100%" size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">See table below &#145;Net charge to the profit and loss account for bad and doubtful debts by geographical region&#146;.</FONT></I>    </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.</FONT></I>    </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">135</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p136"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Movement in provisions by industry segment and by geographical region </FONT><I><FONT size=2 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center valign="bottom"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</FONT>   </TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="11" align=left valign="bottom"><hr width="100%" size="1" noshade></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,668</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,143</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,496</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,356</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">477</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,140</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts written off</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(338</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(71</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(201</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(337</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(69</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,016</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(113</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(179</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(13</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(21</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(30</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(67</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(54</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(65</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(42</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(104</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(30</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(295</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(121</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(529</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(675</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(472</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(302</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(147</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,225</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(78</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,224</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(902</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(584</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(445</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,338</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(187</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7,456</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<tr>
  <td align=left valign="bottom">&nbsp;</td>
  <td align=right valign="bottom"><hr width="100%" size="1" noshade>
  </td>
  <td align=left valign="bottom">&nbsp;</td>
  <td align=right valign="bottom"><hr width="100%" size="1" noshade>
  </td>
  <td align=left valign="bottom">&nbsp;</td>
  <td align=right valign="bottom"><hr width="100%" size="1" noshade>
  </td>
  <td align=left valign="bottom">&nbsp;</td>
  <td align=right valign="bottom"><hr width="100%" size="1" noshade>
  </td>
  <td align=left valign="bottom">&nbsp;</td>
  <td align=right valign="bottom"><hr width="100%" size="1" noshade>
  </td>
  <td align=left valign="bottom">&nbsp;</td>
  <td align=right valign="bottom"><hr width="100%" size="1" noshade>
  </td>
  <td align=left valign="bottom">&nbsp;</td>
</tr>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts written off in previous</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> years</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">295</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">414</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">335</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">610</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net charge to profit and loss account<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">286</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(45</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">376</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(23</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">216</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">339</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">421</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">552</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">482</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">271</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">116</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,992</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,983</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">General Provisions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(118</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(124</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(121</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">874</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">400</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,676</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,093</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Foreign exchange and other movements<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">653</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(29</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,432</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">218</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,328</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,435</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,055</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,181</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,461</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">583</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,715</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions against banks:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions against customers</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,554</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">629</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">981</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,184</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">530</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,878</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
              provisions<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">861</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">426</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">196</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,277</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,813</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,435</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,055</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,181</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,461</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">583</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,715</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
    against customers as a percentage </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">of
    loans and advances to customers</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.65</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.84</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.99</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.62</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.46</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.00</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
    provisions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.40</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.57</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.40</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.65</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.95</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.52</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="1" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
<TR>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.05</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.41</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.39</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.27</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.41</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.52</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<tr>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
  <td align=right><hr width="100%" size="2" noshade>
  </td>
  <td align=left>&nbsp;</td>
</tr>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">See table below &#145;Net charge to the profit and loss account for bad and doubtful debts by geographical region&#146;.</FONT></I>    </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other movements
include amounts of US&#36;129 million in Europe and US&#36;4,524 million in North
America transferred in on the acquisition of HSBC Finance Corporation, and of

US&#36;116 million in South America transferred in on the acquisition of Lloyds
TSB</FONT></I><i><font size=1 face="TimesNewRoman,Times New Roman,Times,serif"> Group&#146;s
Brazilian businesses and assets.</font></i> </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.</FONT></I>    </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">136</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p137"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center valign="bottom"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002</FONT></TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="11" align=left valign="bottom"><hr width="100%" size="1" noshade></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,067</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,408</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,952</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">723</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,033</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,183</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts written off</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></font></TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD width=2% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD width=2% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(161</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(255</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(92</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(28</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(595</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(88</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(150</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(54</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(116</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(149</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(352</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(109</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(130</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(199</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(328</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(132</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(96</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(96</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(851</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(452</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(536</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(600</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(360</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(163</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,111</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts written off in previous </FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">years</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">180</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net charge to profit and loss account<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">345</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">480</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(29</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">116</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">299</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">243</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">322</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">820</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">General Provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(65</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(97</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(213</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(351</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">569</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,321</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Foreign exchange and other movements<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">426</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,658</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(520</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,567</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 31 December</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,668</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,143</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,496</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,356</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">477</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,140</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions against banks:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions against customers</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,774</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">688</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,321</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,482</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">341</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,606</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
              provisions<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">871</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">455</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">874</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,511</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 31 December</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,668</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,143</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,496</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,356</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">477</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,140</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
            against customers as a percentage</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> of
    loans and advances to customers</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.65</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.97</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.42</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.85</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.73</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.83</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.52</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.64</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.45</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.09</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.88</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.69</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.61</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.87</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.94</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.61</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.52</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">See table below &#145;Net charge to the profit and loss account for bad and doubtful debts by geographical region&#146;.</FONT></I>    </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other movements include amounts transferred in on the acquisition of HSBC Mexico of US&#36;1,704 million.</FONT></I>   </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.</FONT></I>    </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">137</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p138"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><BR>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Movement in provisions by industry segment and by geographical region </FONT><I><FONT size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="11" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2001</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="11" align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,025</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,802</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,091</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">739</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,197</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts written off</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></font></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(123</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(238</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(256</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(107</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(29</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(753</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(29</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(88</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(53</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(67</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(54</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(34</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(48</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(107</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(215</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(458</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(121</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(13</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(147</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(224</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(155</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(93</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(93</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(95</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(660</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(442</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(630</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(427</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(322</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(357</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,178</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts
written off in previous</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> years</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">140</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">138</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">285</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net charge to profit and loss account<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial, industrial and international trade</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">157</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">484</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real estate</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(35</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank financial institutions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(20</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(34</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Government</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other commercial</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(84</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(58</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">151</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">242</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Residential mortgages</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(47</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">111</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other personal</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">168</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">702</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">General provisions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(36</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">633</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">927</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,037</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign exchange and other movements</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(37</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(85</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(158</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,067</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,408</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,952</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">723</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,033</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,183</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions against banks:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions against customers</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,204</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">856</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,786</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">289</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">365</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,500</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
              provisions<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">841</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">552</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">166</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">434</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">668</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,661</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions at 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,067</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,408</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,952</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">723</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,033</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,183</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
            against customers as a percentage </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">of
    loans and advances to customers</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; specific
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.61</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.24</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.44</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.39</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.03</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.73</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; general
    provisions</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.62</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.80</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.51</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.59</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12.87<SUP>3</SUP>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.84</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.23</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.04</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.95</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.98</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.90</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.57</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">See table below &#145;Net charge to the profit and loss account for bad and doubtful debts by geographical region&#146;.</FONT></I>    </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.</FONT></I>    </TD>
</TR><TR valign="top">
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Includes US&#36;600 million of additional provisions held against Argentine loans.</FONT></I>  </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">138</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p139"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Net impairment
charge to income statement by geographical region</font> </p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="16" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
              ended 31 December 2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="16" align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia-</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Kong</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Individually assessed impairment allowances</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New allowances</FONT></TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,029</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">200</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">131</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">348</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,715</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Release of allowances no longer required</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(648</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(123</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(166</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(43</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(18</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(998</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts previously written off</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(21</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(18</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(34</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(110</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(199</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">360</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">59</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(69</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">195</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(27</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">518</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Collectively assessed impairment allowances</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New allowances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,013</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">159</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">339</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,198</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">716</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,425</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Release of allowances no longer required</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(326</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(45</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(86</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(271</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(60</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(788</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts previously written off</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(63</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(27</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(48</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(82</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(75</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(295</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,624</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">87</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">205</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,845</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">581</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,342</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total charge for impairment losses</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,984</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">136</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,040</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">554</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,860</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Bank</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Customer</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,989</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">138</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,040</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">554</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,867</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer charge for impairment losses</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">as a percentage of closing gross loans</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and advances</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.55</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.12</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.77</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.60</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.90</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31 December 2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,068</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">506</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">936</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,045</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">891</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,446</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment allowances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,491</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">398</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">836</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,836</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">796</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,357</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Net charge to
the income statement for bad and doubtful debts by geographical region</font> </p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="16" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
            ended 31 December 2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="16" align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New provisions</FONT></TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,047</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">237</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">419</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,771</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">398</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,872</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Release of provisions no longer required</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(726</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(187</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(199</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(105</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(49</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,266</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts previously written off</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(136</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(47</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(70</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(581</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(79</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(913</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,185</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,085</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">270</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,693</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(162</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(223</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(48</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(63</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(498</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total bad and doubtful debt charge</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,023</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(220</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,022</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,195</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Bank</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Customer</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,031</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(220</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,022</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">270</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,205</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer bad and doubtful debt charge</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">as a percentage of closing gross loans</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and advances</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.36</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.28</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.97</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.44</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.91</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December 2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,039</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,160</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,875</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">657</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,427</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,798</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">522</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">940</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,714</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">568</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,542</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">139</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p140"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
        Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)</FONT></FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Net charge to the income statement for bad and doubtful debts by geographical region </FONT><I><FONT size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="16" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
            ended 31 December 2003</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>      </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT>    </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-Pacific</FONT> </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>      </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>      </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New provisions</FONT></TD>
        <TD width="7%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,485</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="1%" align=right>&nbsp;</TD>
        <TD width="7%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">655</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="1%" align=right>&nbsp;</TD>
        <TD width="7%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">412</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="1%" align=right>&nbsp;</TD>
        <TD width="7%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,962</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="1%" align=right>&nbsp;</TD>
        <TD width="7%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">263</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="1%" align=right>&nbsp;</TD>
        <TD width="7%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,777</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Release of provisions no longer required</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(351</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(182</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(269</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(87</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(64</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(953</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts previously written off</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(142</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(42</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(74</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(335</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(610</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">992</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">431</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,540</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">182</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,214</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(118</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(124</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(121</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total bad and doubtful debt charge</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">874</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">400</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,676</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,093</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Bank</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Customer</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">880</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">400</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,676</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,096</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer bad and doubtful debt charge</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">as a percentage of closing gross loans</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and advances</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.41</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.53</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.36</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.03</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December 2003</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,701</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,671</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,538</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,444</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,050</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,415</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,055</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,177</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,461</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">583</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,691</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD colspan="16" align=center><FONT size=2 face="Times New Roman, Times, serif">Year ended 31 December 2002</FONT>        <font size="2" face="Times New Roman, Times, serif">&nbsp;</font>       <font size="2" face="Times New Roman, Times, serif">&nbsp;</font>       <font size="2" face="Times New Roman, Times, serif">&nbsp;</font>       <font size="2" face="Times New Roman, Times, serif">&nbsp;</font>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>    <hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">North</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">South</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Asia-Pacific</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">America</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">America</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Total</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Specific provisions</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">New provisions</FONT></TD>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">963</FONT>
        </TD>
        <TD width=2% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">528</FONT>
        </TD>
        <TD width=2% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">400</FONT>
        </TD>
        <TD width=2% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">399</FONT>
        </TD>
        <TD width=2% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">388</FONT>
        </TD>
        <TD width=2% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,678</FONT>
        </TD>
        <TD width=2% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Release of provisions no longer required</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(271</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(160</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(268</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(79</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(48</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(826</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Recoveries of amounts previously written off</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(58</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(25</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(52</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(35</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(10</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(180</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">634</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">343</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">80</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">285</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">330</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,672</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
    </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">General provisions</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Argentine additional provision</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(196</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(196</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(65</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(97</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">9</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(17</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(155</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(65</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(97</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">9</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">15</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(213</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(351</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total bad and doubtful debt charge</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">569</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">246</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">89</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">300</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">117</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,321</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;Customer</font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="Times New Roman, Times, serif">569</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="Times New Roman, Times, serif">246</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="Times New Roman, Times, serif">89</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="Times New Roman, Times, serif">300</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="Times New Roman, Times, serif">117</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="Times New Roman, Times, serif">1,321</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><hr width="100%" size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Customer bad and doubtful debt charge</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;as a percentage of closing gross loans</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;and advances</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">0.34</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">0.35</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">0.23</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">0.38</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3.27</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">0.36</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">31 December 2002</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Non-performing loans</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,495</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,724</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,055</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,773</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">476</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">10,523</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3,645</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,143</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,496</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,356</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">477</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">9,117</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">140</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p141"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="16" align=center><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December 2001</FONT>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="16" align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-Pacific</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific provisions</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New provisions</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">802</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">449</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">577</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">392</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">346</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,566</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Release of provisions no longer required</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(260</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(212</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(268</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(42</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(35</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(817</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recoveries of amounts previously written off</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(65</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(138</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(43</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(285</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">477</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">206</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">307</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">303</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,464</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General provisions</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentine additional provision</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">600</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">600</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(36</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(36</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">624</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total bad and doubtful debt charge</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">927</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,037</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Customer</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">927</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,037</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
              bad and doubtful debt charge </font><font face="TimesNewRoman,Times New Roman,Times,serif">as
              a percentage of closing gross loans</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> and
    advances</font></font></div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.32</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.29</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.52</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.41</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.80</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.64</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December 2001</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-performing loans</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,682</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,028</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,723</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">544</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,649</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,045</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,408</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,952</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">723</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,033</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,161</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>

<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Year ended 31 December 2005 compared with year ended 31 December 2004</b></FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment charges were US&#36;7,860 million, an increase of 27 per cent compared with 2004. Acquisitions accounted for US&#36;107 million of the rise and US&#36;498 million
reflected the non-recurrence of the general provision release in 2004. The total charge remained dominated by the personal sector, with losses in these portfolios representing 92 per cent of the Group&#146;s net loan impairment charge. On a constant
currency basis, the trends were as follows:</FONT></P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> New allowances
    for loan impairment charges were US&#36;10,140 million, an increase of 13 per cent compared with 2004. Releases and recoveries of allowances increased by 4 per cent to US&#36;2,280 million.
  Including a general provision release of US&#36;498 million in 2004, releases and recoveries decreased by 15 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, growth in UK personal lending and a weakening in credit quality were the principal causes of a 50 per cent increase in new loan impairment charges to US&#36;3,042 million in 2005. Slower economic growth and weaker employment
conditions were compounded by a change in legislation in 2004 that relaxed conditions for personal bankruptcies, which rose to record highs by the final quarter of 2005. In response to these trends in the personal portfolio, HSBC tightened
underwriting controls, focusing more on existing relationships and changing the product mix towards lower risk customers. These actions, together with further centralisation of underwriting approvals and</FONT></P>
</div>

<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">revised reward programmes, assisted in mitigating the rate of growth in new impairment charges towards the end of 2005. In the commercial sector, there were a number of individually
significant new charges raised in the fourth quarter, as well as a higher rate of new allowances. Although credit charges remained low by historic standards, the trend is progressively moving back to more normal levels. Elsewhere in Europe, France
and Italy saw declines in new allowances, due to the sale of a consumer finance subsidiary during the year and the non-recurrence of corporate charges, respectively. In Turkey, new allowances have increased in line with the growth in the personal
loan portfolio.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries in Europe were US&#36;1,058 million, an increase of 23 per cent. Including a general provision release of US&#36;162 million in 2004,
releases and recoveries were broadly in line. Increased releases in Turkey, largely reflecting higher volumes offset the non-recurrence of the general provision release in Switzerland.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New impairment allowances in </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong Kong </FONT></B><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">were US&#36;359 million, a rise of 51 per cent. This was partially attributable to a small number of individual allowances for corporate and commercial customers. However, overall credit quality
improved, evidenced by a decline in non-performing loans as a proportion of gross advances, reflecting a strong economy with low unemployment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries in Hong Kong declined 53 per cent, including the non-recurrence of a</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">141</FONT></P>


<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p142"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
    Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>

<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">general provision release of US&#36;223 million in 2004. Excluding this, releases and recoveries fell by 9 per cent to US&#36;213 million, as the significant number of large corporate
releases in 2004 was not repeated. The general provision release last year reflected a review of historical loss experience and the improved market environment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effect of strong growth in advances in the </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of
Asia-Pacific</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">, produced an 11 per cent rise in new impairment allowances to US&#36;470 million. In particular, increased allowances in Taiwan were driven by a combination of
loan growth and an increase in credit card delinquency. There were further increases in Indonesia and the Philippines due to growth in advances, with credit quality stable in both countries. These were partially offset by declines in mainland China
and Singapore. In general, across the region, advances to customers rose and credit quality improved. Non-performing assets, as a percentage of advances, fell across most major countries.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the Rest of Asia-Pacific, releases and recoveries rose by 6 per cent to US&#36;334 million, including the US&#36;48 million general provision release in
2004. Excluding this, releases and recoveries were 24 per cent higher than 2004. There were higher releases and recoveries across most countries in the region reflecting the strong economic environment, although in Malaysia and Singapore there were
declines, due to the non-recurrence of the general provision releases in 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New loan impairment allowances in </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North America</FONT></B><FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif"> declined 4 per cent. This was despite loan growth, and the additional credit allowances raised in relation to Hurricane Katrina, and accelerated bankruptcy filings in the second half of the year
ahead of new legislation in the US. A portion of the increase in bankruptcies was an acceleration of write-offs that would have otherwise been experienced in future periods. In an effort to assist customers affected by Hurricane Katrina, HSBC
initiated various programmes, including extended payment arrangements. The reduction in the charge also reflected the non-recurrence of a US&#36;47 million charge in 2004, following the adoption of FFIEC write-off policies relating to retail and
credit card balances. Excluding these factors, credit quality improved year on year, reflecting an improving economic environment. This contributed to the fall in new impairment allowances, which was only partially offset by increased requirements
due to loan growth. HSBC has benefited from the shift in the balance of the consumer lending business towards higher credit quality customers. HSBC Finance monitors the two-month-and-over contractual</FONT></P>
</div>

<div style="float: right; width: 48%">


<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">delinquency ratio
closely, as management views it as an important indicator of future write-offs.
The ratio declined from 4.0 per cent at 31 December 2004 to 3.6
per cent at 30
June 2005, rising to 3.7 per cent at 31 December
2005.
Lending in the US is primarily </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in the personal sector. Credit quality in the commercial portfolio was stable in 2005. The favourable trends in the US were partially offset by rises in new allowances in Mexico and
Canada. In both cases, this was largely driven by personal balance growth in the loan portfolio in recent years. Underlying credit quality was stable in Mexico and improved in Canada.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries in North America were US&#36;506 million, a decrease of 27 per cent. Including the 2004 general provision release of US&#36;63
million, releases and recoveries declined by 33 per cent. In the US, a rise in releases reflected an improved credit environment and a strong economy. Under IFRSs, from 1 January 2005 certain recoverable amounts were incorporated into the loan
impairment charge directly resulting in lower reported recoveries. There were further decreases in Mexico, due to a particularly large number of recoveries last year, and in Bank of Bermuda, following the non-recurrence of the general provision
release in 2004. These declines were offset by a more than five-fold increase in releases in Canada, where better credit quality was driven by improved economic conditions, particularly in the resource driven economy of western Canada.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In </FONT><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South America</FONT></B><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, new impairment allowances in Brazil were the principal cause of a 51 per cent rise in new charges to US&#36;723 million in 2005. Significant growth of 24 per cent in gross advances, coupled with deteriorating credit quality in
the consumer finance business, were the main contributing factors to this increase. Lending growth combined with a move into the low-income segment, where finances have been stretched by higher interest rates, drove higher delinquency. Changes were
made to underwriting procedures during the year, to improve the credit quality of new business. This resulted in a falling impairment charge to asset ratio towards the end of the year. New allowances in Argentina were in line with 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries in South America increased by 16 per cent to US&#36;169 million. Recoveries in Brazil rose as a result of improved collections,
compounded by higher releases as a result of greater volumes of advances. Argentine releases fell as impaired loans reduced, partially offsetting the rise in Brazil.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">142</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p143"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Charge for impairment losses as a percentage of average gross loans and advances to customers</b></FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of</FONT></B>
        </TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B>
        </TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe
 </FONT></B>
        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong
    Kong</font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia-Pacific</font></b></TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year ended 31 December 2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New allowances</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.12</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.44</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.70</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.25</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.68</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.50</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.39</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.26</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.50</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.21</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1.80</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(0.34</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment allowances</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.73</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.18</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.20</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.04</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.88</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.16</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total charge for impairment losses</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.73</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.18</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.20</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.04</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.89</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.16</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amount written off net of recoveries</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.00</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.31</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.37</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.99</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.49</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.26</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December 2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New provisions</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.78</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.31</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.77</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.54</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.58</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.41</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.33</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.30</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.49</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.30</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2.13</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.35</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net charge for specific provisions</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.45</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.01</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.28</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.24</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.45</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.06</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total provisions charged</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.39</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.29</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.19</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.21</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.45</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.99</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amount written off net of recoveries</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.46</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.33</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.61</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.56</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.27</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.26</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>


        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended 31 December 2003</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New provisions</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.76</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.89</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.96</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.91</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.09</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.60</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases and recoveries</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.25</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.30</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.80</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.25</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1.88</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.32</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net charge for specific provisions</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.51</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.59</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.66</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.21</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.28</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total provisions charged</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.45</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.54</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.20</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.74</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.34</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.25</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amount written off net of recoveries</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.39</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.73</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.86</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.93</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.94</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.40</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P><B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Collateral and other credit enhancements obtained</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">During 2005, HSBC obtained assets by taking possession of collateral held as security, or calling other credit enhancements, as follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">obtainable</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">in 2005</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Nature of assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential property</FONT></TD>
        <TD width=15% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,171</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial and industrial property</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr noshade size=1></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,197</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left><hr noshade size=2>

        </TD>
</TR>
</TABLE>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1 </font></td>
    <td> <i><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">Audited
    IFRS 7 information.</font></i>&nbsp; </td>
  </tr>
</table>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Repossessed properties are made available for sale in an orderly fashion, with the proceeds used to reduce or repay the outstanding indebtedness. Where
  excess funds are available after the debt has been repaid, they are available either for other secured lenders with lower priority or are returned to the customer. HSBC does not generally occupy repossessed properties for its business use. The
  majority of repossessed properties in 2005 arose in HSBC Finance Corporation in the US.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2><b>Renegotiated loans </b></FONT><I><FONT size=1>(Audited IFRS 7 information)</FONT></I></font></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Restructuring activity
is designed to manage customer relationships, maximise collection opportunities
and, if possible, avoid foreclosure or repossession. These include extended payment

arrangements, approved external debt management</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">plans,
deferring foreclosure, modification, loan</FONT></P>
</div>

<div style="float: right; width: 48%">

<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rewrites and/or
      deferral of payments pending a change in circumstances. Following restructuring,
      an overdue consumer account is normally reset from delinquent to current
      status. Restructuring policies and practices are based on indicators or criteria
      which, in the judgement of local management, indicate that repayment will
      probably continue. These policies are kept under continuous
    review and their application varies according to the nature of the market,
      the product, and the availability of empirically based data. When empirical
      evidence indicates an increased propensity to default on restructured accounts,
      the use of roll-rate methodology ensures this factor is taken into account
  when calculating impairment allowances.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Renegotiated loans that would otherwise be past due or impaired totalled US&#36;18.1 billion at 31 December 2005. Restructuring is most commonly applied to
consumer finance portfolios. The largest concentration is in HSBC Finance, and amounts to US&#36;14.8 billion or 82 per cent of the total renegotiated loans. The majority of restructured amounts arise from secured lending.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2><b>HSBC Holdings </b></FONT><I><FONT size=1>(Audited IFRS 7 information)</FONT></I></font></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings manages its credit risk by limiting its exposure to transactions with its subsidiary undertakings. No outstanding balances were considered past due or impaired as at 31
December 2005.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Holdings&#146; maximum exposure to credit risk at 31 December 2005, excluding
    collateral or</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
  credit enhancements, was as follows:</FONT></P>
</div>

<p><br clear="all">
</p>
<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">143</FONT></P>

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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
          Review</FONT><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td><font size="1"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="1"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="1"> &nbsp;</font></td>
  </tr>
</table>

<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>&nbsp;</TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Off-balance</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maximum</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">sheet exposure</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">exposure</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to HSBC undertakings</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,663</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,755</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments &#150; debt securities of HSBC undertakings</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,256</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,256</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guarantees</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,316</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,540</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58,856</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No collateral or other credit enhancements were held by HSBC Holdings in respect of its transactions with subsidiary undertakings, other than cash deposited
in respect of interest rate contract margins.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings&#146; financial assets are held with subsidiaries of HSBC, primarily those domiciled in Europe and North America.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Areas of special interest</FONT></B></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Group advances to personal customers</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The loan impairment charge in 2005 remained dominated by the charge relating to the personal sector, which represented 92 per cent of the Group total after taking account of losses from
HSBC&#146;s other credit related activities. Within this total, losses on residential mortgages remained modest.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, HSBC&#146;s lending to the personal sector amounted to US&#36;420 billion, or 56 per cent of total gross loans and advances, compared
with US&#36;388 billion (57 per cent) at 31 December 2004. Acquisitions in 2005 accounted for 1 per cent of the overall increase on the previous year. The main characteristics of this portfolio and the economic influences affecting it are outlined
below.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Secured residential mortgages, including the Hong Kong GHOS, accounted for US&#36;239 billion, or 57 per cent of total lending to the personal sector,
compared with US&#36;228 billion, or 59 per cent, at 31 December 2004. The US and the UK were the main areas of growth in 2005, though increased lending to European customers was masked by the effect of the strengthening US dollar on currency
translation. In percentage terms, growth in the Rest of Asia-Pacific was also strong, and mortgage lending increased by over 30 per cent in each of the Middle East, India, Taiwan, South Korea, mainland China and Singapore.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Growth
in the unsecured element of the portfolio, consisting of credit and charge card
advances, personal loans, vehicle finance facilities</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
other varieties of instalment finance, was more subdued than in the prior year.
Following a review of</FONT></P>
</div>

<div style="float: right; width: 48%">

<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> the UK personal
    unsecured lending book, US&#36;1 billion of gross lending to
  personal customers was written off, and related collectively assessed loss allowances extinguished. This reflected those amounts for which it was deemed there was no realistic possibility of recovery, and was the main cause of more subdued growth.
  At 31 December 2005, the combined portfolios totalled US&#36;182 billion, or 43 per cent, of total lending to the personal sector, compared with US&#36;160 billion, or 41 per cent, at 31 December 2004. The acquisition of the credit card portfolios
  of Metris added US&#36;5 billion to unsecured lending in 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Growth in these portfolios reflected resilient consumer spending in most of the main economies in which HSBC operates. In the UK, demand for additional
consumer credit moderated, and marketing and competitive pricing initiatives were the main drivers of growth. Again, growth in Europe was masked by the strengthening US dollar.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Geographically, total lending to personal customers was dominated by the diverse and mature portfolios in North America (US&#36;218 billion), the UK
(US&#36;107 billion) and Hong Kong (US&#36;38 billion). Collectively, these books accounted for 87 per cent of total lending to the personal sector (31 December 2004: 87 per cent).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Account management within HSBC&#146;s personal lending portfolios is generally supported by sophisticated statistical techniques, which are enhanced by the
availability of credit reference data in key local markets. The utilisation of an increasingly analytical approach to the management of these portfolios remains an ongoing objective of the Group.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
    the US, excluding the acquisition of Metris, growth was largely in the mortgage
    services and branch-based consumer lending businesses. Promotions in the dealer
    network, and strong growth in the consumer direct loan programme, also contributed
    to increased vehicle finance lending. With the exception of the areas immediately
    affected by Hurricane Katrina, the US housing market remained strong, supported
    by low interest rates and</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
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<div style="float: left; width: 48%">
  <P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">transaction
    costs, and increased availability of credit. Within the US, HSBC&#146;s portfolios
    remained geographically diverse, and were largely secured by first lien positions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Although increased mortgage borrowing has contributed to the record level of consumer debt burden in the US, levels have largely stabilised and are expected
to decline gradually, as incomes rise sufficiently to repay debt, notwithstanding higher interest rates. Bankruptcy filings increased sharply in the second half of 2005 as a result of a change in legislation, but receded to more modest levels by the
end of the year. This has continued into 2006. Notwithstanding the effect of additional impairment allowances required for the Hurricane Katrina and increased bankruptcy filings, delinquency rates continued to fall across the majority of portfolios
during 2005, and trends in lending quality improved.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Mexico, HSBC utilised well-developed distribution capabilities and enhanced marketing initiatives to grow consumer lending, card and mortgages. Net
interest margin was partially offset by a lower interest rate environment during the year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the UK, growth in personal lending was mainly in the mortgage market, where HSBC focused on retaining existing customers, and increasing market share
through competitive pricing and marketing strategies. Fixed rate mortgages were the main driver of growth, against the background of a more subdued market. Overall, the secured mortgage portfolio represented 64 per cent of total lending to personal
customers in the UK, and although delinquency increased modestly during 2005, losses remained negligible.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The unsecured portfolio in the UK also continued to expand, driven by credit and charge cards, and to a lesser extent unsecured personal lending, though
growth in gross lending was largely offset by the US&#36;1 billion write-off mentioned above. In response to prevailing market conditions, which saw a progressive rise in personal indebtedness, bankruptcies and delinquencies over the course of 2005,
HSBC revised credit scorecards, adopted positive credit reference data, further centralised underwriting, and expanded its origination and collection analytics and efforts. As a result, there were indicators in the second half of the year that the
credit quality of more recent unsecured lending vintages had improved.</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal lending
in Hong Kong remained subdued
in 2005. The mortgage market remained intensely competitive, with competitors
offering very low rates, along with up-front cash incentives to attract new mortgage
business.  Overall mortgage</FONT></P>
</div>
<div style="float: right; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balances, excluding
    the reduction in balances under the GHOS, which remained suspended, were
    broadly flat compared with December
  2004. Credit quality continued to improve, with consumers benefiting from employment
  levels and rising
  property prices, with a notable reduction in the level of negative equity on
  mortgage balances.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In contrast with Hong Kong, personal lending in the Rest of Asia-Pacific grew strongly in most countries in 2005, boosted by a series of mortgage and credit
card campaigns during the year and growth in the card base, which added 1.6 million cards, to reach 6.3 million cards in issue at the end of 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Growth was also notable in Brazil, where marketing and new product launches contributed to growth of 44 per cent in personal unsecured lending, as consumer
sentiment improved with economic growth. Credit quality deteriorated, notably in the consumer finance business, however, actions taken to mitigate this, notably through tightening underwriting, delivered an improvement in the fourth
quarter.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Elsewhere, credit quality remained relatively stable, although HSBC continued to monitor carefully those portfolios that possess the greatest potential for
future economic stress. Delinquency and loss trends differed across jurisdictions, reflecting these varied conditions.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Non-traditional lending</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In response to customer demand, HSBC offers interest only residential mortgage loans in more developed markets. These loans allow customers to pay only accruing interest for a period of
time, and provide customers with the repayment flexibility inherent in the structures of such products. An increasing number of customers prefer to make one-off, or irregular capital reduction payments through the lifetime of such loans, reflecting
their individual income patterns.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC underwrites and prices these loans in a manner appropriate to compensate for their risk by ensuring, for example, that loan-to-value ratios are more
conservative than for traditional mortgage lending. HSBC does not offer loans which are designed to expose customers to the risk of negative amortisation.</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">145</FONT></P>

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<P><font size="2" face="Arial,Arial,Helvetica,sans-serif"> H S B C &nbsp; H O
L D I N G S &nbsp; P L C</font></P>
<font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)<br>
<br>
</FONT></FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><b><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Risk elements in the loan portfolio</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The disclosure of credit risk elements under the following headings reflects US accounting practice and classifications:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="3%">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans
    accounted for on a non-accrual basis;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accruing
        loans
contractually past due 90 days or</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">more
as to interest or principal; and</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">troubled
    debt restructurings not included in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">above.</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In accordance with IFRSs, interest income continues to be recognised on assets that have been written down as a result of an impairment loss. In the
following tables, HSBC presents information on its impaired loans and advances which are designated in accordance with the policy described above.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans are consistent with the &#145;non-accrual basis&#146; classification used in US GAAP and in prior years.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Impaired loans and advances</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banks</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customers</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,446</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,427</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total impaired loans and advances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,468</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,453</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total allowances cover as a percentage of impaired loans and advances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">99.1%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.9%</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Impaired customer
loans and impairment allowances by geographical region</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <b>2005</b></font>     <font size="2">&nbsp;</font>

        </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impaired</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impairment</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">loans</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">allowances</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">allowances</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,068</FONT></B></TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,491</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,039</FONT></TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,799</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">506</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">398</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">522</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">936</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">836</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,160</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">940</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,045</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,836</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,875</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,714</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">891</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">796</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">657</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">567</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,446</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,357</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,427</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,542</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total impaired loans to customers declined by US&#36;981 million to US&#36;11,446 million at the end of 2005. At 31 December 2005, impaired loans represented 1.5 per cent of gross
customer loans and advances after grossing, compared with 1.8 per cent at 31 December 2004. Following a review of the personal unsecured lending portfolio in the UK, US&#36;1 billion of impaired loans, for which there was no realistic possibility of
recovery, were written-off.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The commentary that follows is based on constant exchange rates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans in Europe fell by 5 per cent to US&#36;5,068 million in 2005. In the UK, impaired loans decreased by 4 per cent. This was primarily due to the
write-offs mentioned above. Excluding this, impaired loans rose, in part due to the strong growth in unsecured personal lending and credit cards. The UK has experienced weakening personal credit quality in recent years, driven by record levels of
consumer debt, slower economic growth and higher unemployment. These factors, coupled with a change in legislation, have resulted in a significant</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">increase in personal bankruptcies. There were further declines in France, due to corporate restructuring and acquisition activity, and a 21 per cent decline in Malta. This reflected the
write-off of fully provided loans that were no longer deemed to have a realistic prospect of recovery.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Hong Kong, impaired loans declined by 28 per cent to US&#36;506 million in 2005. Improvement was seen in both the personal and corporate portfolios,
driven by the strong economy, lower unemployment and stable property prices following a recovery in 2004. Some weakness in the real estate market was evident in the fourth quarter, following successive interest rate rises, but loan quality remains
strong.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impaired loans, both in absolute terms and as a proportion of gross advances, declined across most major countries in the Rest of Asia-Pacific. In total,
impaired balances declined by 19 per cent to US&#36;936 million. In particular, there were significant falls in Malaysia, due to a significant number of restructurings and to strong economic growth. There</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">146</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p147"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">were also improvements in mainland China and Singapore, due to strong economic growth.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In North America, impaired loans increased by 4 per cent to US&#36;4,045 million. This rise reflected portfolio growth and accelerated bankruptcies ahead of
new US legislation, particularly in secured and personal unsecured lending. The trend in US impaired loans as a percentage of gross receivables was stable year-on-year. In Mexico, impaired loans increased in line with portfolio growth. Improving
credit conditions in Canada, on the back of a strong economy, drove a decrease in impaired loans, offsetting the rises in the US and Mexico.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A rise of 26 per cent to US&#36;891 million in South America&#146;s impaired loans was mainly due to the 34 per cent increase in Brazil. This was partly
driven by strong balance sheet growth, but there was also some weakening in credit quality in the consumer finance business, particularly in the low income segment. Action taken during the year to amend lending parameters has assisted in stabilising
delinquency. Argentina&#146;s economy continued its steady recovery and as a result impaired loans declined by 9 per cent, partly offsetting the rise in Brazil.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Troubled debt restructurings</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US GAAP requires separate disclosure of any loans whose terms have been modified because of problems with the borrower to grant concessions other than are warranted by market conditions.
These are classified as &#145;troubled debt restructurings&#146; and are distinct from the normal restructuring activities described above. Disclosure of troubled debt restructurings may be discontinued after the first year if the debt performs in
accordance with the new terms.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fall in troubled debt restructurings was driven by the decline in Hong Kong, a product of the continuing improvement in the quality of the loan
book.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Unimpaired loans past due 90 days or more</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The rise in Europe was due to the UK, where improved processes led to better credit data collection. In North America, HSBC Finance&#146;s business benefited from improvement in
delinquency and default trends year on year. In common with other card issuers, including other parts of HSBC, HSBC Finance continues to accrue interest on credit cards past 90 days until charged off. Appropriate provisions are raised against the
proportion judged to be irrecoverable.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Potential problem loans</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit risk elements also cover potential problem loans. These are loans where information about borrowers&#146; possible credit problems causes management serious doubts about the
borrowers&#146; ability to comply with the loan repayment terms. There are no potential problem loans other than those identified in the table of risk elements set out below.</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">147</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p148"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<font size="2">
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT></P>
</font><font size="3"> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Financial
Review </FONT></B><FONT face="Arial,Arial,Helvetica,sans-serif">(<font size="2">continued</font>)<br>
<br>
</FONT></FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<BR>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Risk elements</FONT><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table provides an analysis of risk elements in the loan portfolios at 31 December for the past five years:</FONT></P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan="3" align=left><div align="center"><font size="2">&nbsp;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
    31 December</font></div></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><div align="center"><font size="2">&nbsp;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
    31 December</font></div></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2001</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impaired loans</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=8% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,081</FONT></B></TD>
  <TD width=2% align=right>&nbsp;</TD>
  <TD width=8% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,053</FONT></TD>
  <TD width=2% align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD width=2% align=left>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,680</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,479</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,605</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">506</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,670</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,707</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,008</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">945</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,172</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,519</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,008</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,692</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,045</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,875</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,651</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,672</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">660</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">891</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">657</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">696</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">476</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">544</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,468</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,453</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,216</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,342</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,509</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Troubled debt restructurings</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">198</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">436</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">571</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">396</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">381</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">160</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">144</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">210</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">732</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">837</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">669</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">144</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,246</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,363</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,845</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,199</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">659</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Unimpaired loans contractually past due</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">90 days or more as to principal or</FONT></B></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
        <TD>&nbsp;</TD>
        <TD>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;interest</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">592</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">205</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">193</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">928</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,171</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,252</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,634</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,362</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,538</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">291</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Risk elements on loans</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,708</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,155</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,873</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,536</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,620</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">778</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,199</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,446</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,296</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,487</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,106</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,284</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,632</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,130</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,861</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,133</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,190</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,113</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,718</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">715</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,623</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,350</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,535</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,152</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">735</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,348</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,178</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,599</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,832</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,418</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets held for resale</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">205</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">634</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">708</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">794</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">959</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">831</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">858</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">198</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">149</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total risk elements</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,913</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,182</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,905</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,562</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,704</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">827</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,274</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,448</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,313</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,506</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,137</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,305</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,662</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,184</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,893</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,767</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,898</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,907</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,819</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">729</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,663</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,350</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,535</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,152</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">735</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,307</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,009</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,457</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,030</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,567</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

      </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font> </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font> </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment allowances as a</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79.2</FONT></B></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82.7</FONT></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;&nbsp;&nbsp;<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">percentage
    of risk elements on loans</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77.9</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>&nbsp;</P>
<P><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Interest foregone on impaired loans</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest income that would have been recognised under the original terms of the impaired interest and restructured loans amounted to approximately</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>&nbsp;</P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;275 million in 2005, compared with US&#36;280 million in 2004. Interest income of approximately US&#36;120 million from such loans was recorded in 2005, compared with US&#36;182
    million in 2004.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">148</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p149"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width: 48%">
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Country distribution of outstandings and cross-border exposures</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC controls the risk associated with cross-border lending, essentially that foreign currency will not be made available to local residents to make payments, through a centralised
structure of internal country limits which are determined by taking into account relevant economic and political factors. Exposures to individual countries and cross-border exposure in aggregate are kept under continuous review.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table summarises the aggregate of in-country foreign currency and cross-border outstandings by type of borrower to countries which individually
represent in excess of 1 per cent of HSBC&#146;s total assets. The classification is based on</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the country of residence of the borrower but also recognises the transfer of country risk in respect of third party guarantees, eligible collateral held and residence of the head office
when the borrower is a branch. In accordance with the Bank of England Country Exposure Report (Form CE) guidelines, outstandings comprise loans and advances (excluding settlement accounts), amounts receivable under finance leases, acceptances,
commercial bills, certificates of deposit, and debt and equity securities (net of short positions), and exclude accrued interest and intra-HSBC exposures. Comparative figures for 2003 were calculated in accordance with the requirements of the Bank
of England&#146;s Form C1, which was replaced by Form CE with effect from 31 December 2004 reporting.</FONT></P>
</div><br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Government</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and official</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banks</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">institutions</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United Kingdom</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19.6</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.7</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.2</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39.5</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38.4</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37.6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Netherlands</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18.9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Italy</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18.5</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United Kingdom</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Italy</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Netherlands</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2003</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United Kingdom</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Netherlands</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Italy</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, HSBC had in-country foreign currency and cross-border outstandings to counterparties in Hong Kong, Australia and Canada of between 0.75
per cent and 1 per cent of total assets. The aggregate in-country foreign currency and cross-border outstandings were: Hong Kong: US&#36;14.6 billion; Australia: US&#36;12.5 billion; Canada: US&#36;11.7 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004, HSBC had in-country foreign currency and cross-border outstandings to counterparties in Australia and Canada of between 0.75 per cent
and 1 per cent of total assets. The aggregate in-country foreign currency and cross-</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">border outstandings were: Australia: US&#36;12.7 billion; Canada: US&#36;11.8 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2003, HSBC had in-country foreign currency and cross-border outstandings to counterparties in Australia and Japan of between 0.75 per cent and
1 per cent of total assets. The aggregate in-country foreign currency and cross-border outstandings were: Australia: US&#36;9.1 billion; Canada: US&#36;7.9 billion.</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">149</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p150"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><font face="Univers,Bold,Arial,Helvetica,sans-serif"> <B><FONT size="3">Financial </FONT></B><font size="3"><B>Review</B></font><B> </B><FONT size=2>(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">
<P>&nbsp;</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2" face="Univers,Bold,Arial,Helvetica,sans-serif"><b>Liquidity
          and funding management</b></font></td>
  </tr>
  <tr>
    <td><hr noshade align="center" width="100%" size="2">
    </td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><i>(Audited
      IFRS 7 information)</i></font></td>
  </tr>
</table>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
The objective of HSBC&#146;s liquidity and funding management is to ensure that
all foreseeable funding commitments and deposit withdrawals can be met when due,
and that wholesale market access is co-ordinated and disciplined. To this end,
HSBC maintains a diversified and stable funding base comprising core retail and
corporate customer deposits and institutional balances. This is augmented by
wholesale funding and portfolios of highly liquid assets which are diversified
by currency and maturity, in order to enable HSBC to respond quickly and smoothly
to unforeseen liquidity requirements. </font></P>
<P><font size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The management of liquidity and funding is primarily carried out locally in the operating companies of HSBC in accordance with practice and limits set by the
Group Management Board. These limits vary by local financial unit to take account of the depth and liquidity of the market in which the entity operates. It is HSBC&#146;s general policy that each banking entity should be self-sufficient with regard
to funding its own operations. Exceptions are permitted to facilitate the efficient funding of certain short-term treasury requirements and start-up operations or branches which do not have access to local deposit markets, all of which are funded
under strict internal and regulatory guidelines and limits from HSBC&#146;s largest banking operations. These internal and regulatory limits and guidelines serve to place formal limitations on the transfer of resources between HSBC entities and are
necessary to reflect the broad range of currencies, markets and time zones within which HSBC operates. </FONT></font></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC requires operating entities to maintain a strong liquidity position and to manage the liquidity profile of their assets, liabilities and commitments so
that cash flows are appropriately balanced and all funding obligations are met when due. </FONT></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The
Group&#146;s liquidity and funding management process includes: </FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%"><font size="2" face="Times New Roman, Times, serif">&#8226;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">projecting
          cash flows by major currency and considering
      the level of liquid assets necessary in relation thereto;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&#8226;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> monitoring
          balance sheet liquidity ratios against internal
      and regulatory requirements;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&#8226;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">maintaining
          a diverse range of funding sources with
      adequate back-up facilities;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&#8226;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">managing
      the concentration and profile of debt maturities;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
</div>
<div style="float: right; width: 48%">
  <p>&nbsp;</p>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif"> maintaining
      debt financing plans;</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">monitoring
            depositor concentration in order to avoid
            undue reliance on large individual depositors and ensure a satisfactory
            overall funding
      mix; and </font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">maintaining
            liquidity and funding contingency plans.
            These plans identify early indicators of stress conditions and describe
            actions to be taken
            in the event of difficulties arising from systemic or other crises, while
            minimising adverse
      long-term implications for the business.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
  </table>
  <p><font size="2"><B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Primary sources of funding </FONT></B><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></font></p>
  <P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Current accounts and savings deposits payable on demand or at short notice form
a significant part of HSBC&#146;s funding. HSBC places considerable importance
on the stability of these deposits. Stability depends upon maintaining depositor
confidence in HSBC&#146;s capital strength and liquidity, and on competitive
and transparent deposit-pricing strategies. HSBC seeks to support this confidence
by consistently reinforcing
HSBC&#146;s brand values of trust and solidity across the Group&#146;s geographically
diverse retail banking network. </font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      accesses professional markets in order to provide funding for non-banking
      subsidiaries that do not accept deposits, to maintain a presence in local
      money markets and to optimise the funding of asset maturities not naturally
      matched by core deposit funding. In aggregate, HSBC&#146;s banking entities
      are liquidity providers to the inter-bank market, placing significantly
      more funds with other
banks than they borrow. </FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The
      main operating subsidiary that does not accept deposits is HSBC Finance
      Corporation, which funds itself principally through taking term funding
      in the professional markets and through the securitisation of assets. At
      31 December 2005, US&#36;132 billion of HSBC Finance Corporation&#146;s
      liabilities were drawn from professional markets, utilising a range of
      products, maturities and currencies to avoid undue reliance on any particular
funding source. </FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Of
      total liabilities of US&#36;1,502 billion at 31 December 2005, funding from customers amounted to US&#36;810 billion, of which US&#36;773
      billion was contractually repayable within one year. However, although
      the contractual repayments of many customer accounts are on demand or at
      short notice, in practice short-term deposit balances remain stable as
inflows and outflows broadly match.</FONT></font></P>
</div>
<div align="center"><br clear="all">
  <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">150</FONT>
</div>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p151"></a>
<p><a href="#contents">Back to Contents</a></p>
</font>
<div style="float: left; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    following is an analysis of cash flows payable by HSBC under financial liabilities
  by remaining contractual maturities at the balance sheet date: </font></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif"></FONT></P>

</div><br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR align="right" valign="bottom">
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR align="right" valign="bottom">
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>between</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>between</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR align="right" valign="bottom">
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>On</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>within 3</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>3 and 12</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>1 and 5</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>after 5</B></font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR align="right" valign="bottom">
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>demand</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>months</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>months</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>years</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>years</B></font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR align="right" valign="bottom">
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR align="right" valign="bottom">
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Deposits by banks</font></TD>
        <TD width="7%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>21,672</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="7%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>29,937</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="7%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>11,026</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="7%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>7,619</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="7%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>4,259</B></font></TD>
    <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Customer accounts</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>424,880</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>254,354</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>40,813</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>29,619</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>6,531</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Financial liabilities designated at fair value</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>6,258</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,365</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>4,603</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>34,244</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>73,534</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Debt securities in issue</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,487</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>64,824</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>51,538</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>118,109</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>24,823</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Subordinated liabilities</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>714</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>2,453</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>14,583</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>30,555</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Other financial liabilities</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>12,922</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>14,871</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>971</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>109</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>689</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Total at 31 December 2005</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>467,219</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>366,065</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>111,404</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>204,283</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>140,391</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<font size="2"><P>
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">For information on the contractual maturity of gross loan commitments, see Note 40 on the Financial Statements.</FONT></I></P>
</font>
<div style="float: left; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liabilities in trading portfolios have not been analysed by contractual maturity because trading assets and liabilities are typically held for short periods
of time. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assets
    available to meet these liabilities, and to cover outstanding commitments
    to lend (US&#36;642 billion), included cash, central bank balances, items in
  the course of collection and treasury and other bills (US&#36;75 billion); loans to banks (US&#36;156 billion, including US&#36;121 billion repayable within one year); and loans to customers (US&#36;793 billion, including US&#36;313 billion
  repayable within one year). In the normal course of business, a proportion of customer loans contractually repayable within one year will be extended. In addition, HSBC held debt securities marketable at a value of US&#36;273 billion. Of these
  assets, some US&#36;98 billion of debt securities and treasury and other bills
have been pledged to secure liabilities. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HSBC
    would meet unexpected net cash outflows by selling securities and accessing
  additional funding sources such as interbank or asset-backed markets. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
    key measure used by the Group for managing liquidity risk is the ratio of
    net liquid assets to customer liabilities. Generally, liquid assets comprise
    cash balances, short-term interbank deposits and highly-rated debt securities
    available for immediate sale and for which a deep and liquid market exists.
    Net liquid assets are liquid assets less all wholesale market funds, and
    all funds provided by
  customers deemed to be professional, maturing in the next 30 days. The definition
    of a professional customer takes account of the size of the customer&#146;s
total deposits. </font></P>
</div>
<div style="float: right; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minimum
    liquidity ratio limits are set for each bank operating entity. Limits reflect
    the local market place, the diversity of funding sources available, and the
    concentration risk from large depositors. Compliance with entity level limits
    is monitored within the Group Finance Function and reported regularly to
  the Risk Management Meeting. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
    consolidated data is not utilised in the management of HSBC&#146;s liquidity, the consolidated liquidity ratio figures of net liquid assets to
  customer liabilities shown in the following table provide a useful insight into the overall liquidity position of the Group&#146;s banking entities. The Group&#146;s
liquidity risk has not changed materially during the year. </font></P>
<P>
<FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">Ratio of net liquid assets to customer liabilities </FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=center colspan=11><font size="2">&nbsp;
    </font></TD>
</TR>
<TR valign="bottom">
        <TD colspan=3 align=right><div align="center"><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
        <B>At 31 December</B>
      </font></div></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Average</b></font></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=3 align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <b>during</b> </font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <b>Maximum</b> </font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <b>Minimum</b> </font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2005</B>
        </font></TD>
        <TD width=2% align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2004
        </font></TD>
        <TD width="2%" align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>2005</B>
        </font></TD>
        <TD width="2%" align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>in 2005</B>
        </font></TD>
        <TD width="2%" align=left>&nbsp;

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>in 2005</B>
        </font></TD>
    <TD width="2%" align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.1</FONT><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</font></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;
    </font></TD>
        <TD align=right><font size="2">
    <FONT face="TimesNewRoman,Times New Roman,Times,serif">15.9</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">%</font>
        </font></TD>
        <TD align=left><font size="2">&nbsp;
    </font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.3</FONT><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</font></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;
    </font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.5</FONT><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</font></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;
    </font></TD>
        <TD align=right><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">14.4</FONT><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</font></B>
        </font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P><font face="Univers,Bold,Arial,Helvetica,sans-serif">
<B><font size="2">HSBC Holdings </font></B><font size="2"><I>(Audited
IFRS 7 information)</I></font></font></P>
<P>
  <FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings&#146; primary sources of cash are interest and capital receipts from its subsidiaries, which it deploys in short-term bank deposits or liquidity funds. HSBC Holdings&#146; primary
  uses of cash are investments in subsidiaries, interest payments to debt holders
  and dividend payments to shareholders. On an ongoing basis, HSBC Holdings replenishes
  its liquid resources through the receipt of interest on, and repayment of,
  intra-group loans, from dividends paid by subsidiaries, and from interest earned
  on its own liquid funds. The ability of its subsidiaries to pay dividends or
  advance monies to HSBC Holdings depends, among other things, on their respective
  regulatory
capital requirements, statutory reserves, and financial and operating performance.</FONT></P>
</div><br clear="all">
<P align="center">&nbsp;</P>
<P align="center"><FONT size="2" face="sans-serif">151</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2"><page><a name="p152"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
</font>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial </FONT></B><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif"><B>Review</B></font><B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">
<P>&nbsp;</P>
<P><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">HSBC actively
    manages the cash flows from its subsidiaries
    to optimise the amount of cash held at the holding company level, and expects
    to continue
    doing so in the future. The wide range of HSBC&#146;s activities means that
    HSBC Holdings is not dependent on a single source of profits to fund its
    dividends. Together with its accumulated liquid assets, HSBC Holdings believes
    that planned
  dividends and interest from subsidiaries will enable</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>&nbsp;</P>
<P><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">it to meet anticipated cash obligations. Also, in normal circumstances, HSBC Holdings has full access to capital markets on normal terms. </FONT></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The following is an analysis of cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities at the balance sheet
date: </FONT></font></P>
<P>&nbsp;</P>
</div>
<br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>between</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>between</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Due</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>On</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>within 3</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>3 and 12</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1 and 5</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>after 5</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>demand</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>months</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>months</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>years</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>years</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Amounts owed to HSBC undertakings</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>664</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>176</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,060</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,654</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>521</B></font></TD>
    <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Financial liabilities designated at fair value</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>140</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>420</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>3,442</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>20,382</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Other liabilities</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,196</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>7</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Accruals and deferred income</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>13</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>82</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Subordinated liabilities</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>107</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>321</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>2,771</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>15,638</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Total at 31 December 2005</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>677</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,701</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1,801</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>7,867</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>36,548</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>

<div style="float: left; width: 48%">
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></P>
<P><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
      31 December 2005, the short-term liabilities of HSBC Holdings totalled
    US&#36;3,191 million including US&#36;1,193 million in respect of the proposed
    third interim dividend for 2005. Short-term assets of US&#36;5,599 million consisted mainly of cash at bank of US&#36;756 million and loans and advances to HSBC undertakings of US&#36;4,661
  million. </FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><b><font size="2" face="Univers,Bold,Arial,Helvetica,sans-serif">Market risk management</font></b></td>
  </tr>
  <tr>
    <td><hr noshade align="center" width="100%" size="2">
    </td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><i>(Audited
          IFRS 7 information)</i></font></td>
  </tr>
</table>
<P><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">The objective
    of HSBC&#146;s market risk management is to manage and control market risk exposures in order to optimise return on risk while maintaining a market profile consistent with
the Group&#146;s status as a premier provider of financial products and services. </FONT></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
    risk is the risk that movements in market risk factors, including foreign
    exchange rates and commodity prices, interest rates, credit spreads and equity
    prices will reduce HSBC&#146;s income or the value of its portfolios. Credit
risk is discussed separately in the Credit risk management section. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HSBC separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those positions arising from market-making,
  proprietary position-taking and other marked-to-market positions so designated. The marked-to-market positions so designated but not held with trading intent have historically not been material to the Trading Value at Risk figure. However, this is
  no longer the case following the transition to accounting under IFRSs, which has increased the proportion of financial instruments measured at fair value. The contribution of these positions to the Trading Value at Risk is disclosed separately.
</font></P>
<P>&nbsp;</P>
</div>
<div style="float: right; width: 48%">
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></P>
<P><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-trading
      portfolios primarily arise from the effective interest rate management
    of HSBC&#146;s retail and commercial banking assets and liabilities. </FONT></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    management of market risk is principally undertaken in Global Markets using
    risk limits approved by the Group Management Board. Limits are set for each
    portfolio, product and risk type, with market liquidity being a principal
    factor in determining the level of limits set. Traded Markets Development
    and Risk, an independent unit within Corporate, Investment Banking and Markets,
    develops the
  Group&#146;s market risk management policies and measurement techniques. Each
  major operating entity has an independent market risk control function which
  is responsible for measuring market risk exposures in accordance with the policies
  defined by Traded Markets Development and Risk, and monitoring and reporting
these exposures against the prescribed limits on a daily basis. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
    operating entity is required to assess the market risks which arise on each
    product in its business and to transfer these risks to either its local Global
    Markets unit for management, or to separate books managed under the supervision
    of the local Asset and Liability Management Committee (&#145;ALCO&#146;).
    The aim is to ensure that all market risks are consolidated within operations
    which have the necessary skills, tools, management and governance to manage
such risks professionally. </font></P>
<P><font size="2" face="Univers,Arial,Helvetica,sans-serif">
Value at risk (&#145;VAR&#146;) <I><font face="serif">(Audited IFRS 7 information</font></I><font face="serif"><B><I>)</I></B> </font></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
One of the principal tools used by HSBC to monitor and limit market risk exposure
is VAR. VAR is a technique that estimates the potential losses that </font></P>
</div>
<font size="2"><br clear="all">
<P align="center">
<FONT face="sans-serif">152</FONT></P>
</font>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p153"></a>
<p><a href="#contents">Back to Contents</a></p>
</font>
<div style="float: left; width: 48%">
<P>&nbsp;</P>
<p><font size="2"><P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  could occur on risk positions as a result of movements in market rates and
  prices over a specified time horizon and to a given level of confidence (for
  HSBC, 99 per cent). HSBC calculates VAR daily. The VAR model used by HSBC is
  predominantly based on historical simulation. The historical simulation model
  derives plausible future scenarios from historical market rate time series,
  taking account of inter-relationships between different markets and rates,
  for example, between interest rates and foreign exchange rates. Potential movements
  in market prices are calculated with reference to market data from the last
  two years. The model incorporates the impact of option features in the underlying
  exposures. HSBC has changed the assumed holding period from a 10-day period
  to a 1-day period as this reflects the way the risk positions are managed.
  Comparative VAR numbers have been restated to reflect this change. </font></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Although
    a valuable guide to risk, VAR should always be viewed in the context of its
  limitations. For example:</FONT></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td><font size="2" face="Times New Roman, Times, serif">the
          use of historical data as a proxy for estimating
          future events may not encompass all potential events, particularly
          those which are extreme
      in nature;</font></td>
  </tr>
</table></div>
<div style="float: right; width: 48%">
<P>&nbsp;</P>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="3%" valign="top">&#8226;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">the
            use of a 1-day holding period assumes that all
            positions can be liquidated or hedged in one day. This may not fully reflect
            the market risk arising
            at times of severe illiquidity, when a 1-day holding period may be
            insufficient to liquidate
        or hedge all positions fully;</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top">&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif"> the
            use of a 99 per cent confidence level, by definition,
            does not take into account losses that might occur beyond this level
        of confidence; and </font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top">&nbsp;</td>
    </tr>
    <tr>
      <td valign="top">&#8226;</td>
      <td align="left" valign="top"><font size="2" face="Times New Roman, Times, serif">VAR
            is calculated on the basis of exposures outstanding
            at the close of business and therefore does not necessarily
        reflect intra-day exposures.</font></td>
    </tr>
    <tr>
      <td valign="top">&nbsp;</td>
      <td align="left" valign="top">&nbsp;</td>
    </tr>
  </table>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HSBC
      recognises these limitations by augmenting its VAR limits with other position
      and sensitivity limit structures. Additionally, HSBC applies a wide range
      of stress testing, both on individual portfolios and on the Group&#146;s consolidated positions. HSBC&#146;s
      stress-testing regime provides senior management with an assessment of
      the financial impact of identified extreme events on the market risk exposures
of HSBC.</font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The VAR, both trading and non-trading, for Global Markets was as follows:</font></P><P>&nbsp;</P>
</div>
<br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    Value at risk</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    US&#36;m</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>Total</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>At 31 December 2005</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="10%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>128.5</B></font></TD>
    <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    At 31 December 2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    254.7</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<font size="2"><BR>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    Average</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    Minimum</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    Maximum</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    US&#36;m</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>2005</B></font></TD>
        <TD width="10%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>174.1</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="10%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>108.2</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="10%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>248.8</B></font></TD>
    <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    172.5</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    101.2</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    304.2</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<font size="2"><BR>
</font>
<div style="float: left; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total VAR
    at 31 December 2005 reduced compared with 31 December 2004. As interest rates
    rose during 2005 in the major markets, the risk arising in Global Markets&#146; positions
  was managed down to limit exposure to further interest rate rises.</font></P>
<font size="2" face="Univers,Arial,Helvetica,sans-serif"><I>(Unaudited information)</I><BR>
</font><font size="2">
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The
    histogram below illustrates the frequency of daily revenue arising from all
    Global Markets&#146; business and other trading activities. In 2005, HSBC
    implemented a change in the transfer pricing of funds between the Personal
    Financial Services and the Corporate, Investment Banking and Markets segments
    in North America, following a transfer of the management of all of the interest
    rate risk of the held prime residential mortgage portfolio. The numbers for
    2004 have been restated</FONT></P>
</font></div>
<div style="float: right; width: 48%">
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  to reflect the impact of transfer pricing had it been in place on a similar
  basis and to include the Futures and Equities revenues which comprise part
  of the Global Markets&#146; business. As a result of these restatements, the
  average daily revenue in 2004 increased from US&#36;18.3 million to US&#36;20.5
  million. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The average
    daily revenue earned from Global Markets&#146; business
    and other trading activities in 2005 was US&#36;18.7 million, compared with
    US&#36;20.5 million in 2004. The standard deviation of these daily revenues
    was US&#36;10.4 million compared with US&#36;8.1 million for 2004. The standard
    deviation measures the variation of daily revenues about the mean value of
    those revenues. </font></P>
</div>
<br clear="all">

<P align="right">&nbsp; </P>
<P align="center"><FONT size="2" face="Univers55,Arial,Helvetica,sans-serif">153</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p154"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
</font>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial </FONT></B><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif"><B>Review</B></font><B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%"><font size="2"><P>&nbsp;</P>
  <P><font size="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><FONT face="TimesNewRoman,Times New Roman,Times,serif">An
        analysis of the frequency distribution of daily revenue shows that there
        were three days with</FONT></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">negative
      revenue during 2005 compared with two days in 2004. The most frequent result
      was a daily revenue of between US&#36;20 million and US&#36;24 million,
  with 43 occurrences.</font></P>
  <P> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Daily distribution
  of Global Markets&#146; and other trading revenues in 2005</FONT></B><FONT face="TimesNewRoman,Times New Roman,Times,serif"> </FONT></P>
</font>
  <p><FONT size=2 face="sans-serif">Number of days</FONT><FONT size=2 face="BellMT,Times New Roman,Times,serif"><br>
    </FONT><font size="2"><img src="b822899-14ax5x1.jpg" width="100%" border=0></font></p>
  <p align="center"><font size="2"><font face="sans-serif">Revenues (US $m)</font></font>
  </p>
  <p align="left"><font size="2"><FONT face="Univers-Medium,Arial,Helvetica,sans-serif"><img src="solidbox.gif" width="12" height="12"> Profit
  and loss frequency</FONT></font></p>
  <div align="center"></div>
<P><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Daily
          distribution of Global Markets&#146; and other trading revenues in
          2004</B></font></P>
<P><font size="2" face="BellMT,Times New Roman,Times,serif"> <font face="sans-serif">Number of days</font><br>
</font><font size="2"><img src="b822899-14ax5x2.jpg" width="100%" border=0> </font></P>
<p align="center"><font size="2"><font face="sans-serif">Revenues (US $m)</font> </font> </p>
<p><font size="2"><B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT face="Univers-Medium,Arial,Helvetica,sans-serif"><img src="solidbox.gif" width="12" height="12"> Profit
      and loss frequency</FONT><BR>
</font></p>
<font size="2">
  <P><font face="Univers,Arial,Helvetica,sans-serif"> Fair value and price verification
    control <I><font face="serif">(Audited
  IFRS 7 information)</font></I><font face="serif"> </font></font></P>
  <P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Where certain financial instruments are carried on the Group&#146;s balance
    sheet at fair values, the valuation and the related price verification processes
    are subject to independent validation across the Group. Financial instruments
    which are accounted for on a fair value basis include assets held in the
    trading portfolio, financial instruments designated at fair value, obligations
    related to securities sold short all derivative financial instruments and
  available-for-sale securities. </font></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The
    determination of fair values is therefore a significant element in the reporting
  of the Group&#146;s Global Markets activities. </FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Responsibility
    for determining accounting policies and procedures governing valuation and
  validation ultimately rests with independent finance</FONT></P>
</font></div>
<div style="float: right; width: 48%">
<P>&nbsp;</P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">functions
    which report functionally to the Group Finance Director. All significant
    valuation policies, and any changes thereto, must be approved by senior finance
    management. HSBC&#146;s governance of financial reporting requires that Financial
    Control departments across the Group are independent of the risk-taking businesses,
    with the Finance functions having ultimate responsibility for the determination
    of fair values included in the financial statements, and for ensuring that
    the Group&#146;s policies comply with all relevant accounting standards.
    Both senior executive management and the Group Audit Committee assess the
    resourcing and expertise of Finance functions within the Group on a regular
    basis to ensure that the Group&#146;s financial control and price verification
  processes are properly staffed to support the required control infrastructure. </font></P>
<P><font size="2" face="Univers,Arial,Helvetica,sans-serif">
<B>Trading </B><I><font face="serif">(Audited IFRS 7 information</font></I><font face="serif"><B><I>)</I> </B></font></font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  HSBC&#146;s control of market risk is based on restricting individual operations
  to trading within a list of permissible instruments authorised for each site
  by Traded Markets Development and Risk, and enforcing rigorous new product
  approval procedures. In particular, trading in the more complex derivative
  products is concentrated in offices with appropriate levels of product expertise
  and robust control
systems. </font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">In addition, at both portfolio and position levels, market risk in trading portfolios is monitored and controlled using a complementary set of techniques
such as VAR and present value of a basis point, together with stress and sensitivity testing and concentration limits. These techniques quantify the impact on capital of defined market movements. </FONT></font></P>
<P><font size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total
    trading VAR for Global Markets at 31 December 2005 was US&#36;32.7 million. The contribution from positions taken without trading intent was US&#36;6.9
  million, the principal components of which are hedges that fail to meet the strict documentation and testing requirements of IAS 39 and are designated as &#145;non-qualifying&#146; hedges, and other positions transacted as economic hedges but which
  again do not qualify for hedge accounting. HSBC&#146;s policy on hedging is
  to manage economic risk in the most appropriate way without regard as to whether
  hedge accounting is available, within limits regarding the potential volatility
  of reported earnings. Trading VAR is further analysed below by risk type, by
  positions taken with trading intent and by positions taken without trading
intent: </FONT></font></P>
</div>
<br clear="all">
<P>&nbsp;</P>
<P align="center"> <FONT size="2" face="Univers55,Arial,Helvetica,sans-serif">154</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p154"></a>
<p><a href="#contents">Back to Contents</a></p>
</font>
<P><font size="2" face="Univers,Arial,Helvetica,sans-serif">
  Total trading VAR by
risk type <I><font face="serif">(Audited IFRS 7 information)</font></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Foreign</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>exchange and</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>commodity</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Interest</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>prices</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>rate trading</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Equity</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Total</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
    <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> <b>At
    31 December 2005</b></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>4.6</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>33.8</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>4.7</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>32.7</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> At
    31 December 2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    12.4</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    30.9</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    4.8</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    37.7</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Average</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>6.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>37.3</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>5.5</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>37.3</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    16.1</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    29.6</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    5.2</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    39.2</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Minimum</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>2.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>24.3</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>2.3</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>23.5</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    7.4</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    19.1</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    3.5</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    30.1</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Maximum</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>12.4</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>76.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>10.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>73.2</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    21.4</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    42.9</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    8.9</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    53.1</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<P><font size="2" face="Univers,Arial,Helvetica,sans-serif">
  Positions taken with trading
intent &#150; VAR by risk type <I><font face="serif">(Audited IFRS 7 information)</font></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Foreign</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>exchange and</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>commodity</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Interest</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>prices</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>rate trading</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Equity</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Total</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif"> <b>At
    31 December 2005</b></font></TD>
        <TD width="2%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>4.6</B></font></TD>
        <TD width="2%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>28.4</B></font></TD>
        <TD width="2%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>4.7</B></font></TD>
        <TD width="2%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>30.1</B></font></TD>
    <TD width="2%" align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> At
    31 December 2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    12.4</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    30.9</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    4.8</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    37.7</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Average</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>6.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>33.3</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>5.5</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>33.5</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    16.1</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    29.6</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    5.2</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    39.2</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> <b>Minimum</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>2.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>25.5</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>2.3</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>25.7</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    7.4</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    19.1</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    3.5</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    30.1</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Maximum</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>12.4</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>49.0</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>10.9</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>46.7</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    21.4</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    42.9</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    8.9</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    53.1</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<P><font size="2" face="Univers,Arial,Helvetica,sans-serif">
  Positions taken without trading
intent &#150; VAR by risk type <I><font face="serif">(Audited IFRS 7 information)</font></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Foreign</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>exchange and</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>commodity</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Interest</B></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>prices</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>rate trading</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Equity</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Total</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> <b>At
    31 December 2005</b></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>6.9</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="8%" align=right><font size="2" face="Times New Roman, Times, serif">
    <B>6.9</B></font></TD>
    <TD width="2%" align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> At
    31 December 2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Average</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>8.6</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>8.6</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Minimum</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1.4</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>1.4</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif"><b>Maximum</b></font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#EEEEEE">
  <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>24.5</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>&#150;</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>24.5</B></font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    &#150;</font></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<p>
<P align="center"><font size="2" face="Univers55,Arial,Helvetica,sans-serif">155</font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p156"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
</font>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial </FONT></B><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif"><B>Review</B></font><B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%"><P>&nbsp;</P>
<p><font size="2" face="Univers,Bold,Arial,Helvetica,sans-serif"><B>Non-trading </B><I><font face="serif">(Audited IFRS 7 information)</font></I></font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">The principal
    objective of market risk management of non-trading portfolios is to optimise
  net interest income. </font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
    risk in non-trading portfolios arises principally from mismatches between
    the future yield on assets and their funding cost, as a result of interest
    rate changes. Analysis of this risk is complicated by having to make assumptions
    on optionality in certain product areas, for example, mortgage prepayments,
    and from behavioural assumptions regarding the economic duration of liabilities
    which are contractually repayable on demand, for example, current accounts.
    The prospective change in future net interest income from non-trading portfolios
    will be reflected in the current realisable value of these positions, should
    they be sold or closed prior to maturity. In order to manage this risk optimally,
    market risk in non-trading portfolios is transferred to Global Markets or
  to separate books managed under the supervision of the local ALCO. </font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    transfer of market risk to books managed byGlobal Markets or supervised by
    ALCO is usually achieved by a series of internal deals between the business
    units and these books. When the behavioural characteristics of a product
    differ from its contractual characteristics, the behavioural characteristics
    are assessed to determine the true underlying interest rate risk. Local ALCOs
    regularly monitor all such behavioural assumptions and interest rate risk
    positions, to ensure they comply with interest rate risk limits established
  by the GroupManagement Board. </font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
    noted above, in certain cases, the non-linear characteristics of products
    cannot be adequately captured by the risk transfer process. For example,
    both the flow from customer deposit accounts to alternative investment products
    and the precise prepayment speeds of mortgages will vary at different interest
    rate levels. In such circumstances, simulation modelling is used to identify
  the impact of varying scenarios on valuations and net interest income.</font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Once
    market risk has been consolidated in Global Markets or ALCO-managed books,
    the net exposure is typically managed through the use of interest rate swaps
  within agreed limits.</font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">The
    principal non-trading risks which are not included in VAR for Global Markets
    (see &#145;Value at risk&#146; above) are
detailed below.</font></p>
</div>
<div style="float: right; width: 48%">
<p>&nbsp;</p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Market
    risk within HSBC Finance primarily arises from mismatches between future
    behaviouralised asset yields and their funding costs. This mismatch mainly
    comes from the fact that asset yields are predominantly fixed and relatively
    insensitive to market movements in interest rates, whereas the related wholesale
    funding and its associated derivatives are more sensitive to such movements.
    This non-trading risk is principally managed by controlling the sensitivity
    of projected net interest income under varying interest rate scenarios: see &#145;Net
  interest income&#146; below.</font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;VAR
    limits are set to control the total market risk exposure of HSBC Finance.
    The VAR as at 31 December 2005 was US&#36;13.5 million (2005 average: US&#36;13.4
    million; 2005 minimum: US&#36;6.2 million; 2005 maximum: US&#36;41.6 million),
    compared with US&#36;9.1 million at 31 December 2004(2004 average: US&#36;16.1
    million; 2004 minimum: US&#36;4.1 million; 2004 maximum: US&#36;31.9
million).</font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
    risk arising in the prime residential mortgage business of HSBC Bank USA
    is primarily managed by a specialist function within the business,under guidelines
    established by HSBC Bank USA&#146;s ALCO. A range of risk management tools
    is applied to hedge the sensitivity arising from movements in interest rates.
    The key element of market risk within the US prime mortgage business relates
    to the prepayment options embedded in US mortgages, which affect the sensitivity
    of the value of mortgage servicing rights (&#145;MSRs&#146;) to interest
    rate movements and the net interest margin on mortgage assets. MSRs represent
    the economic value of the right to receive fees for performing specified
    residential mortgage servicing activities. They are sensitive to interest
    rate movements because lower rates accelerate the prepayment speed of the
    underlying mortgages and therefore reduce the value of the MSRs. The reverse
    is true for rising rates. HSBC uses a combination of interest rate-sensitive
    derivatives and debt securities to help protect the economic value of MSRs.
    An accounting asymmetry can arise in this area because the derivatives used
    to hedge the economic exposure arising from MSRs arealways measured at fair
    value, but the MSRs themselves are measured for accounting purposes at the
    lower of amortised cost and valuation. It is, therefore, possible for an
    economically hedged position not to be shown as such in the accounts, when
    the hedge shows a loss but the MSR cannot be revalued above cost to reflect
    the related profit. HSBC&#146;s policy again
is to hedge the economic risk.</font></p>
</div>
<br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size="2" face="Univers55,Arial,Helvetica,sans-serif">156</FONT></P>
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<div style="page-break-before:always"></div>
<page><a name="p157"></a>
<p><a href="#contents">Back to Contents</a></p>
<div style="float: left; width: 48%"><P>&nbsp;</P>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;VAR
    limits are set to control the exposure to MSRs and MSR hedges. The VAR on
    MSRs and MSR hedges at 31 December 2005 was US&#36;3.9 million (2005 average:
     US&#36;3.2 million; 2005 minimum: US&#36;2.4 million; 2005 maximum: US&#36;4.0
     million), compared with US&#36;3.7 million at 31 December 2004 (2004 average:
     US&#36;3.9 million; 2004 minimum: US&#36;2.8 million; 2004 maximum: US&#36;4.6
  million).</font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-trading
    exposure also arises on non-cumulative perpetual preferred securities issued.
    These fixed-rate securities are eligible as tier 1 capital
       and are managed as capital instruments. Prior to the adoption of IFRSs
    these securities were classified as a non-equity element of minority interests
       but they are now classified as debt securities issued and therefore included
       in non-trading market risk analysis. The combination of a fixed interest
       rate and perpetual term generated a VAR of
    US&#36;65.0 million at 31 December 2005 (2005 average: US&#36;70.3 million;
    2005 minimum: US&#36;62.3 million; 2005 maximum: US&#36;78.2 million), compared
    with US&#36;72.5 million at 31 December 2004 (2004 average: US&#36;75.6 million;
  2004  minimum: US&#36;66.6 million; 2004 maximum: US&#36;86.3 million).</font></p>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
      risk arises in HSBC&#146;s insurance businesses within their portfolios of
      investments and policyholders&#146; liabilities.
      The principal market risks are interest-rate risk and equity risk, which
      primarily arise when guaranteed investment return policies have been issued.
      The insurance
      businesses have a dedicated head office market risk function which oversees
    management of this risk. </font></p>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
    similar market risk also arises within HSBC&#146;s defined benefit pension
    schemes to the extent that the obligations of the schemes are not fully matched
    by assets with determinable cash flows. This risk principally derives from
    the pension schemes holding equities against their future pension obligations.
    The risk is that market movements in equity prices could result in assets
    which are
  insufficient over time to cover the level of projected liabilities. Management,
    together with the trustees who act on behalf of the pension scheme beneficiaries,
    assess the level of this risk using reports prepared by independent external
actuaries. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    present value of HSBC&#146;s defined benefit pension plans&#146; liabilities was US&#36;27.7 billion at 31 December 2005, compared with US&#36;26.5
billion at 31 December 2004. Assets of the defined benefit </font></P>
</div>
<div style="float: right; width: 48%"><P>&nbsp;</P>
<P>
  <FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">schemes at 31 December 2005 comprised: equity investments 46 per cent (54 per cent at 31 December 2004); debt securities 33 per cent (29 per cent at 31 December 2004) and other (including
property) 21 per cent (17 per cent at 31 December 2004). (See Note 7 on the Financial Statements). </FONT></P>
<p><FONT size="2" face="Univers,Bold,Arial,Helvetica,sans-serif">Net interest income</FONT></p>
<P>
  <FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">A principal part of
  HSBC&#146;s management of market risk in non-trading portfolios is to monitor
  the sensitivity of projected net interest income under varying interest rate
  scenarios (simulation modelling). HSBC aims, through its management of market
  risk in non-trading portfolios, to mitigate the impact of prospective interest
  rate movements which could reduce future net interest income, whilst balancing
  the cost of such
hedging activities on the current net revenue stream. </FONT></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
    simulation modelling, businesses use a combination of scenarios relevant
    to local businesses and local markets as well as standard scenarios required
    to be used across HSBC. The standard scenarios are consolidated to illustrate
    the combined pro forma impact on HSBC consolidated portfolio valuations and
  net interest income. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    table below sets out the impact on future net interest income of a 25 basis
    points parallel fall or rise in all yield curves worldwide at the beginning
    of each quarter during the 12 month period from 1 January 2006. These scenarios
    differ from those disclosed in the <I>Annual Report and Accounts 2004</I> which assumed an immediate 100 basis points parallel rise or fall in all yield curves on the first day of the 12 month period. The revised scenarios, although still simplified, are considered more
relevant. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assuming
    no management actions, such a series of incremental parallel rises in all
    yield curves would decrease planned net interest income for the year to 31
    December 2006 by US&#36;525 million, while such a series of incremental parallel falls in all yield curves would increase planned net interest income by US&#36;474
    million. These figures incorporate the impact of any option features in the
underlying exposures. </font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Instead
    of assuming that all interest rates move together, HSBC groups its interest
    rate exposures into currency blocs whose interest rates are considered likely
    to move together. The sensitivity of projected net interest income, on this
  basis, is described as follows:</font></P>
</div>
<br clear="all">
<P align="right">&nbsp;</P>
<P align="center"><FONT size="2" face="Univers55,Arial,Helvetica,sans-serif">157</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font size="2"><page><a name="p158"></a>
<p><a href="#contents">Back to Contents</a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
</font>
<P> <B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Financial </FONT></B><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif"><B>Review</B></font><B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Rest of</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Hong Kong</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Rest of</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US dollar</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Americas</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>dollar</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Asia</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Sterling</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Euro</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>bloc</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>bloc</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>bloc</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>bloc</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>bloc</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>bloc</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Total</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>US&#36;m</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>Change in 2006 projected net</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;<B>interest income</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    +25 basis points shift in yield curves</font></TD>
        <TD align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;at the beginning of each quarter .</font></TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>(448</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>74</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>(18</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>28</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>(47</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>(114</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
        <TD width=6% align=right bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>(525</B>
        </font></TD>
        <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    -25 basis points shift in yield curves</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;at the beginning of each quarter .</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>402</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>(72</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>20</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>(39</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    <B>)</B></font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>51</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>112</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>474</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    Change in 2005 projected net</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;interest income</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    +25 basis points shift in yield curves</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;at the beginning of each quarter .</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    (500
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    81
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    2
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    18
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    62
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    (160
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    (497
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    -25 basis points shift in yield curves</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;at the beginning of each quarter .</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    637
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    (83
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    (104
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    (13
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    (70
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    157
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
    524
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<div style="float: left; width: 48%"><P>&nbsp;</P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    interest rate sensitivities set out in the table above are illustrative only
    and are based on simplified scenarios. The figures represent the effect of
    the pro forma movements in net interest income based on the projected yield
    curve scenarios and the Group&#146;s current interest rate risk profile.
    This effect, however, does not incorporate actions that would be taken by
    Global Markets or in the business units to mitigate the impact of this interest
    rate risk. In reality, Global Markets seeks proactively to change the interest
    rate risk profile to minimise losses and optimise net revenues. The projections
    above also assume that interest
  rates of all maturities move by the same amount and, therefore, do not reflect
    the potential impact on net interest income of some rates changing while
    others remain unchanged. The projections also make other simplifying assumptions,
including that all positions run to maturity.</font></P>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Group&#146;s core exposure to changes in its net interest income arising
    from movements in interest rates falls into three areas: core deposit franchises,
HSBC Finance and Global Markets.</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Core
          deposit franchises: these are exposed to changes
          in the value of the deposits raised and spreads against wholesale funds;
          in a low interest
          rate environment, the value of core deposits increases as interest
          rates rise and decreases
          as interest rates fall. This risk is, however, asymmetrical in a very
          low interest rate
          environment as there is limited room to lower deposit pricing in the
    event of interest rate reductions.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> HSBC
          Finance provides an offset to the sensitivity
          effect of interest rate reductions on the core deposit franchises.
          This arises from having
          a substantially fixed rate, real estate secured, lending portfolio funded
          to an extent with
    interest rate sensitive short-term liabilities.</font></td>
  </tr>
  </table></div>
<div style="float: right; width: 48%"><P>&nbsp;</P>
  <table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Global
          Markets: the residual interest rate risk is managed
          within Global Markets. This reflects the Group&#146;s policy of transferring
          all interest rate
          risk, other than structural risk, to Global Markets to be managed within
          defined limits and
    with flexibility as to the instruments used.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
          major drivers of the changes shown in the projected effect of interest
    rate moves in the above table are set out below. </font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> In
          the US dollar bloc, the rise in interest rates in 2005,
          coupled with an overall flattening of the yield
          curve, led the Group to reduce its sensitivity
          to falling rates, particularly with respect to some retail products
    with embedded optionality.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> In
          Hong Kong, the rise in interest rates during the
          year improved the sensitivity to falling interest rates as there was
          more room to lower deposit
    pricing in the event of falling interest rates.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Global
          Markets decreased its exposure to US dollar,
          Hong Kong dollar, and euro assets, contributing to the decreased
          sensitivity in these currencies
    to both rising and falling rates. </font></td>
  </tr>
  </table>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It can be seen from
the above that projecting the movement in net interest income from prospective changes in interest rates is
a complex interaction of structural and managed exposures. In a rising rate environment,
the most critical
exposures are those managed within Global Markets. </font></p>
<P><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the Group considers a principal risk to future net interest income to be a general flattening of yield curves at a low level of interest rates,
as this reduces the value of the deposit franchise and limits the opportunities within Global Markets.</font></P></div>
<br clear="all">
<P>&nbsp;</P>
<P align="center"><font size="2" face="Univers55,Arial,Helvetica,sans-serif">158</font></P>
<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p159"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following the adoption of IFRSs, HSBC monitors the sensitivity of reported reserves to interest rate movements on a monthly basis by assessing the expected
reduction in valuation of available-for-sale portfolios and cash flow hedges</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">due to parallel movements of plus or minus 100 basis points in all yield curves. The table below describes the sensitivity to these movements at 31 December 2005 and the maximum and
minimum month figures during the year then ended:</FONT></P>
</div><br clear="all">
<br>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD rowspan="4" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At</FONT></B>
        </TD>
        <TD rowspan="4" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD rowspan="4" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD rowspan="4" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31 December</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maximum</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Minimum</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">impact</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">impact</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">+ 100 basis point parallel move all in yield curves</FONT></TD>
        <TD width=10% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,918</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=10% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,655</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=10% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,918</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As a percentage of shareholders&#146; funds at 31 December 2005</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2.0%</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2.8%</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2.0%</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">- 100 basis point parallel move all in yield curves</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,877</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,543</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,877</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As a percentage of shareholders&#146; funds at 31 December 2005</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.0%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.7%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.0%</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<br>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The sensitivities included in the table are illustrative only and are based on simplified scenarios. Moreover, the table shows only those interest rate risk
exposures arising in available-for-sale portfolios and from cash flow hedges. These particular exposures form only a part of the Group&#146;s overall interest rate exposures. The accounting treatment under IFRSs of the Group&#146;s remaining
interest rate exposures, while economically largely offsetting the exposures shown in the above table, does not require revaluation movements to go to reserves.</FONT></P>
<P><b>
  <FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Structural foreign exchange exposures</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Structural foreign exchange exposures represent net investments in subsidiaries, branches or associated undertakings, the functional currencies of which are currencies other than the US
dollar.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences on structural exposures are recorded in the consolidated statement of recognised income and expense. The main operating (or functional)
currencies in which HSBC&#146;s business is transacted are the US dollar, the Hong Kong dollar, sterling, the euro, the Mexican peso, the Brazilian real and the Chinese renminbi. As the US dollar and currencies linked to it form the dominant
currency bloc in which HSBC&#146;s operations transact business, HSBC Holdings prepares its consolidated financial statements in US dollars. HSBC&#146;s consolidated balance sheet is, therefore, affected by exchange differences between the US dollar
and all the non-US dollar functional currencies of underlying subsidiaries.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC hedges structural foreign exchange exposures only in limited circumstances. HSBC&#146;s</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">structural foreign exchange exposures are managed with the primary objective of ensuring, where practical, that HSBC&#146;s consolidated capital ratios, and the capital ratios of
individual banking subsidiaries, are protected from the effect of changes in exchange rates. This is usually achieved by ensuring that, for each subsidiary bank, the ratio of structural exposures in a given currency to risk-weighted assets
denominated in that currency is broadly equal to the capital ratio of the subsidiary in question.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Selective hedges were in place during 2005. Hedging is undertaken using forward foreign exchange contracts which are accounted for under IFRSs as hedges of a
net investment in a foreign operation, or by financing with borrowings in the same currencies as the functional currencies involved. There was no ineffectiveness arising from these hedges in the year ended 31 December 2005.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">There was no material effect from exchange differences on HSBC&#146;s capital ratios during the period.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC Holdings </FONT><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Audited IFRS 7 information)</FONT></I></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As a financial services holding company, HSBC Holdings has limited market risk activity. Its activities predominantly involve maintaining sufficient capital resources to support the
Group&#146;s diverse activities; allocating these capital resources across the Group&#146;s businesses; earning dividend and interest income on its investments in the Group&#146;s businesses; providing dividend payments to HSBC Holdings&#146; equity
shareholders and interest payments to providers of debt capital; and maintaining a supply of short-term cash resources. It does not take proprietary trading positions.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">159</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p160"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The objectives of HSBC Holdings&#146; market risk management are to minimise income statement volatility arising from short-term cash balances and funding
positions; to minimise the market risk arising from long-term investments and long-term liabilities; and to protect distributable reserves from the adverse impact of market risk variables.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Market risk for HSBC Holdings is monitored by its ALCO.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The main market risks to which HSBC Holdings is exposed are interest rate risk and foreign currency risk.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings is exposed to interest rate risk on debt capital investments in, and loans to, subsidiary undertakings; on debt capital issues; and on
short-term cash resources.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following the adoption of IFRSs, certain loans to subsidiary undertakings of a capital nature that are not denominated in the functional currency of either
the provider or the recipient are accounted for as financial assets. Changes in the carrying amount of these assets due to exchange differences are taken directly to the income statement. Prior to the adoption of IFRSs, such exchange differences
were taken directly to reserves. These loans, and the associated foreign exchange exposures, are eliminated on a Group consolidated basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Revaluations due to foreign exchange rate movements of loans to subsidiary undertakings of a capital nature, and which are denominated in the functional
currency of either the borrower or the recipient, are taken directly to reserves. Equity investments in subsidiary undertakings are accounted for on a cost basis and are not revalued following movements in exchange rates.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total VAR arising within HSBC Holdings at 31 December 2005 was as follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD rowspan="3" align=left>&nbsp;</TD>
        <TD rowspan="3" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Foreign</FONT></B></TD>
        <TD rowspan="3" align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B></TD>
        <TD rowspan="3" align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">exchange</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">rates</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    </TR>
<TR valign="bottom">
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=4% align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26.1</FONT></B></TD>
        <TD width=4% align=right>&nbsp;</TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36.1</FONT></B></TD>
        <TD width=4% align=right>&nbsp;</TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51.4</FONT></B></TD>
    <TD width=4% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45.9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48.9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Minimum</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42.6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maximum</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56.6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A principal tool in the management of market risk is the projected sensitivity of HSBC Holdings&#146; net interest income to future changes in yield
curves.</FONT></P>
<font size="2"><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Unaudited information)</FONT></I><BR>
</font>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The table below sets out the effect on HSBC Holdings&#146; future net interest income of an incremental 25 basis point parallel fall or rise in all yield
curves worldwide at the beginning of each quarter during the 12 month period from 1 January 2006.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assuming no management action, a series of such rises would decrease HSBC Holdings&#146; planned net interest income for 2006 by US&#36;7 million while a
series of such falls would increase planned net interest income by US&#36;7 million. These figures incorporate the impact of any option features in the underlying exposures.</FONT></P>
</div><br clear="all">
<p> <font size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><i>Unaudited
information</i> </font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US dollar</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Sterling</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Euro</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">bloc</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">bloc</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">bloc</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Change in 2006 projected net interest income</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">+</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25
basis points shift in yield curves at the beginning of each quarter</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18</FONT>
        </TD>
        <TD width=2% align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD width=2% align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25
basis points shift in yield curves at the beginning of each quarter</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18</FONT>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in 2005 projected net interest income</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">+</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25
basis points shift in yield curves at the beginning of each quarter</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25 basis points shift in yield curves at the beginning of each quarter</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
</TABLE>
<br>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings&#146; principal exposure to changes in its net interest income from movements in interest rates arises on short-term cash balances, floating
rate loans advanced to subsidiary undertakings and fixed rate debt capital securities in issue which have been swapped to floating rate.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The interest rate sensitivities set out in the table above are illustrative only and are based on simplified scenarios. The figures represent the effect of
pro forma movements in net interest income based on the projected yield curve scenarios and HSBC Holdings&#146; current interest rate risk profile. This</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">160</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p161"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width:48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">effect, however, does not incorporate actions that could be taken to mitigate the effect of this interest rate risk.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings&#146; interest rate risk has not changed materially in the year.</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Residual
    value risk management</font></b></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><i>(Audited
      information)</i></font></td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A significant part of a lessor&#146;s leasing activities is its management of residual value risk. This arises from operating lease transactions to the extent that the values recovered
from disposing of leased assets or re-letting them at the end of the lease terms (the &#145;residual values&#146;) differ from those projected at the inception of the leases. The business regularly monitors residual value exposure by reviewing the
recoverability of the residual value projected at lease inception. This entails considering the re-lettability and projected disposal proceeds of operating lease assets at the end of their lease terms. Provision is made to the extent that the
carrying values of leased assets are impaired through residual values not being fully recoverable.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The net book value of equipment on operating leases includes projected residual values at the end of current lease terms, to be recovered through re-letting
or disposal in the following periods:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within 1 year</FONT></TD>
        <TD width=15% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">355</FONT></B></TD>
        <TD width=4% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=15% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172</FONT></TD>
    <TD width=4% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Between 1-2 years</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">484</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Between 2-5 years</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">465</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,042</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">More than 5 years</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,684</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,073</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total exposure</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,504</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,771</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Operational
    risk management</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><I>(Unaudited
      information)</I></font></td>
  </tr>
</table>
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operational risk is the risk of loss arising from fraud, unauthorised activities, error, omission, inefficiency, systems failure or external events. It is inherent in every business
organisation and covers a wide spectrum of issues.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC manages this risk through a controls-based environment in which processes are documented, authorisation is independent and transactions are reconciled
and monitored. This is supported by an independent programme of periodic reviews undertaken by Internal Audit, and by monitoring external operational risk events, which ensure that HSBC stays in line with best practice and takes account of lessons
learned from publicised operational failures within the financial services industry.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has codified its operational risk management process by issuing a high level standard, supplemented by more detailed formal guidance issued in January
2005. This explains how HSBC manages operational risk by identifying, assessing, monitoring, controlling and mitigating the risk, rectifying operational risk events, and implementing any additional procedures required for compliance with local
regulatory requirements. The processes undertaken to manage operational risk are determined by reference to the scale and nature of each HSBC operation. The HSBC standard covers the following:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="5%">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">operational
        risk management responsibility is</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">assigned
    to senior management within each</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">business operation;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">information
        systems are used to record the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">identification
        and assessment of operational</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">risks and to generate appropriate,
        regular</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">management
    reporting;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">assessments
        are undertaken of the operational</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">risks
        facing each business and the risks inherent</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">in its processes, activities
        and products. Risk</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">assessment
        incorporates a regular review of</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">identified risks to monitor
    significant changes;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">operational
        risk loss data is collected and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">reported
        to senior management at the business</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">unit level. Aggregate operational
        risk losses are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">recorded
        and details of incidents above a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">materiality threshold are reported
        to Group</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Head
        Office. A regular report on operational</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">losses is made to Group Audit
        Committee and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
    Risk Management Meeting; and</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk mitigation,
        including insurance, is</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">considered
    where this is cost-effective.</font></td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In each of HSBC</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;</FONT><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">s subsidiaries, local management is responsible for implementing HSBC standards on operational risk throughout their operations and, where deficiencies are evident, rectifying them within a reasonable timeframe. Subsidiaries
acquired by HSBC are required to assess, plan and implement the standard&#146;s requirements within an agreed timescale.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC maintains and tests contingency facilities to support operations in the event of disasters. Additional reviews and tests are conducted in the event that
any HSBC office is affected by a business disruption event, to incorporate lessons learned in the operational recovery from those circumstances. HSBC has requested all country managers to prepare plans for the operation of their businesses, with
reduced staffing levels, should a flu pandemic occur.</FONT></P>
</div><br clear="all">
<P align="right">&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">161</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p162"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Reputational
    risk management</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
  <tr>
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Unaudited
    information)</FONT></I></TD>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The safeguarding of HSBC&#146;s reputation is of paramount importance to its continued prosperity and is the responsibility of every member of staff. Reputational risks can arise from
social, ethical or environmental issues, or as a consequence of operational risk events. As a banking group, HSBC&#146;s good reputation depends upon the way in which it conducts its business, but it can also be affected by the way in which clients,
to whom it provides financial services, conduct themselves.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reputational risks are considered and assessed by the Board, the Group Management Board, the Risk Management Meeting, subsidiary company boards, board
committees and/or senior management during the formulation of policy and the establishment of HSBC standards. Standards on all major aspects of business are set for HSBC and for individual subsidiaries, businesses and functions. These policies,
which are an integral part of the internal control systems, are communicated through manuals and statements of policy and are promulgated through internal communications and training. The policies set out operational procedures in all areas of
reputational risk, including money laundering deterrence, environmental impact, anti-corruption measures and employee relations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management in all operating entities is required to establish a strong internal control structure to minimise the risk of operational and financial failure,
and to ensure that a full appraisal of reputational implications is made before strategic decisions are taken. The Group Internal Audit function monitors compliance with policies and standards.</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Risk
    management of insurance operations</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Forms
    part of the audited financial statements)</FONT></I></TD>
  </tr>
</table>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Insurance
risk</FONT></B></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within its service proposition, HSBC offers its personal and commercial customers a wide range of insurance products, many of which complement other bank and consumer finance
products.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Both life and non-life insurance is underwritten. Underwriting occurs in nine countries through 27 licensed insurers, principally in the UK, Hong Kong,
Mexico, Brazil, the US and Argentina.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Life insurance contracts include participating business (with discretionary participation features) such as endowments and pensions, credit life business in
respect of income and payment</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">protection, annuities, term assurance and critical illness covers.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-life insurance contracts include motor, fire and other damage, accident, repayment protection and a limited amount of commercial and liability
business.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The principal insurance risk faced by HSBC is that the costs of claims combined with acquisition and administration costs may exceed the aggregate amount of
premiums received and investment income. HSBC manages its insurance risks through the application of formal underwriting, reinsurance and claims procedures. These procedures are designed also to ensure compliance with regulations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Group&#146;s overall approach to insurance risk is to maintain a good diversification of insurance business by type and geography, and to focus on risks
that are straightforward to manage and frequently are directly related to the underlying banking activity (for example, with credit life products). The following tables provide an analysis of the insurance risk exposures by geography and by type of
business. These tables demonstrate the Group&#146;s diversification of risk and the strong emphasis on personal lines. Personal lines tend to be higher volume and with lower individual value than commercial lines, which further diversifies the risk.
Separate tables are provided for life and non-life business, reflecting their very distinct risk characteristics. Life business tends to be longer term than non-life and also frequently involves an element of savings and investment in the premium.
For this reason, the life insurance risk table provides an analysis of the insurance liabilities as the best available overall measure of the insurance exposure. By contrast for non-life business, the table uses written premium as representing the
best available measure of risk exposure.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Both life and non-life business insurance risks are controlled through a combination of local and central procedures and policies. These include a
centralised approach to the authorisation to write certain classes of business, with restrictions applying particularly to commercial and liability non-life business. For life business in particular, use is also made of ALCOs in order to monitor the
risk exposures. Market risk limits are also applied centrally as an additional control over the extent of insurance risk that is retained.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As indicated in the specific comments relating to particular classes, use is also made of reinsurance as a means of further mitigating exposure, in
particular to aggregations as a result of catastrophe risk.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">162</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p163"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Analysis of insurance risk</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The insurance risk is illustrated by an analysis of business by type of contract and geographic location.</FONT></P>
<P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Analysis of life insurance risk &#150; policyholder liabilities</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan="2" rowspan="4"><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font></TD>
        <TD rowspan="2" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font></TD>
        <TD width=2% rowspan="4" align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=2% rowspan="4" align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of</FONT></B></TD>
        <TD width=2% rowspan="4" align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=2% rowspan="4" align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=2% rowspan="4" align=left>&nbsp;</TD>
        <TD rowspan="2" align=left><FONT size="2">&nbsp;</font>   <font size="2">&nbsp;</font></TD>
    <TD width=2% rowspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia-</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Kong</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD colspan="2">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2">
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Life (non-linked)</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% bgcolor="#eeeeee">&nbsp;</TD>
        <TD bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2">
<font face="TimesNewRoman,Times New Roman,Times,serif">Insurance
contracts </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">with
DPF<sup>1</sup></font>&nbsp;
        </font></div></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,886</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">152</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,193</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Credit
    life</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">196</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">352</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Annuities</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,651</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">515</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,390</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Term
              assurance and other </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">long-term
    contracts</font></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,063</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">170</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,434</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2">&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%">
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total life (non-linked)</FONT></DIV></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,576</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,954</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">256</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,898</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">685</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,369</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2">
    <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Life (linked)</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,201</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">536</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">332</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">826</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,895</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2">        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
        contracts</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> with
    DPF<sup>1</sup></font></font></DIV></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2">&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD colspan="2"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Life
              insurance
policyholders&#146; </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">liabilities</font></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,777</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,490</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">597</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,898</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,511</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,273</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2">&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD width="3%" >
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD width=100%>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Insurance contracts and investment contracts with discretionary participation features (&#145;DPF&#146;) give policyholders a contractual right to receive, as a supplement to
their guaranteed benefits, additional benefits that are likely to be a significant portion of the total contractual benefits and whose amount or timing is contractually at the discretion of HSBC. The additional benefits are contractually based on
the performance of a specified pool of contracts or assets, or the profit of the company issuing the contracts.</FONT></I></TD>
</TR>
</TABLE>
<br>
<div style="float: left; width:48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The above table of life insurance policyholder liabilities provides an overall summary of the life insurance activity across the Group. For life insurance
business, the insurance risk will vary considerably depending on the type of business. The principal risks are in relation to mortality, morbidity, lapse and surrender, investment (market) and expense levels. As indicated above, the geographic and
product diversity of HSBC&#146;s life insurance business provides an effective mitigation of exposure to insurance risk. This is in addition to the local underwriting, claims handling and expense control management functions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In general terms, mortality and morbidity risks are mitigated through medical underwriting and the ability in a number of cases to amend the premium in the
light of changes in experience. Lapse and surrender risks are mitigated by the setting of appropriate surrender values. Market risk is usually mitigated through a combination of investment policy to match liabilities and the risk being shared with
policyholders. In the case of unit-linked business, market risk is generally borne by policyholders. In the case of life business with a discretionary participation feature, the risk is shared with policyholders through the management of
bonuses.</FONT></P>
</div>
<div style="float: right; width:48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The principal division of life business is between unit linked and non-linked. There are a number of major sub-categories of non-linked life
assurance.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance contracts with discretionary participation features include with-profits business. The largest portfolio is in Hong Kong. This is a book of
endowment life policies, with annual bonuses awarded to policyholders. Although </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">prima facie</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> this
business entails significant market risk, this is managed in conjunction with other risks through the investment policy and adjustment to bonus rates. In practice this means that the majority of the market risk is borne by policyholders. The main
risk associated with this product is the value of assigned assets falling below that required to support benefit payments. HSBC manages this risk by conducting regular actuarial investigations on the supportability of the bonus rates.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit life insurance business is written in relation to the banking and finance products. The insurance risk relates to mortality and morbidity risk for the
duration of the loans advanced. Claims experience is continuously monitored and premium rates adjusted accordingly. For much of this business, the average term of the credit risk exposure is for two to three years, which limits the insurance risk
exposure.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">163</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p164"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Annuities are contracts providing income from capital investment paid in a stream of regular payments for either a fixed period or during the
annuitant&#146;s lifetime. Deferred annuities are those whose payments to the annuitant begin at a designated future date as opposed to immediate annuities where payments begin at once. The principal risks in respect of annuity business relate to
mortality and market risk in relation to the need to match investments against the anticipated cash flow profile of the policies. HSBC has a number of annuity books, some of which have been in run-off for several years. The majority of the annuity
book is composed of contracts with a duration of no longer than five years. Investments are managed to match the anticipated cash flow profile, and the mortality risk is regularly monitored. HSBC has annuity business in the US, Mexico, Cayman
Islands and Argentina.</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The major component of the &#145;Term assurance and other long-term contracts&#146; category is term assurance and critical illness policies written in the
UK. The principal risks are in respect of mortality and morbidity, and are mitigated through a combination of underwriting practices, premium adjustment in light of changes in experience and reinsurance.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For linked insurance business, market risk is usually borne by policyholders. The principal risk retained by HSBC relates to expenses, although mortality,
disability and morbidity risks are also associated with this product and are managed through the application of the techniques set out above for non-linked lines of business.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan=7 align=left><FONT size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Analysis of
    non-life insurance risk &#150; net written insurance premiums</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong-</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia-</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Kong</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accident and health</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">112</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Motor</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">192</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">259</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">529</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fire and other damage</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">251</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">354</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liability</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">229</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">90</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">353</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit (non-life)</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">225</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">427</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Marine, aviation<br>
</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;and
transport</font></TD>
        <TD align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other non-life insurance<br>
</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;contracts</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total net written insurance<br>
</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;premiums</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">940</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">183</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">372</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">367</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,885</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan=13 align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="3%" align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD colspan=13 align=left> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
              written insurance premiums represent gross written premiums less gross
              written premiums ceded to
reinsurers.</FONT></I></TD>
  </TR>
</TABLE>
<br>
<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-life insurance contracts include liability and property insurance. However, only a small proportion of HSBC&#146;s non-life insurance portfolio is
liability insurance which is in general underwritten as part of a product business proposal. The key risks associated with non-life business are underwriting risk and claims experience risk. Underwriting risk is the risk that HSBC does not charge
premiums appropriate for the cover provided and claims experience risk is the risk that portfolio experience is worse than expected. HSBC manages these risks through prudent pricing (for example, imposing restrictions and deductibles in the policy
terms and conditions), product design, risk selection, claims handling, investment strategy and reinsurance policy. All non-life insurance contracts are annually renewable and the underwriters have the right to</FONT></P>
</div>
<div style="float:right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">refuse renewal or to change the terms and conditions of the contract at renewal.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC underwrites non-life insurance business in Ireland, the UK, Hong Kong, Argentina, the US, Mexico and Singapore.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accident and health insurance business is underwritten in all major markets with the largest portfolio being Hong Kong. Potential accumulations of personal
accident risks are mitigated by the purchase of catastrophe reinsurance.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Motor insurance business covers vehicle damage and liability for personal injury. It includes a large portfolio underwritten in Brazil for US&#36;105
million, which was disposed of during 2005. Other significant portfolios are written in the</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">164</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p165"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK, Mexico and Argentina. Reinsurance protection has been arranged where necessary to avoid excessive exposure to larger losses, particularly those relating to personal injury
claims.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fire and other damage business is written in all major markets, most significantly in Europe. The predominant focus in most markets is insurance for homes
and contents while covers for selected commercial customers are largely written in Asian and South American markets. All portfolios at risk from catastrophic losses are protected by reinsurance in accordance with information obtained from
professional risk-modelling organisations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A very limited portfolio of liability business is written in major markets.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following the disposal of the non-life insurance portfolio in Brazil, credit non-life business now represents the largest single class and is concentrated in
the US and the UK. This business is written in relation to the banking and finance products.</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Present value of in-force long-term insurance business (&#145;PVIF&#146;)</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC life insurance business is accounted for using the embedded value approach, which, </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">inter
alia</FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">, provides a comprehensive framework for the evaluation of insurance and related risks. The present value of the shareholders&#146; interest in the profits expected to
emerge from the book of in-force policies at 31 December 2005 can be stress-tested to assess the ability of the book of life business to withstand adverse developments. A key feature of life insurance business is the importance of managing the
assets, liabilities and risks in a coordinated fashion rather than individually. This reflects the greater interdependence of these three elements for life insurance than is generally the case for non-life insurance.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table shows the effect on the PVIF as at 31 December 2005 of reasonably possible changes in the main economic assumptions across all insurance
underwriting subsidiaries:</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">PVIF</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">+ 100 basis points shift in risk-free rate</FONT></TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">90</FONT></B>
        </TD>
        <TD width="2%" align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; 100 basis points shift in risk-free rate</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(100</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">+ 100 basis points shift in risk discount rate</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(54</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; 100 basis points shift in risk discount rate</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">+ 100 basis points shift in expenses inflation</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; 100 basis points shift in expenses inflation</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">+ 100 basis points shift in lapse rate</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; 100 basis points shift in lapse rate</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(49</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
</TABLE>
<br>
<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effects on PVIF shown above are illustrative only and employ simplified scenarios. They do not incorporate actions that could be taken by management to
mitigate effects nor do they take account of consequential changes in policyholder behaviour.</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">General economic and business assumptions</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The sensitivity of profit for the year to, and net assets at, 31 December 2005 to reasonably possible changes in conditions at 31 December 2005 across all insurance underwriting
subsidiaries is as follows:</FONT></P>
<p>&nbsp;</p>
</div><br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact on:</FONT></B><font size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit for</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">the year</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Economic assumptions</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 per cent increase in claims costs</FONT></TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(82</FONT></B>
        </TD>
        <TD width="2%" align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(78</FONT></B>
        </TD>
        <TD width="2%" align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 per cent decrease in claims costs</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-economic assumptions</FONT></B></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent increase in mortality and/or morbidity rates</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent decrease in mortality and/or morbidity rates</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50 per cent increase in lapse rates</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(17</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(14</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50 per cent decrease in lapse rates</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent increase in expense rates</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(20</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(20</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent decrease in expense rates</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">165</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p166"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A key aspect of the risk management for insurance business, and life insurance in particular, is the need actively to manage the assets in relation to the
liabilities. Of particular importance for a number of lines of business is the need to match the expected pattern of cash flow, which in some cases (such as annuities) can run for many years. The following table shows the overall disposition of
assets and liabilities and demonstrates that there is an</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">appropriate level of matching. It is generally not possible to achieve a complete matching of asset and liability duration. This is partly because with annual premium contracts there are
uncertain future cash flows yet to be received from policyholders and partly because the duration of some liability cash flows exceeds the duration of the longest available dated fixed interest investments.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left valign="middle"><font size="2">&nbsp;</font></TD>
        <TD align=left valign="middle">&nbsp;</TD>
        <TD align=left valign="middle"><font size="2">&nbsp;</font></TD>
        <TD align=left valign="middle">&nbsp;</TD>
        <TD align=left valign="middle"><font size="2">&nbsp;</font></TD>
        <TD align=left valign="middle">&nbsp;</TD>
        <TD align=left valign="middle"><font size="2">&nbsp;</font></TD>
        <TD align=left valign="middle">&nbsp;</TD>
        <TD align=left valign="middle"><font size="2">&nbsp;</font></TD>
        <TD colspan=4 align=center valign="middle">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD colspan="9" align=center valign="middle"><font size="2">&nbsp;</font>         <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Insurance contracts</FONT></B><font size="2">&nbsp;</font></TD>
        <TD colspan=4 align=center valign="middle">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">contracts</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Term</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assurance</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Contracts</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and other</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">with</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Unit-</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">long-term</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Unit-</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">DPF</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">linked</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Annuities</b></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">contracts</font></b><sup><font face="TimesNewRoman,Times New Roman,Times,serif">2</font></sup></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New
Roman,Times,serif"><b>Non-life</b></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">linked</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial assets:</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width="3%" align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">trading assets</FONT></TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">170</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="7%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial assets</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2">&nbsp;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">designated at fair</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2">&nbsp;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,132</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">947</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,995</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,415</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,488</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,048</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">derivatives</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">426</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">488</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial investments</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,581</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,272</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">339</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,230</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,527</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,896</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,845</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">635</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">268</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">828</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">619</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">376</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,098</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,180</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total financial assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,278</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,826</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,152</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,517</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,921</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,170</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,322</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,652</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,838</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurance assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">193</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">612</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">669</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,585</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PVIF</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,400</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,400</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">329</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">760</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,195</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,298</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,904</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,390</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,162</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,919</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,171</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,322</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,852</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,018</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial liabilities</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">designated at fair value .</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,289</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,445</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities under insurance</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">contracts issued</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,193</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,895</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,390</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,786</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,871</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,144</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred tax</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">322</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">322</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,125</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,125</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,193</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,895</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,390</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,786</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,871</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,298</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,447</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,036</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; equity</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,982</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,982</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities and</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan=2 align=left><FONT size="2">&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">shareholders&#146; equity<SUP>4</SUP></FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,193</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,895</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,390</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,786</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,871</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,298</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,429</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,018</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Discretionary participation features.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes credit life insurance.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Other assets comprise solvency and unencumbered assets.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes assets, liabilities and shareholders&#146; funds of associate insurance companies Erisa S.A. and Ping An Insurance.</FONT></I></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">166</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p167"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The balance sheet of insurance underwriting operations by geographical region at 31 December 2005 was as follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of Asia-</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong Kong</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial assets:</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width=3% align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150; </font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">trading
    assets</font></TD>
        <TD width=8% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B>
        </TD>
        <TD width=2% align=left><FONT size="2">&nbsp;</font></TD>
        <TD width=8% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150; </font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">financial
    assets designated at fair</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,276</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,164</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">545</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,063</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,048</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150; </font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">derivatives</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">386</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">102</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">488</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150; </font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">financial
    investments</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,053</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,429</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,962</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">341</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,845</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150; </font></TD>
        <TD align=left><FONT size="2" face="TimesNewRoman,Times New Roman,Times,serif">other
    assets</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">886</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,512</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">157</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,142</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">483</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,180</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total financial assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,601</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,207</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">762</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,381</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,887</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,838</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurance assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,293</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">153</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,585</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PVIF</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">796</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">557</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,400</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">307</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">64</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">306</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">499</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,195</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,997</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,876</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">852</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,840</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,453</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,018</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial liabilities designated at fair</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,375</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,874</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">154</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,445</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities under insurance contracts</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">issued</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,284</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,724</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">655</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,787</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,694</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,144</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred tax</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">237</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(17</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">322</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,374</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">123</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">395</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">212</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,125</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,270</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,804</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">727</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,165</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,070</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,036</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; equity</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,727</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,072</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,675</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">383</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,982</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities and shareholders&#146;</FONT></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD colspan="2" align=left><FONT size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">equity<SUP>1</SUP></FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,997</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,876</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">852</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,840</FONT></B>
        </TD>
        <TD align=left><FONT size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,453</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,018</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=14 align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
        <TD width="3%" align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD colspan=13 align=left><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes
          assets, liabilities and shareholders&#146; funds of associate insurance
          companies Erisa S.A. and
Ping An Insurance.</FONT></I></TD>
  </TR>
</TABLE>
<br>
<div style="float: left; width: 48%">

<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial risks</FONT></B></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s insurance businesses are exposed to a range of financial risks, including market risk, credit risk and liquidity risk. The nature and management of these risks is described
below.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Underwriting subsidiaries incur financial risk, for example, when the proceeds from financial assets are not sufficient to fund the obligations arising from
insurance and investment contracts. Other non-underwriting insurance-related activities undertaken by HSBC subsidiaries such as insurance broking; insurance management (including captive management); and insurance, pensions and annuities
administration and intermediation are exposed to financial risk but not to a significant extent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The insurance underwriting subsidiaries have developed their own risk management policies appropriate for the business. Where applicable they also comply
with HSBC&#146;s banking risk management procedures. However, in some cases, such as the use of one day VAR measures, these are not appropriate for insurance and, therefore, not applied.</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The majority of HSBC&#146;s insurance underwriting subsidiaries are owned and primarily managed by local banking subsidiaries. Their activities are subject
to a variety of locally applied controls and to external regulatory monitoring. Centralised insurance management, including risk and capital management, is relatively limited in scope, acting primarily as an additional level of control. In many
jurisdictions, local regulatory requirements prescribe the type, quality and concentration of assets that HSBC&#146;s insurance underwriting subsidiaries must maintain in local currency to meet local insurance liabilities. Within each subsidiary,
ALCOs are responsible for the management of financial risks within local requirements and ensure compliance with the control framework and risk appetite established centrally.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table analyses the assets held in HSBC&#146;s insurance underwriting subsidiaries at 31 December 2005 by type of liability against which the
assets are held, and provides an overall framework for considering exposure to financial risk:</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">167</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p168"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Life linked</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Life non-linked</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-life</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other assets</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trading assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Treasury bills</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">153</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">170</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial assets designated</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">at fair value</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Treasury bills</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,374</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,118</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">745</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,241</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Equity securities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,744</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,275</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">726</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,755</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,127</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,419</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,488</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,048</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial investments</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Held-to-maturity:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,603</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">157</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">226</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,986</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,603</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">157</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">226</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,986</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Treasury bills</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">101</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other eligible bills</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">447</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">563</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,116</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">556</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,437</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,109</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Equity securities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,116</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,073</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,670</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,859</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,127</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,187</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,302</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,554</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,170</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Comprises life linked insurance contracts, linked long-term investment contracts and investment contracts with discretionary participation features.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Comprises life non-linked insurance contracts and non-linked long-term investment contracts.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Comprises non-life insurance contracts.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Comprises solvency and unencumbered assets.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes financial assets of insurance underwriting associates, Erisa, S.A. and Ping An Insurance.</FONT></I></TD>
</TR>
</TABLE>
<br>
<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under linked insurance and investment contracts, premium income less charges levied is invested in unit-linked funds. HSBC manages the financial risk of this
product by holding appropriate assets in funds or portfolios to which the liabilities are linked. This generally transfers the financial risk to the policyholder. The assets held to support unit-linked liabilities represent 35.9 per cent of the
total financial assets of HSBC&#146;s insurance underwriting subsidiaries at the reporting date.</FONT></P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Market risk</FONT><b><BR>
<FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest rate risk</FONT><BR>
</b>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s insurance underwriting subsidiaries are exposed to interest rate risk when there is a mismatch in terms of duration or yields between the assets and liabilities. Examples of
interest rate risk exposure are as follows:</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%" valign="top">&#8226;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lower market
        interest rates result in lower yields</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">on
        the assets supporting guaranteed investment</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">returns payable to policyholders;
    and</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&#8226;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">higher
        market interest rates result in a reduction</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        the value of the fixed income securities</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">portfolio which may result in
        losses if, as a</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">result
    of an increase of the level of surrenders,</FONT></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">

<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%">&nbsp;</td>
    <td> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the corresponding
      fixed income securities have to be sold.</FONT></td>
  </tr>
</table>

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC manages the interest rate risk arising from its insurance underwriting subsidiaries by establishing limits centrally. These govern the sensitivity of
the net present values of expected cash flows from subsidiaries&#146; assets and liabilities to a one basis point parallel upward shift in the discount curve used to calculate values. Adherence to these limits is monitored by local ALCOs.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest rate risk is also assessed by measuring the impact of defined movements in interest yield curves on the profits after tax and net assets of the
insurance underwriting subsidiaries. An immediate and permanent movement in interest yield curves as at 31 December 2005 in all territories in which HSBC&#146;s insurance subsidiaries operate would have the following impact on the profit for the
year and net assets at that date:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit for</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">the year</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net assets</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">+ 100 basis points shift in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">yield curves</FONT></font></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(46</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(122</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; 100 basis points shift in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">yield curves</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">181</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">168</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p169"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The interest rate sensitivities set out above are illustrative only and employ simplified scenarios. They are based on US&#36;8,068 million of
interest-bearing securities held by insurance underwriting subsidiaries at 31 December 2005 and US&#36;3,350 million of insurance liabilities under insurance contracts and long-term investment contracts issued. The sensitivities do not incorporate
actions that could be taken by management to mitigate the effect of the interest rate movements, nor do they take account of consequential changes in policyholder behaviour.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The majority of interest rate exposure arises within insurance underwriting subsidiaries in the UK, the US and Hong Kong.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s insurance underwriting subsidiaries are also exposed to the risk that the yield on assets held may fall short of the return guaranteed on certain
contracts issued to policyholders. This investment return guarantee risk is managed by matching assets held to liability requirements. In addition, a provision is established when analysis indicates that, over the life of the contracts, the returns
from the designated assets may not be adequate to cover the related liabilities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The guarantees offered to policyholders in respect of certain insurance products are divided into broad categories as follows:</FONT></P>
</div>
<div style="float: right; width: 48%">

<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%" valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">annuities
      in payment;</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">deferred
        annuities: these consist of two phases &#150;</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
      savings and investing phase, and the</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">retirement income phase;</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">annual
        return: the investment return credited to</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        policyholder every year (referred to as a</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">&#145;hard&#146; guarantee),
        or the average annual</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">investment
        return credited to the policyholder</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">over the life of the policy
        to its maturity or</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">surrender
        (referred to as a &#145;soft&#146; guarantee) is</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">guaranteed to be no lower than
      a specified rate;</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">capital:
        policyholders are guaranteed to receive</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">back
        no less than the premiums paid less</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">expenses, or a cash payment
        or series of cash</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">payments
        whose amounts are at least equal to</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">those defined within the policy;
      and</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">market
        performance: policyholders receive an</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">investment
        return which is guaranteed to be</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">within a prescribed range of
        average investment</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">returns
        earned by predetermined market</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">participants on the specified
      product.</FONT></td>
  </tr>
</table>

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The table below shows, in respect of each category of guarantee, the total reserves established for guaranteed products, the range of investment returns
implied by the guarantees, and the range of current yields of the investment portfolios supporting the guarantees.</FONT></P>
<p>&nbsp;</p>
</div><br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">returns implied</FONT></B>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reserve</FONT></B></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>by guarantee</B><SUP>1</SUP>
        </font></TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Current yields</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Annuities in payment</FONT></TD>
        <TD width="12%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,063</FONT></B></TD>
        <TD width="12%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.0 &#150; 4.2%</FONT></B>
        </TD>
        <TD width="12%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.0 &#150; 13.0%</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deferred annuities</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">408</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.0 &#150; 6.0%</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.1 &#150; 8.6%</FONT></B>
        </TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deferred annuities</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">674</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.0 &#150; 9.0%</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.7%</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Annual return</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,362</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.0 &#150; 3.0%</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.5 &#150; 5.6%</FONT></B>
        </TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Annual return</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">581</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.0 &#150; 6.0%</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.5 &#150; 11.5
          %</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Capital</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,168</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.0%</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.9 &#150; 5.6
          %</FONT></B>
        </TD>
  </TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Market performance<SUP>2</SUP></FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,938</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">n/a</FONT></B>
        </TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">n/a</FONT></B>
        </TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The above table excludes guarantees from associate insurance companies Erisa, S.A. and Ping An Insurance.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">There is no specific investment return implied by market performance guarantees because the guarantees are expressed as lying within prescribed ranges of average market
returns.</FONT></I></TD>
</TR>
</TABLE>
<br>
<div style="float: left; width: 48%">

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Group manages the annuities, annual return and capital guarantees by seeking to match the exposure predominantly with bonds which are producing a return
at least equal to the investment return implied by the guarantee. Provision is made for any anticipated shortfall, generally calculated by recourse to stress testing of the likely outcomes.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The main risk arising from these guarantees is reinvestment risk, which arises primarily when the duration of the policy extends beyond the
maturity</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">dates of the bonds. Future reinvestment yields may be less than the investment rates implied by the guarantee.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A certain number of these products have been discontinued to new business; this includes the deferred annuity portfolio in HSBC Finance, where the current
portfolio yield is less than the guarantee and highlighted in the above table. For this block of business, a purchase accounting reserve was made at the time of the acquisition of HSBC Finance to mitigate the impact of the disparity in yields.
In</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">169</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p170"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>

<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">addition, in the UK there is an annuity portfolio where the risk is fully reinsured.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For market performance guarantee business in the table above, the Group seeks to match the composition of the investment portfolio with the composition of
the average investment portfolio of the other market participants. These are published by the regulator monthly. Reserves have also been established to cover any potential shortfall although, since inception, they have never been called
upon.</FONT></P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity risk</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC manages the equity risk arising from its holdings of equity securities centrally by setting limits on the maximum market value of equities that each insurance underwriting subsidiary
may hold. Equity risk is also monitored by estimating the effect of predetermined movements in equity prices on the profit and total net assets of the insurance underwriting subsidiaries.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table illustrates the impact on the aggregated profit for the year and net assets of a reasonably possible 10 per cent variance in equity
prices:</FONT></P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit for</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">the year</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net assets</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent increase in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">equity prices</FONT></font></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent decrease in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">equity prices</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(45</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(46</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">These equity sensitivities are illustrative only and employ simplified scenarios. They are based on US&#36;6,753 million of marketable equity securities held
by insurance underwriting subsidiaries at 31 December 2005, and US&#36;6,137 million of liabilities under insurance contracts and long-term investment contracts issued. They do not allow for any management actions to mitigate the effects of the
equity price decline, nor for any consequential changes, such as in policyholder behaviour, that could accompany such a fall.</FONT></P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Foreign exchange risk</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s insurance underwriting subsidiaries are exposed to this risk when the assets supporting insurance liabilities are denominated in currencies other than the currencies of the
liabilities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC manages the foreign exchange risk arising from its insurance underwriting subsidiaries centrally, by establishing limits on the net positions</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by currency and the total net short position that each insurance subsidiary may hold. The risk is also monitored by tracking the effect of predetermined exchange differences on the total
profit and net assets of the insurance underwriting subsidiaries.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table illustrates the impact on the aggregated profit for the year and net assets of a reasonably possible 10 per cent variance in the US
dollar exchange rate:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for the</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">year</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent increase in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">US dollar exchange rate</FONT></font></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></TD>
        <TD width=15% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 per cent decrease in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">US dollar exchange rate</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">These sensitivities to movements in the US dollar are for illustrative purposes only and employ simplified scenarios applied to local US dollar positions
only. They are based on US&#36;1,444 million of liabilities </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">under insurance contracts and long-term investment contracts and </FONT><FONT size=2 face="TimesNewRoman,Times New
Roman,Times,serif">US&#36;1,505 million of assets denominated in US dollars. They do not allow for actions that could be taken by management to mitigate the effect of exchange differences, nor for any consequential changes in policyholder
behaviour.</FONT></P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Credit risk</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s insurance underwriting subsidiaries are exposed to credit risk in respect of their investment portfolios and their reinsurance transactions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Local management of HSBC&#146;s underwriting insurance subsidiaries is responsible for the quality and performance of the investment portfolios. Investment
guidelines are set at Group level. Local ALCOs set investment parameters appropriate to the local environment within the framework of the Group guidelines and review investment performance and compliance with the guidelines. Assessment of the
creditworthiness of issuers and counterparties is based primarily upon internationally recognised credit ratings and other publicly available information. In addition, to reduce the impact of individual entity or industry sector failures, centrally
determined issuer and industry sector concentration limits are complied with.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment credit exposures are aggregated and reported to HSBC&#146;s Group Credit and Risk function on a quarterly basis.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">170</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p171"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Rating agency designation</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table presents the analysis of treasury bills, other eligible bills and debt securities within HSBC&#146;s insurance business by rating agency designation at 31 December
2005 based on Standard and Poor&#146;s ratings or equivalent:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Treasury</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other eligible</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">bills</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">bills</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Supporting liabilities under non-linked insurance</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">contracts</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">AAA</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">117</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">224</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,367</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,708</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">AA&#150; to
    AA+</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">223</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,372</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,595</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">A&#150; to
    A+</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,459</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,459</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Lower
    than A&#150;</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">382</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">382</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Unrated</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">117</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">447</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,640</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,204</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Supporting shareholder&#146;s funds</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">AAA</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">109</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">892</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,222</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">AA&#150; to
    AA+</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">606</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">613</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">A&#150; to
    A+</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">787</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">787</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Lower
    than A&#150;</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">183</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">183</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Unrated</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,475</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,812</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">AAA</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">338</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">333</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,259</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,930</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">AA&#150; to
    AA+</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">230</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,978</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,208</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">A&#150; to
    A+</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,246</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,246</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Lower
    than A&#150;</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">565</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">565</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Unrated</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">338</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">563</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,115</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,016</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of which issued by:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; government</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">338</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,224</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,562</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; local
    authorities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; corporates</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,424</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,424</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; other</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">563</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">391</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">954</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of which classified as:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; trading
    assets</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">153</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; financial
    instruments designated at fair value</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,867</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,910</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; available-for-sale
    securities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">563</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,109</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,843</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; held-to-maturity
    investments</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,986</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,986</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%"  valign=top>&nbsp;</TD>
  <TD width=99%>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes treasury bills, other eligible bills and debt securities held by insurance underwriting associates Erisa, S.A. and Ping An Insurance.</FONT></I></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">171</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p172"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
    risk also arises when part of the insurance </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk
    incurred by HSBC is assumed by reinsurers.</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> HSBC&#146;s
    Reinsurance Security Committee </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">establishes
    the minimum security criteria for</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> acceptable
    reinsurance and monitors the purchase of </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reinsurance
against these criteria.</FONT></p>
</div>
<div style="float: right; width: 48%">

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
      2005, the split of liabilities ceded to</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reinsurers
      and outstanding reinsurance recoveries,</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">analysed
      by Standard and Poor&#146;s reinsurance credit rating</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">data
  or their equivalent, was as follows:</FONT></p>
</div><br clear="all">
<br>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD colspan=5 align=center><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>Reinsurers&#146; share
    of liabilities under</B></font><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance contracts</FONT></B><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Linked</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-linked</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reinsurance</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">contracts</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">contracts</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">debtors</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AAA</FONT></TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD width="2%" align=right>&nbsp;</TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B></TD>
        <TD width="2%" align=right>&nbsp;</TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B></TD>
        <TD width="2%" align=right>&nbsp;</TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width="2%" align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AA&#150; to AA</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">735</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">764</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A&#150; to A+</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">536</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">544</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lower than A&#150;</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrated</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,476</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,545</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes reinsurers&#146; share of liabilities under insurance contracts and reinsurance debtors of insurance underwriting associates Erisa, S.A. and Ping An
Insurance.</FONT></I></TD>
</TR>
</TABLE>
<br>
<div style="float: left; width: 48%">

<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Liquidity risk</FONT></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">It is an inherent characteristic of almost all insurance contracts that there is uncertainty over the amount and the timing of settlement of claims liabilities that may arise, and this
leads to liquidity risk. As part of the management of this exposure, estimates are prepared for most lines of insurance business of cash flows expected to arise from insurance funds at the balance sheet date. The estimates frequently include future
renewal premiums and new business cash flows. As indicated by the asset and liability table for insurance business, and the analysis of insurance risk of the Group, a significant proportion of the Group&#146;s non-life insurance business is viewed
as very short</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">term, with the settlement of claims expected to occur within one year of the period of risk. There is a greater spread of anticipated duration for the life business where, in a large
proportion of cases, the liquidity risk is borne in conjunction with policyholders (wholly in the case of unit-linked business). To ensure adequate cash resources are available to meet short-term requirements that can arise as a consequence of large
claims events, the local insurance operations may obtain intra-group borrowing facilities at short notice.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table presents an analysis of the remaining contractual maturity of the long-term investment contract liabilities at 31 December
2005:</FONT></P>
</div><br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD colspan=5 align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities under investment contracts issued by</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD colspan=5 align=center><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">insurance underwriting subsidiaries</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
        </font><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Linked</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-linked</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">investment</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">investment</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">contracts</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">contracts</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">designated</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">designated</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">at fair value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">at fair value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Remaining contractual maturity:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; due
    within 1 year</FONT></font></TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">118</FONT></B></TD>
        <TD width="2%" align=right>&nbsp;</TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD width="2%" align=right>&nbsp;</TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">129</FONT></B></TD>
    <TD width="2%" align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; due
    between 1 and 5 years</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,043</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">185</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,228</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; due
    between 5 and 10 years</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">683</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">683</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; due
    after 10 years</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,431</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,431</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; undated<SUP>2</SUP></FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,881</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,093</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,974</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,156</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,289</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,445</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%"  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Excludes investment contracts issued by insurance underwriting associates Erisa, S.A. and Ping An Insurance.</FONT></I></TD>
</TR>
<TR>
        <TD  valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In most cases, policyholders have the option to terminate their contracts at any time and receive the surrender values of their policies. These may be significantly lower than
the amounts shown above.</FONT></I></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">172</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p173"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<p>&nbsp;</p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Capital
    management and allocation</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
  <tr>
    <td> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Forms
    part of the audited financial statements except where stated)</FONT></I></td>
  </tr>
</table>

<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Capital measurement and allocation</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Financial Services
Authority (&#145;FSA&#146;) supervises HSBC on a consolidated basis and, as such,
receives information on the capital adequacy of, and sets capital requirements

for, HSBC as a whole. </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Individual
banking subsidiaries are directly regulated by their local banking supervisors,
who set and monitor their capital adequacy requirements. In most jurisdictions,
non-banking financial subsidiaries are also subject to the supervision and capital
requirements of local regulatory authorities. Since 1988, when the governors
of the Group of Ten central banks agreed to guidelines for the international
convergence of capital
measurement and standards, the banking supervisors of HSBC&#146;s major banking
subsidiaries have exercised capital adequacy supervision within a broadly similar
framework.</FONT></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In implementing
the EU&#146;s Banking </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consolidation
Directive, the FSA requires each bank and banking group to maintain an individually
prescribed ratio of total capital to risk-weighted assets taking into account
both
balance sheet assets and off-balance sheet transactions. Under the EU&#146;s
Amending Directive to the Capital Adequacy Directive, the FSA allows banks to
calculate capital requirements for market risk in the trading book using VAR
techniques.</FONT></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s capital is divided into two tiers:</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%" valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 1
        capital comprises shareholders&#146; funds,</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">innovative
        tier 1 securities and minority</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">interests in tier 1 capital,
        after adjusting for</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">items
        reflected in shareholders&#146; funds which are</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">treated differently for the
        purposes of capital</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">adequacy.
        The book values of goodwill and</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">intangible assets are deducted
        in arriving at</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">tier
    1 capital.</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 2
        capital comprises qualifying subordinated</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">loan
        capital, collective impairment allowances</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">(previously, general provisions),
        minority and</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
        interests in tier 2 capital and unrealised</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">gains arising on the fair valuation
        of equity</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">instruments
        held as available-for-sale. Tier 2</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">capital also includes reserves
        arising from the</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">revaluation
    of properties.</FONT></td>
  </tr>
</table>

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Various limits are applied to elements of the capital base. The amount of innovative tier 1 securities cannot exceed 15 per cent of overall tier 1 capital,
qualifying tier 2 capital cannot exceed tier 1 capital, and qualifying term subordinated loan</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">capital may not exceed 50 per cent of tier 1 capital. There are also limitations on the amount of collective impairment allowances which may be included as part of tier 2 capital. From
the total of tier 1 and tier 2 capital are deducted the carrying amounts of unconsolidated investments, investments in the capital of banks, and certain regulatory items.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking operations are categorised as either trading book or banking book and risk-weighted assets are determined accordingly. Banking book risk-weighted
assets are measured by means of a hierarchy of risk weightings classified according to the nature of each asset and counterparty, taking into account any eligible collateral or guarantees. Banking book off-balance sheet items giving rise to credit,
foreign exchange or interest rate risk are assigned weights appropriate to the category of the counterparty, taking into account any eligible collateral or guarantees. Trading book risk-weighted assets are determined by taking into account
market-related risks such as foreign exchange, interest rate and equity position risks, and counterparty risk.</FONT></P>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Effect of IFRSs</FONT></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In October 2004, the FSA published a consultation paper CP04/17 &#145;Implications of a changing accounting framework&#146;. This was followed in April 2005 with a policy statement with
the same title, PS05/5. These papers set out the FSA&#146;s approach to assessing banks&#146; capital adequacy after implementation of IFRSs. PS05/5 took effect on publication.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under the new policy, there have been changes to the measurement of banks&#146; capital adequacy, the most significant of which for HSBC are set out
below.</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%" valign="top"><font size="2">&#8226;</font></td>
    <td width="95%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The capital
        treatment for collective impairment</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">allowances
        is the same as previously applied to</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">general provisions, that is
        they are included in</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">tier
        2 capital. This had a positive impact on</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s total capital ratio
        as the amount of</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">collective
        impairment allowances exceeds the</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">amount of the previous general
    provisions.</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effect
        of recognising defined benefit</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pension
        plan deficits on the balance sheet will</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">be reversed for regulatory reporting.
        However,</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">whereas
        previously banks deducted from capital</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">prepayments to pension plans,
        they must now</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">deduct
        from capital their best estimate of the</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">additional funding that they
        expect to pay into</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        plans over the following five years to reduce</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">the defined benefit liability.
        This estimate is</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">arrived
    at in conjunction with the plans&#146;</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">actuaries and/or trustees.</FONT></td>
  </tr>
</table>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">173</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p174"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">

<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%" valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under IFRSs,
        dividends are not recognised as a</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">liability
        on the balance sheet until they are</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">declared. This gives rise to
        an increase in</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">shareholders&#146; funds
        at the balance sheet date</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">compared with the previous accounting,
        which</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">is
        reversed when the relevant dividend is</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">subsequently declared. Banks
        reflect the benefit</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        this increase in their regulatory capital until</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">the dividend declaration, in
        line with the</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting
    treatment.</FONT> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrealised
          gains on available-for-sale equities</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
    are included as part of tier 2 capital;</FONT> <FONT size=2
face="TimesNewRoman,Times New Roman,Times,serif">previously these were not recognised.</FONT></td>
  </tr>
</table>


<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The FSA plan to review certain elements of this policy in mid-2007. In addition, in January 2006, the FSA published a consultation paper, CP06/1, which set
out proposed amendments to the handbook, on which comments are due in March 2006. These proposals are not expected to have a significant impact for HSBC.</FONT></P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Future developments</FONT><BR>

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Basel Committee on Banking Supervision (&#145;the Basel Committee&#146;) has published a new framework for calculating minimum capital requirements. Known as &#145;Basel II&#146;, it
will replace the 1988 Basel Capital Accord. Basel II is structured around three &#145;pillars&#146;: minimum capital requirements, supervisory review process and market discipline. The supervisory objectives for Basel II are to promote safety and
soundness in the financial system and maintain at least the current overall level of capital in the system; enhance competitive equality; constitute a more comprehensive approach to addressing risks; and focus on internationally active
banks.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">With respect to pillar one minimum capital requirements, Basel II provides three approaches, of increasing sophistication, to the calculation of credit risk
regulatory capital. The most basic one, the standardised approach, requires banks to use external credit ratings to determine the risk weightings applied to rated counterparties, and group other counterparties into broad categories and apply
standardised risk weightings to these categories. In the next level, the internal ratings-based foundation approach allows banks to calculate their credit risk regulatory capital requirement on the basis of their internal assessment of the
probability that a counterparty will default, but with quantification of exposure and loss estimates being subject to standard supervisory formulae. Finally, the internal ratings-based advanced approach will allow banks to use their own internal
assessment of not only the</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">probability of default but also the quantification of exposure at default and loss given default.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basel II also introduces capital requirements for operational risk and, again, three levels of sophistication are proposed. The capital required under the
basic indicator approach will be a simple percentage of gross revenues: under the standardised approach it will be one of three different percentages of gross revenues applicable to each of eight business lines, and under advanced measurement
approaches it will be an amount determined using banks&#146; own statistical analysis of operational risk data.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The EU Capital Requirements Directive (&#145;CRD&#146;) recast the Banking Consolidation Directive and the Capital Adequacy Directive and will be the means
by which Basel II will be implemented in the EU. The CRD was approved by the European Parliament in September 2005 and the European Parliament&#146;s amendments were subsequently endorsed by EU Finance Ministers on 12 October 2005. The CRD is
expected to be published in its final form in the spring of 2006. It requires EU Member States to bring implementing provisions into force on 1 January 2007, although in the case of the provisions relating to the implementation of the internal
ratings-based advanced approach to credit risk and the advanced measurement approach to operational risk, implementation may be delayed until 1 January 2008.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In January 2005, the FSA published a consultation paper, CP05/3 &#145;Strengthening capital standards&#146;, setting out proposals for implementing the
recast EU Directives. The FSA proposed that the new requirements should take effect from 1 January 2007, except that firms may elect to continue applying the existing capital adequacy framework until 1 January 2008. A further FSA consultation paper,
CP06/3 &#145;Strengthening Capital Standards 2&#146;, was published in February 2006 setting out the FSA&#146;s latest proposals for implementing the CRD in the UK, together with the draft FSA Handbook text.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC continues to participate actively in industry consultations surrounding the development and implementation of Basel II and the recast EU Directives, and
fully supports the more risk-sensitive regulatory capital framework proposed to replace the original 1988 Basel Capital Accord. The application of Basel II across HSBC&#146;s geographically diverse businesses, which operate in a large number of
different regulatory environments, represents a significant logistical and technological challenge, and an extensive programme of implementation projects is currently in progress. Basel II permits</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">174</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p175"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">local discretion in a number of areas for determination by local regulators. The extent to which requirements will diverge, coupled with how the FSA, HSBC&#146;s home regulator, and the
local host regulators in the other countries in which HSBC operates interact will be key factors in completing implementation of Basel II. In view of this ongoing uncertainty, it remains premature to establish with precision the effect of Basel II
on HSBC&#146;s capital ratios or how the competitive landscape will change. One example of regulatory uncertainty relates to the US, where banking supervisory authorities have yet to produce draft rules (termed Notice of Proposed Rulemaking). They
are now expected to be published in the first half of 2006. The US authorities have decided to apply the advanced credit and operational risk methodologies of Basel II only to the largest US banks and holding companies, although other banks may
decide to opt in. HSBC North America Holdings Inc. (HSBC&#146;s highest level US bank holding company in the US, which holds all HSBC&#146;s major US operating subsidiaries and HSBC Canada) has been mandated to comply with these rules. For smaller
US banks, the US banking authorities are considering applying an updated version of the existing Basel I rules (dubbed Basel Ia). The Basel Ia rules may also be used in the determination of Basel II capital floors during the transition period
(2009-11).</FONT></P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Capital management</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">It is HSBC&#146;s policy to maintain a strong capital base to support the development of its business. HSBC seeks to maintain a prudent balance between the</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">different components of its capital and, in HSBC Holdings, between the composition of its capital and that of its investment in subsidiaries. This is achieved by each subsidiary managing
its own capital within the context of an approved annual plan which determines the optimal amount and mix of capital required to support planned business growth and meet Group and local regulatory capital requirements and, in the case of HSBC
Finance, its ratings targets. Capital generated in excess of planned requirements is returned to HSBC Holdings, normally by way of dividends, and represents a source of strength for HSBC.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings is primarily a provider of equity capital to its subsidiaries. These investments are substantially funded by HSBC Holdings&#146; own equity
issuance and profit retentions. Major subsidiaries usually raise their own non-equity tier 1 capital and subordinated debt in accordance with HSBC guidelines regarding market and investor concentration, cost, market conditions, timing and the effect
on the composition and maturity profile of HSBC&#146;s capital. The subordinated debt requirements of other HSBC companies are met internally.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC recognises the impact on shareholder returns of the level of equity capital employed within HSBC and seeks to maintain a prudent balance between the
advantages and flexibility afforded by a strong capital position and the higher returns on equity possible with greater leverage. In the current environment, HSBC uses a benchmark tier 1 capital ratio of 8.25 per cent in considering its long-term
capital planning.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P>
  <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Source and application of tier 1 capital </FONT><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Unaudited information)</FONT></I></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Movement in tier 1 capital</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,259</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54,863</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consolidated profits attributable to shareholders of the parent company</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,081</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,840</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Add back: goodwill amortisation</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,818</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,750</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7,301</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Add back: shares issued in lieu of dividends</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,811</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,607</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increase in goodwill and intangible assets deducted</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,631</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,088</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Preference shares issued</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,405</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ordinary shares issued</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">690</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">581</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Innovative tier 1 capital issued</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,983</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other (including exchange differences)</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,462</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,956</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,403</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,259</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Movement in risk-weighted assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">759,210</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">618,662</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Movements</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,954</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">140,548</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">827,164</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">759,210</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">175</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p176"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Financial</FONT><FONT color="#c0c0c0" face="Univers,Bold,Arial,Helvetica,sans-serif"> </FONT><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Review </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Capital structure </FONT><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Unaudited
information)</FONT></I></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Composition of regulatory capital</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 1 capital</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; funds</FONT></font></TD>
        <TD width="10%" align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,432</FONT></B>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font></TD>
        <TD width="10%" align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86,623</FONT>
        </TD>
        <TD width="2%" align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Minority interests and preference shares</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,741</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,253</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Innovative tier 1 securities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,383</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,077</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Less :</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Goodwill capitalised and intangible assets</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(32,821</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(31,190</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other regulatory adjustments<SUP>1</SUP></FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,332</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,504</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total qualifying tier 1 capital</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,403</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,259</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 2 capital</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Reserves arising from revaluation of property and unrealised gains on</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">available-for-sale equities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,593</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,660</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Collective impairment allowances</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,749</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">General provisions</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,624</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Perpetual subordinated debt</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,640</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,670</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Term subordinated debt</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,519</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,373</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Minority and other interests in tier 2 capital</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">425</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">519</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total qualifying tier 2 capital</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,926</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,846</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Unconsolidated investments</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6,437</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,361</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Investments in other banks</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,147</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(799</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other deductions</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(296</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(165</FONT>
        </TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total regulatory capital</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">105,449</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,780</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Risk-weighted assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking book</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">762,037</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">705,302</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading book</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,127</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,908</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">827,164</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">759,210</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk-weighted assets were included in the totals above in respect of:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; contingent
    liabilities</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43,333</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,264</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; commitments</FONT></font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51,288</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,541</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Capital ratios</FONT></B></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total capital</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.8</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.0</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 1 capital</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.0</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></td>
    <td> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Other
          regulatory adjustments mainly arise from the implementation of IFRSs
          in conjunction with the
FSA&#146;s policy statement PS05/5.</FONT></I></td>
  </tr>
</table>
<br>
<div style="float: left; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The above figures were computed in accordance with the EU Banking Consolidation Directive and the FSA policy statement PS05/5. The comparative figures at 31 December 2004 have not been
restated to reflect the implementation of IFRSs and PS05/5. HSBC complied with the FSA&#146;s capital adequacy requirements throughout 2005 and 2004.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tier 1 capital increased by US&#36;7.1 billion. Retained profits contributed US&#36;7.3 billion, shares issued in lieu of dividends, together with preference
shares issued, contributed US&#36;3.2 billion and other movements, including net other IFRS transitional adjustments, added US&#36;0.8 billion. These increases</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">were partly offset by reductions due to exchange differences of US&#36;4.2 billion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The increase of US&#36;8 billion in tier 2 capital mainly reflects collective impairment allowances becoming eligible for inclusion in capital in place of
general provisions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total risk-weighted assets increased by US&#36;68 billion, or 9 per cent. The increase mainly reflects growth in the loan book and trading positions. At
constant currency, risk-weighted asset growth was 13 per cent.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">176</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p177"></a><p><a href="#contents"><font size="2">Back to Content</font></a></p>

<div style="float: left; width: 48%">

<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Risk-weighted assets by principal subsidiary</FONT><br>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Unaudited information)</FONT></I></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In order to give an indication of how HSBC&#146;s capital is deployed, the table below analyses the disposition</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of risk-weighted assets by principal subsidiary. The risk-weighted assets are calculated using FSA rules and exclude intra-HSBC items.</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Risk-weighted assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD width=10% align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45,525</FONT></B></TD>
        <TD width=2% align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,918</FONT></TD>
    <TD width=2% align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking Corporation and other subsidiaries</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">123,906</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119,595</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking Corporation</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169,431</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">157,513</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Banking Holdings (Suisse)</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,224</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,815</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54,684</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54,569</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank and other subsidiaries</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">221,355</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">220,824</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">297,263</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">295,208</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">129,282</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">110,744</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,275</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,127</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA and other subsidiaries</FONT></TD>
        <TD align=right bgcolor="#cccccc"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">123,829</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108,577</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC North America</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">283,386</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">245,448</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,166</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,750</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,682</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,088</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,991</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,472</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC South American operations</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,736</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,743</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank of Bermuda</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,195</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,107</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings sub-group</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">780</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,380</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,534</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,501</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">827,164</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">759,210</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">177</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p178"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><B><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O
      L
D I N G S &nbsp; P L C</FONT> </B></p>
<p><B><FONT size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Other Information</FONT></B></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td> <b><font face="Univers,Bold,Arial,Helvetica,sans-serif">Loan maturity
      and interest sensitivity analysis</font></b> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade align="center" width="100%" size="2">               </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
      2005, the geographical analysis of loan maturity and interest sensitivity
      by loan type on a contractual repayment basis was as follows:</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest</FONT></B></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">of
      Asia-</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Kong</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maturity
      of 1 year or less</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43,254</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,684</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,898</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,293</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,265</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121,394</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">
      <div style="margin-left:3%; text-indent:-3%"><font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
        loans to customers</font> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
        industrial and international trade</font></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54,243</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,155</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,478</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,759</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,229</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">91,864</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real
      estate and other property related</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,884</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,189</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,814</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,472</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">218</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,577</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
      financial institutions</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,287</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,588</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,606</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,655</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">109</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,245</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">782</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">116</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,439</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">253</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,645</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other
      commercial</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,223</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,942</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,700</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,240</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">855</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,960</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127,419</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,990</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,037</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,379</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,466</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">208,291</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government Home Ownership</font><font size="2">&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Scheme</font></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">489</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">489</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential
      mortgages and other personal loans</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,066</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,685</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,538</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,629</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,827</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103,745</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">157,485</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,164</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,575</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,008</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,293</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">312,525</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">200,739</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,848</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,472</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88,301</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,558</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">433,918</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maturity
      after 1 year but within 5 years</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">750</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">266</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,224</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">
      <div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
        loans to customers</font><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
        industrial and international trade</font></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,558</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,192</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,335</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,128</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">655</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,868</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real
      estate and other property related</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,180</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,036</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,734</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,651</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,658</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
      financial institutions</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,726</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">348</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">558</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,480</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,130</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">363</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">186</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">472</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,647</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">163</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,831</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other
      commercial</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,984</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,532</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,253</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,536</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,622</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,811</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,294</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,352</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,442</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,210</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80,109</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government Home Ownership</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Scheme</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,564</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,564</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">
      <div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential
        mortgages and other personal loans .</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,043</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,836</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,535</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50,515</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,268</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100,197</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,854</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,694</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,887</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68,957</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,478</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">181,870</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66,604</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,761</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,153</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,081</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,495</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">183,094</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
        rate sensitivity of loans and advances to</font> <font face="TimesNewRoman,Times New Roman,Times,serif">banks
        and commercial loans to customers:</font></font></div></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Fixed
      interest rate</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,991</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,070</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,791</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">430</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,351</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Variable
      interest rate</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,570</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,292</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,548</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,775</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">797</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66,982</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,561</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,361</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,618</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,566</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,227</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81,333</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Maturity
      after 5 years</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">364</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">396</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,596</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,356</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
      loans to customers</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Commercial,
      industrial and international trade</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,886</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">389</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">473</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,312</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,070</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Real
      estate and other property related</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,610</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,479</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">959</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,725</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,776</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-bank
      financial institutions</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,292</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">296</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,657</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Governments</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">676</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">602</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">227</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,742</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other
      commercial</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,739</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,953</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">938</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">600</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,238</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,203</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,852</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,644</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,535</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">249</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,483</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government Home Ownership</font>&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Scheme</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,627</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,627</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residential
      mortgages and other personal loans</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65,486</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,269</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,746</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">118,270</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">211,854</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,689</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,748</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,390</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124,805</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">332</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">256,964</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93,053</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,748</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,786</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127,401</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">332</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">260,320</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
        rate sensitivity of loans and advances to</font> <font face="TimesNewRoman,Times New Roman,Times,serif">banks
        and commercial loans to customers</font></font></div></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Fixed
      interest rate</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,633</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">927</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,673</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,274</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Variable
      interest rate</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,934</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,822</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,113</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,458</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">238</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,565</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,567</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,852</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,040</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,131</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">249</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45,839</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2> </TD>
    <TD><font size="2">&nbsp;</font></TD>
  </TR>
</TABLE>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">178</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p179"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Other information </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Deposits</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <hr size="2" noshade> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
      table analyses the average amount of bank and customer deposits and certificates
      of deposit (&#145;CDs&#146;) and other money market instruments (which are
      included within &#145;debt securities in issue&#146; in the balance sheet),
      together with the average interest rates paid thereon for each of the past
      three years. The geographical analysis of average deposits is based on the
      location of the office in which the deposits are recorded and excludes balances
      with HSBC companies. The &#145;Other&#146; category includes securities
      sold under agreements to repurchase.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="7" align=center>&nbsp;</TD>
    <TD colspan="13" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT><font size="2">&nbsp;</font> </TD>
    <TD rowspan="7" align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=center> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD rowspan="5" align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=center><HR noshade size=1></TD>
    <TD colspan="3" align=center><HR noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">rate</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deposits
          by banks</font></b></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD height="20">&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width="9%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,252</FONT></B></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="9%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="9%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,746</FONT></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="9%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width="2%" align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD width="2%" align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="9%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,895</FONT></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="9%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,418</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.5</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,237</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,418</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,021</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.9</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,029</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.8</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,877</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,111</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,870</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,828</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67,802</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68,882</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,018</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
        Kong</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,054</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,752</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,253</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,104</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.5</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,484</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,059</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,012</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.2</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,016</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.6</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">450</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.1</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">218</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.3</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">416</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.7</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">110</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,388</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,668</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,872</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of
        Asia-Pacific</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,164</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,641</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,438</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,442</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,013</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">737</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,375</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.3</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,410</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.1</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,055</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.6</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">761</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.4</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,146</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">664</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,742</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,210</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,894</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
        America</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,344</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,948</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,442</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,647</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.6</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,098</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.4</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,161</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,886</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.3</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,176</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,151</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47.5</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,480</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,526</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,917</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,702</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,280</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
        America</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">117</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7.7</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">148</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.8</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">181</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">330</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.5</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">238</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">273</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.8</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,073</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.2</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">703</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.7</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">299</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,559</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,102</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">770</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,853</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,100</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,045</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,728</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.0</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,980</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,556</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,624</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.1</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,869</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.9</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,806</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,203</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.3</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,615</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.4</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,427</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94,408</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96,564</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68,834</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center">
  <FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">179</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p180"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C &nbsp; H
    O L D I N G S &nbsp; P L C</FONT></p>
<p><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other Information</FONT><FONT size="2" face="Arial,Bold,Arial,Helvetica,sans-serif">
  </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan="7" align=center>      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended
      31 December</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
    ended</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD height="22" align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=center><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=center> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font><font size="2">&nbsp;</font>
    </TD>
    <TD align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      December 2003</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=right><HR noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=right><HR noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Average</FONT></B>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">rate</FONT></B>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp; </TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Customer
          accounts</b> </font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,501</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,184</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,667</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146,484</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128,249</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101,189</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.8</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46,248</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,846</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Savings</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,876</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48,201</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,941</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,010</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.8</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,967</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.2</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,167</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,696</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.6</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">280,401</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">266,387</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">216,438</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
        Kong</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,365</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,508</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,829</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">91,723</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">94,629</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,818</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.1</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50,281</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.4</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,817</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Savings</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58,646</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,054</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,015</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,101</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.4</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(26.7</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">106</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.7</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">379</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169,438</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">167,075</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">152,773</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Rest
        of Asia-Pacific </font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,825</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,592</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,467</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,721</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,480</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,483</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.1</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,584</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,171</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Savings</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,685</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,484</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,597</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,105</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.6</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,895</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.9</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,866</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,304</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83,509</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,706</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59,044</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
        America</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,084</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,508</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,364</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,788</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.6</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,395</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,648</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.3</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53,328</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.7</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,919</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Savings</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,295</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,945</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.8</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,971</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,652</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,534</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.5</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,989</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,672</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">114,679</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">121,782</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99,631</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
        America</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,126</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,428</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,192</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">276</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">308</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">207</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.9</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,110</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,976</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Savings</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,271</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.1</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">343</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">269</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.4</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">157</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,444</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">411</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,299</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,392</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,073</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">72,901</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82,220</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">Demand
          and other &#150; non-interest bearing</font></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68,519</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">283,992</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.8</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">264,061</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Demand &#150; interest
          bearing</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">206,345</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.1</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">191,551</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">170,729</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.2</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Savings</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">170,773</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">97,027</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81,793</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64,025</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,855</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.3</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,539</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,297</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">662,326</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">634,342</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">533,959</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">CDs
          and other money market instruments</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,778</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.8</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,684</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.6</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,156</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.8</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,599</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.1</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,031</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Hong
          Kong</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,656</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.6</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,467</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.2</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,804</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.4</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Rest
          of Asia-Pacific</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,906</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.1</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD height="16" align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,150</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,790</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">North
          America</FONT></font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,309</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.4</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.8</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.7</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">South
          America</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,067</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.0</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62,411</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,090</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">180</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p181"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Certificates
      of deposit and other time deposits</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
      2005, the maturity analysis of certificates of deposit and other wholesale
      time deposits, by remaining maturity, was as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">After
      3 months</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">After
      6 months</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3
      months</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">but
      within</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">but
      within</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">After</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">or
      less</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6
      months</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12
      months</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12
      months</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Certificates
      of deposit</FONT></font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,713</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,581</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">325</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,622</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time
      deposits:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      banks</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,192</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,012</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,497</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,630</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,331</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      customers</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,800</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,652</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,495</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,496</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,443</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">64,705</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,245</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,317</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,129</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">84,396</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Certificates
      of deposit</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">340</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">988</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,178</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,598</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,104</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time
      deposits:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      banks</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">889</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">938</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      customers</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,438</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">330</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">353</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,335</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,456</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,667</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,323</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,538</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,970</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,498</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
      of Asia-Pacific</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Certificates
      of deposit</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,251</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">894</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,031</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">498</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,674</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time
      deposits:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      banks</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,923</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">299</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">397</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">284</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,903</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      customers</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,408</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,321</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,426</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,234</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,582</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,514</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,507</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,811</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
      America</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Certificates
      of deposit</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,114</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,178</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time
      deposits:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      banks</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,490</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">611</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">552</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">212</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,865</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      customers</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,713</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,797</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,803</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,537</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,850</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,317</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,457</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,370</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,749</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,893</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
      America</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Certificates
      of deposit</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time
      deposits:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      banks</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">160</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">71</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">315</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      customers</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">312</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">380</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;Total</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">472</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">751</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Certificates
      of deposit</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,418</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,512</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,549</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,155</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,634</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Time
      deposits:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      banks</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,654</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,010</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,524</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,164</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,352</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      customers</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78,671</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,110</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,767</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,815</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103,363</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">119,743</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,632</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,840</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,134</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171,349</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2> </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="11" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      geographical analysis of deposits is based on the location of the office
      in which the deposits are recorded and excludes balances with HSBC companies.
      The majority of certificates of deposit and time deposits are in amounts
      of US&#36;100,000 and over or the equivalent in other currencies.</font></TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">181</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p182"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Other information </FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Short-term
      borrowings</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <hr size="2" noshade> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC includes
      short-term borrowings within customer accounts, deposits by banks and debt
      securities in issue and does not show short-term borrowings separately on
      the balance sheet. Short-term borrowings are defined by the US Securities
      and Exchange Commission (&#145;SEC&#146;) as Federal funds purchased and
      securities sold under agreements to repurchase, commercial paper and other
      short-term borrowings. HSBC&#146;s only significant short-term borrowings
      are securities sold under agreements to repurchase and certain debt securities
      in issue. Additional information on these is provided in the tables below.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan="7" align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year ended
    31 December</FONT> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font>      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD height="20" colspan="7" align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD rowspan="2" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>Securities
          sold under agreements to repurchase</b></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75,745</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,726</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
        at 31 December</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,427</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,143</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,229</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
        amount outstanding during the year</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,883</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78,590</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,188</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maximum
        quarter-end balance outstanding during the year</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,938</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.6%</FONT></B>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7%</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
        average interest rate during the year</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0%</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.0%</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.9%</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
        average interest rate at the year-end</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.9%</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Short
          term bonds</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,642</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,085</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
        at 31 December</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,979</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,908</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,238</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
        amount outstanding during the year</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,445</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">40,642</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,085</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maximum
        quarter-end balance outstanding during the year</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,979</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.6%</FONT></B>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.8%</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
        average interest rate during the year</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5%</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.7%</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5%</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
        average interest rate at the year-end</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5%</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serifTimes, serif">Off-balance
      sheet arrangements</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <hr size="2" noshade> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC enters
      into certain off-balance sheet arrangements with customers in the ordinary
      course of business, as described below.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%" valign=top>&nbsp;</TD>
    <TD width="3%" valign=top> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(i)</FONT></TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      guarantees, letters of credit and similar undertakings</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note 40
      on the Financial Statements on page 327 describes various types of guarantees
      and discloses the maximum potential future payments under such arrangements.
      Credit risk associated with all forms of guarantees is assessed in the same
      manner as for on-balance sheet credit advances and, where necessary, provisions
      for assessed impairment are included in &#145;Other provisions&#146;.</FONT>
    </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign=top>&nbsp;</TD>
    <TD valign=top> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</FONT></TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commitments
      to lend</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undrawn
      credit lines are disclosed in Note 40 on the Financial Statements on page
      327. The majority by value of undrawn credit lines arise from &#145;open
      to buy&#146; lines on personal credit cards, cheques issued to potential
      customers offering them a pre-approved loan, advised overdraft limits, and
      mortgage offers awaiting customer acceptance. HSBC generally has the right
      to change or terminate any conditions of a personal customer&#146;s overdraft,
      credit card or other credit line upon notification to the customer. In respect
      of corporate commitments to lend, in most contracts HSBC&#146;s position
      will be protected through restrictions on access to funding in the event
      of material adverse change.</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign=top>&nbsp;</TD>
    <TD valign=top> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iii)</FONT></TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
      derivatives</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC uses
      credit derivatives through its principal dealing operations, acting as a
      principal counterparty to a broad range of users, structuring deals to produce
      risk management products for its customers, or making markets in certain
      products. Risk is typically controlled through entering into offsetting
      credit derivative contracts with other counterparties.</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC manages
      the credit risk arising on buying and selling credit derivative protection
      by including the exposure to any credit risk that arises from such transactions
      within its overall credit limits structure to the relevant counterparty.
      The trading of credit derivatives is restricted to a small number of offices
      within the major centres which in management&#146;s view have the control
      infrastructure and market skills to manage effectively the credit risk inherent
      in the products.</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
      derivatives are also used for the management of credit risk in the Group&#146;s
      loan portfolio. HSBC&#146;s use of credit derivatives in this manner is
      not significant, however.</FONT> </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">182</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p183"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p>&nbsp;</p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
      table presents the notional amounts of credit derivatives protection bought
      and sold by HSBC:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="4" align=left>&nbsp;</TD>
    <TD width="3%" rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Notional
      amount of protection</FONT></TD>
    <TD rowspan="4" align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=right><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bought</FONT></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sold</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At
      31 December 2005</FONT></B></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">249,347</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">262,393</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93,750</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102,321</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="top">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The mismatch
      between these notional amounts is attributable to HSBC selling protection
      on large, diversified, predominantly investment grade portfolios (including
      the most senior tranches) and then hedging these positions by buying protection
      on the more subordinated tranches of the same portfolios. In addition, HSBC
      uses securities to hedge certain derivative positions. Consequently, while
      there is a mismatch in notional amounts of credit derivatives, the risk
      positions are largely matched.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iv)</FONT></TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Special
      purpose and variable interest entities</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC predominantly
      uses special purpose entities ('SPE'), or variable interest entities ('VIE'),
      to securitise loans and advances it has originated where this source of
      funding is cost effective. Such loans and advances generally remain on the
      balance sheet under IFRSs.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC also
      administers SPEs that have been established for the purpose of providing
      alternative sources of financing to HSBC&#146;s customers. Such arrangements
      also enable HSBC to provide tailored investment opportunities for investors.
      These SPEs, commonly referred to as asset-backed or multi-seller conduits,
      purchase interests in a diversified pool of receivables from customers or
      in the market using finance provided by a third party. The cash flows received
      by SPEs on pools of receivables are used to service the finance provided
      by investors. HSBC administers this arrangement, which facilitates diversification
      of funding sources and the tranching of credit risk. HSBC also typically
      provides part of the liquidity facilities to the entities, together with
      secondary credit enhancement.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC also
      has relationships with SPEs which offer management of investment funds,
      provide finance to public and private sector infrastructure projects, and
      facilitate capital funding through the issue of preference shares via partnerships.</FONT>
    </TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">All SPEs
      used by HSBC are authorised centrally upon initial establishment to ensure
      appropriate purpose and governance. The activities of SPEs administered
      by HSBC are closely monitored by senior management. The use of SPEs is not
      a significant part of HSBC&#146;s activities and HSBC is not reliant on
      the use of SPEs for any material part of its business operations or profitability.
      For a further discussion of HSBC&#146;s involvement with SPEs and the accounting
      treatments under IFRSs and US GAAP, see Note 47(j) on the Financial Statements
      on page 398.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><B><FONT size="3" face="Univers,Bold,Arial,Helvetica,sans-serif Times, serif">Contractual
      obligations</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The table
      below provides details of HSBC&#146;s material contractual obligations as
      at 31 December 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD colspan="7" align=center><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Payments
      due by period</FONT></B></TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="7" align=left><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Less
      than</FONT></B></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">More
      than</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1
      year</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1&#150;5
      years</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5
      years</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term
      debt obligations</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">252,008</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107,741</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">104,285</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,982</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Term
      deposits and certificates of deposit</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171,349</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">147,215</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,134</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
      (finance) lease obligations</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">639</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">560</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      lease obligations</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,950</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">744</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,754</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,452</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Purchase
      obligations</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,218</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">922</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">296</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Short
      positions in debt securities and equity shares</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66,696</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55,491</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,687</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,518</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pension
      obligations</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,050</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">390</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,440</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,220</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">499,910</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">312,528</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">135,650</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51,732</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">183</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p184"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other
            information</font> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Disclosure
    controls</font></b></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Group Chairman and Group Finance Director, with the assistance of other members
    of management, carried out an evaluation of the effectiveness of the design
    and operation of HSBC
Holdings&#146; disclosure controls and procedures as of 31 December 2005. Based
upon that evaluation, the Group Chairman and Group Finance Director concluded
that HSBC&#146;s
disclosure controls and procedures as of 31 December 2005 were effective to provide
reasonable assurance that information required to be disclosed in the reports
which the company files and submits under the US Securities Exchange Act of 1934,
as amended, is recorded, processed, summarised and reported as and when
required. There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and procedures. Accordingly,
even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives.</FONT></p>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">There
    has been no change in HSBC Holdings&#146; internal
control over financial reporting during the year ended 31 December 2005 that
has materially
affected, or is reasonably likely to materially affect, HSBC Holdings&#146; internal
control over financial reporting.</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Board
            of Directors and Senior Management</font></b></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD width="3%">&nbsp;</TD>
<TD>
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Directors</FONT></B>   </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
</TR>
<TR>
<TD>&nbsp;</TD> <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Sir John Bond, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group Chairman</FONT>   </TD>
</TR>
<TR>
<TD>&nbsp;</TD> <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(retiring on 26 May 2006)</FONT></I>    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 64. An executive
Director since 1990; Group Chief Executive from 1993 to 1998. Joined HSBC in
1961; a non-executive Director of The Hongkong and Shanghai Banking Corporation
Limited,  having been an executive Director from 1988 to 1992. A Director of
HSBC North America Holdings Inc. A Director of HSBC Bank plc from 1993 to 1997
and Chairman from 1998 to 2004. A non-executive Director of Ford Motor Company
and of Vodafone Group
Plc.</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Chairman
of the
Mayor of Shanghai&#146;s International Business Leaders&#146; Advisory Council.</font> </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">*</FONT></TD>
        <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">The Baroness Dunn, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">DBE, Deputy Chairman and senior non-executive Director</FONT>       </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 66. An executive Director of John Swire &amp; Sons Limited and a Director of Swire Pacific Limited. A non-executive Director since 1990 and a non-executive Deputy Chairman since 1992.
A member of the Nomination Committee. A non-executive Director of The Hongkong and Shanghai Banking Corporation</FONT>  </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
</div>
<div style="float: right; width: 48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD width="3%">&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Limited from 1981 to 1996. A member of the Asia Task Force. A former Senior Member of the Hong Kong Executive Council and Legislative Council.</FONT>     </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD valign=top>&#8224;</TD>
        <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Sir Brian Moffat, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OBE, Deputy Chairman and senior independent non-executive Director</FONT>    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 67. Former Chairman of Corus Group plc. A non- executive Director since 1998 and a non-executive Deputy Chairman since 2001. Chairman of the Group Audit Committee and of the
Nomination Committee. A member of the Court of the Bank of England. A non- executive Director of Macsteel Global BV.</FONT>     </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">S</FONT></B>&nbsp;<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">K
Green, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group Chief Executive,</FONT>   </TD>
</TR>
<TR>
<TD>&nbsp;</TD> <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Group Chairman designate)</FONT></I>   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 57. An executive Director since 1998. Executive Director, Corporate, Investment Banking and Markets from 1998 to 2003. Joined HSBC in 1982. Group Treasurer from 1992 to 1998. Chairman
of HSBC Bank plc, HSBC Bank Middle East Limited, HSBC Bank USA, N.A., HSBC Group Investment Businesses Limited, HSBC Private Banking Holdings (Suisse)</FONT>   <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.,
and HSBC USA Inc. A Director of The Bank of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda
Limited, HSBC France, The Hongkong and Shanghai Banking Corporation Limited,
Grupo</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
</div><br clear="all">
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">184</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p185"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<div style="float: left; width: 48%">
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financiero
        HSBC, S.A. de C.V., HSBC North America</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holdings
    Inc. and HSBC Trinkaus &amp; Burkhardt</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">KGaA.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">A
          W Jebson, </font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group
    Chief Operating Officer</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(retiring
    on 26 May 2006)</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 56.
        An executive Director since 2000. Group IT</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Director
        from 2000 to 2003. Group General Manager,</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">Information Technology
        from 1996 to 2000. Joined</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    in 1978. A Director of HSBC Finance</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Corporation.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">The
    Rt Hon the Lord Butler of Brockwell, </font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">KG,
    GCB, CVO</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 68.
        Master, University College, Oxford. A non-</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">executive
        Director since 1998. Chairman of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Corporate Social Responsibility
        Committee, a member</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        the Nomination Committee and Chairman of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">HSBC Education Trust. A non-executive
        Director of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Imperial
        Chemical Industries plc. A member of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">International Advisory Board
        of Marsh McLennan Inc.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chaired
        the UK Government Review of Intelligence on</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Weapons of Mass Destruction.
        Secretary of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cabinet
        and Head of the Home Civil Service in the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">United Kingdom from 1988 to
    1998.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R
    K F Ch&#146;ien, </font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">CBE</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 54.
        Chairman of CDC Corporation and of its</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">subsidiary,
        China.com Inc. A non-executive Director</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">since 1998. A member of the
        Group Audit Committee.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-executive
        Chairman of HSBC Private Equity</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">(Asia) Limited and a non-executive
        Director of The</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hongkong
        and Shanghai Banking Corporation Limited</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">since 1997. Non-executive Chairman
    of MTR Corporation Limited and a non-executive Director of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Convenience
    Retail Asia Limited, Inchcape plc, VTech</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holdings Limited and
    The Wharf (Holdings) Limited.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">J
    D Coombe</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 60.
        Former executive Director and Chief Financial</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Officer
        of GlaxoSmithKline plc. A non-executive</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">Director since 1 March
        2005. A member of the Group</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Audit
        Committee since 1 July 2005. Appointed a</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">member of the Remuneration Committee
        with effect</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">from
        1 June 2006. A non-executive Director of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Supervisory Board of Siemens
        AG and a non-</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">executive
        Director of GUS plc. A member of The Code</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Committee of the Panel on Takeovers
        and Mergers. A</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">trustee
        of the Royal Academy Trust. A former</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Chairman of The Hundred Group
        of Finance Directors</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
    a former member of the Accounting Standards</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Board.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R
    A Fairhead</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 44.
    Finance Director of Pearson plc. A non-</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD width="3%">&nbsp;</TD>      <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">executive Director since March 2004. A member of the Group Audit Committee. A non-executive Director of The Economist Newspaper Limited. Former Executive Vice President, Strategy and
Group Control of Imperial Chemical Industries plc.</FONT>       </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">DJ Flint, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group Finance Director</FONT>        </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 50. Joined HSBC as an executive Director in 1995. A Director of HSBC Bank Malaysia Berhad. Chaired the Financial Reporting Council&#146;s review of the Turnbull Guidance on Internal
Control. Served on the Accounting Standards Board and the Standards Advisory Council of the International Accounting Standards Board from 2001 to 2004. A non-executive Director of BP p.l.c. since 1 January 2005. A former partner in
KPMG.</FONT>    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD valign=top>&#8224;</TD>
        <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">W K L Fung, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OBE</FONT> </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 57. Group Managing Director of Li &amp; Fung Limited. A non-executive Director since 1998. A member of the Corporate Social Responsibility Committee and of the Remuneration Committee.
Deputy Chairman and non-executive Director of The Hongkong and Shanghai Banking Corporation Limited. A non-executive Director of Bank of Communications Limited. Former Chairman of the Hong Kong General Chamber of Commerce, the Hong Kong
Exporters&#146; Association and the Hong Kong Committee for the Pacific Economic Co-operation Council.</FONT>   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">F Geoghegan, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CBE, Deputy Chairman, HSBC</FONT> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank
plc. </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(Group
Chief Executive designate)</font></i> </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR>
<TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 52. An executive Director since March 2004. Joined HSBC in 1973. A Director and, since 6 March 2006, Deputy Chairman of HSBC Bank plc. A Director of HSBC France and HSBC Private
Banking Holdings (Suisse) S.A. President of HSBC Bank Brasil S.A.- Banco M&uacute;ltiplo from 1997 to 2003 and responsible for all of HSBC&#146;s business throughout South America from 2000 to 2003. Chief Executive of HSBC Bank plc from January 2004
to 6 March 2006. A non-executive Director and Chairman of Young Enterprise.</FONT>      </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD valign=top>&#8224;</TD>
        <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">S Hintze</FONT></B>     </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR>
<TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 61. Former
Chief Operating Officer of Barilla</FONT> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">P.A.
A non-executive Director since 2001. A</font> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">member
of the Corporate Social Responsibility Committee and of the Remuneration Committee.
A non-executive Director of Premier Foods plc and the Society of Genealogists,
a registered
charity. A former Senior Vice President of Nestl&eacute; S.A. With Mars Incorporated from 1972 to 1993, latterly as Executive Vice President of M&amp;M/Mars in New Jersey. A former non-executive Director of Safeway plc.</FONT>      </TD>
</TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
</TABLE>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">185</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p186"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Board
            of Directors and Senior Management</font> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">

<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&#8224;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">J
    W J Hughes-Hallett</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 56.
        Chairman of John Swire &amp; Sons Limited. A</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">non-executive
        Director since 1 March 2005. Appointed</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">a member of the Group
        Audit Committee with effect</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">from
        1 June 2006. A non-executive Director of The</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Hongkong and Shanghai Banking
        Corporation Limited</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">from
        1999 to 2004. A non-executive Director and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">formerly Chairman of Cathay
        Pacific Airways Limited</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        Swire Pacific Limited. A trustee of the Dulwich</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Picture Gallery, the Hong Kong
        Maritime Museum and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
    Esm&eacute;e Fairbairn Foundation.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Sir
    John Kemp-Welch<i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif"> </font></i></font></b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(retiring
    on 26 May 2006)</font></i></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 69.
        Former Joint Senior Partner of Cazenove &amp;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Co
        and former Chairman of the London Stock</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Exchange. A non-executive Director
        since 2000. A</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">member
        of the Group Audit Committee and of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Remuneration Committee. A Deputy
        Chairman of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Reporting Council and a member of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Panel on Takeovers and Mergers
    from 1994 to 2000.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Sir
    Mark Moody-Stuart, </font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">KCMG</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 65.
        Chairman of Anglo American plc. A non-</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">executive
        Director since 2001. Chairman of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Remuneration Committee and a
        member of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate
        Social Responsibility Committee. A non-</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">executive Director of Accenture
        Limited, a Governor</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        Nuffield Hospitals, President of the Liverpool</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">School of Tropical Medicine
        and Chairman of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Global
        Business Coalition on HIV/AIDS. A former</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Director and Chairman of The &#145;Shell&#146; Transport
        and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
        Company, plc and former Chairman of the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Committee of Managing Directors
        of the Royal</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dutch/Shell
    Group of Companies.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">S
    W Newton</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 64.
        Chairman of The Real Return Holdings</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Company
        Limited. A non-executive Director since</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">2002. A Member of the Advisory
        Board of the East</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia
        Institute and of the Investment Board at</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Cambridge University. A Member
        of The Wellcome</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trust
        Investment Committee. Founder of Newton</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Investment Management, from
    which he retired in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&#8224;</td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">S
    M Robertson</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 65.
        Non-executive Chairman of Rolls-Royce</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group
        plc and the founder member of Simon</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Robertson Associates LLP. A
        non-executive Director</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">since
        3 January 2006. A Director of The Economist</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Newspaper Limited, The Royal
        Opera House Covent</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Garden
        Limited and a non-executive Director of Berry</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Bros. &amp; Rudd Limited. Chairman
        of Trustees of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Royal
    Academy Trust and the Ernest Kleinwort</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>

</div>
<div style="float: right; width: 48%">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD width="3%">&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Charitable Trust. A trustee of the Eden Project and the Royal Opera House Endowment Fund. A former Managing Director of Goldman Sachs International. Former Chairman of Dresdner Kleinwort
Benson and a former non-executive Director of Inchcape plc, Invensys plc and the London Stock Exchange.</FONT>  </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">*</FONT></TD>
        <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">H Sohmen, </FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OBE</FONT>   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 66. Chairman of Bergesen Worldwide Limited and Bergesen Worldwide Gas ASA. Chairman and President of BW Corporation Limited (formerly World-Wide Shipping Group Limited) and Chairman
of The International Tanker Owners Pollution Federation Limited. A non-executive Director since 1990. A non-executive Director of The Hongkong and Shanghai Banking Corporation Limited from 1984 to May 2005 and Deputy Chairman from 1996 to May
2005.</FONT>    </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&#8224;</TD>
  <TD><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Sir
      Brian Williamson, </font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">CBE</font> </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 61.
      Chairman of Electra Private Equity plc. A non-executive Director since
      2002. A member of the Nomination Committee. A non-executive Director of
      Resolution plc. A member of the Supervisory Board of Euronext NV. A senior
      adviser to Fleming Family and Partners. Former Chairman of London International
      Financial Futures and Options Exchange, Gerrard Group plc and Resolution
      Life Group Limited. A former non-executive Director of the Financial Services
      Authority and of the Court of The Bank of Ireland.</font> </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">*&nbsp;&nbsp;&nbsp;<i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Non-executive
      Director</font></i> </font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#134;<i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;Independent
      non-executive Director</font></i> </font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Adviser
      to the Board</font></b></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">D
      J Shaw</font></b></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 59. An
      Adviser to the Board since 1998. Solicitor. A partner in Norton Rose from
      1973 to 1998. A Director of The Bank of Bermuda Limited and HSBC Private
      Banking Holdings (Suisse)
S.A.</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Secretary</font></b></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R
      G Barber</font></b></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 55. Group
      Company Secretary since 1990. Joined HSBC in 1980; Corporation Secretary
      of The Hongkong and Shanghai Banking Corporation Limited from 1986 to 1992.
      Company Secretary of
HSBC Bank plc from 1994 to 1996.</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<P>&nbsp;</P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">186</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p187"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Group
    Managing Directors</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> V
          H C Cheng,</font></b><b><font size=2 face="Arial,Bold,Arial,Helvetica,sans-serif"> </font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">OBE</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 57.
        Chairman of The Hongkong and Shanghai Banking Corporation Limited. A
        Group Managing Director since 25 May 2005. Joined HSBC in 1978. Appointed
        a Group General Manager in 1995. Deputy Chairman and Chief Executive
    Officer of Hang Seng Bank Limited from 1998 to 25 May 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">C-H
    Filippi</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 53.
        Chairman and Chief Executive Officer of HSBC France. A Group Managing
        Director since 2004. A Director of HSBC Bank plc. Joined HSBC France
        in 1987 having previously held senior appointments in the French civil
        service. Appointed a Group General Manager in 2001. Global Head of Corporate
    and Institutional Banking from 2001 to 2004.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">ST
    Gulliver</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 46.
        Co-Head Corporate, Investment Banking and Markets. A Group Managing Director
        since 2004. Joined HSBC in 1980. Appointed a Group General Manager in
        2000. Head of Treasury and Capital Markets in Asia-Pacific from 1996
    to 2002 and Head of Global Markets from 2002 to 2003.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">D
    D J John</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 55.
        Chief Executive, HSBC Bank plc and a Group Managing Director since 6
        March 2006. Joined HSBC Bank plc in 1971. Appointed a Group General Manager
        in 2000. Deputy Chairman and Chief Executive Officer, HSBC Bank Malaysia
        Berhad from 1999 to 2002. Chief Operating Officer of HSBC Bank plc from
        2003 to May 2005 and Deputy Chief Executive from May 2005 to 6 March
    2006.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">S
    N Mehta</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 47.
        Chief Executive of HSBC North America Holdings Inc, and Chairman and
        Chief Executive Officer of HSBC Finance Corporation since March 2005.
        A Group Managing Director since 30 April 2005. Joined HSBC Finance Corporation
    in 1998 and was appointed Vice Chairman in April 2004.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Y
    A Nasr</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 51.
        President, HSBC Bank Brasil S.A.-Banco M&uacute;ltiplo. A Group Managing
        Director since 2004. Joined HSBC in 1976. Appointed a Group General Manager
        in 1998. President and Chief Executive Officer of HSBC Bank Canada from
        1997 to 1999. President and Chief Executive Officer of HSBC USA Inc.
    and HSBC Bank USA from 1999 to 2003.</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">J
    J Studzinski</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 49.
        Co-Head Corporate, Investment Banking and Markets. A Group Managing Director
        since 2004. Joined HSBC in 2003 as a Group General Manager, having previously
        been with Morgan Stanley from 1980 to 2003, latterly as Deputy Chairman
    of Morgan Stanley International.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Group
    General Managers</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">PY
    Antika</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 45.
        Chief Executive Officer, HSBC Turkey. Joined HSBC in 1990. Appointed
    a Group General Manager 1 August 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R
    J Arena</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 57.
        Group General Manager, Global e-business. Joined HSBC in 1999. Appointed
    a Group General Manager in 2000.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">C
    C R Bannister</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 47.
        Chief Executive Officer, Group Private Banking. Joined HSBC in 1994.
    Appointed a Group General Manager in 2001.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R
    E T Bennett</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 54.
        Group General Manager, Legal and Compliance. Joined HSBC in 1979. Appointed
    a Group General Manager in 1998.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">N
    S K Booker</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 47.
        Chief Executive Officer, India. Joined HSBC in 1981. Appointed a Group
    General Manager in January 2004.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">P
    W Boyles</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 50.
        Group General Manager, Human Resources. Joined HSBC in 1975. Appointed
    a Group General Manager on 1 January 2006.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">D
    C Budd</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 52.
        Chief Operating Officer and Executive Director, HSBC Bank plc. Joined
    HSBC in 1972. Appointed a Group General Manager on 5 May 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">G
    P S Calvert,</font></b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> OBE</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 53.
        Group General Manager Special Duties. Joined HSBC in 1974. Appointed
    a Group General Manager in June 2004.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Z
    J Cama</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 58.
        Deputy Chairman and Chief Executive Officer, HSBC Bank Malaysia Berhad.
    Joined HSBC in 1968. Appointed a Group General Manager in 2001.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">187</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p188"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Board
            of Directors and Senior Management</font> </b></font><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width:48%">
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">S L Derickson</FONT></B></P>
<P> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 52. Vice
    Chairman of HSBC Finance Corporation. Joined HSBC Finance Corporation in
2000. Appointed a Group General Manager on 30 April 2005.</font></P>
<P><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">A
A Flockhart</font></b></P>
<P><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 54. Chief
    Executive Officer and Chairman, Grupo Financiero HSBC, S.A. de C.V. and HSBC
    M&eacute;xico, S.A. Joined HSBC in 1974. Appointed a Group General Manager
in 2002.</font></P>
<P><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">M
J G Glynn</font></b></P>
<p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 54. President
    and Chief Executive Officer, HSBC Bank USA, N.A. Joined HSBC in 1982. Appointed
    a Group General Manager in 2001.</font></p>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">L
Gordon</font></b></p>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 53. President
    and Chief Executive Officer, HSBC Bank Canada. Joined HSBC in 1987. Appointed
    a Group General Manager on 1 August 2005.</font></p>
<p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">K
M Harvey</font></b></p>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 45. Group
    General Manager and Group Chief Information Officer. Joined HSBC Finance
    Corporation in 1989. Appointed a Group General Manager in August 2004.</font></p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">D
H Hodgkinson</FONT></B></p>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 55. Chief
    Executive Officer and Deputy Chairman, HSBC Bank Middle East Limited. Joined
    HSBC in 1969. Appointed a Group General Manager in 2003.</font></p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">A
P Hope</FONT></B></p>
<P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 59. Group
    General Manager, Insurance. Joined HSBC in 1971. Appointed a Group General
    Manager in 1996.</FONT></P>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">M
J W King</FONT></B></p>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 49. Group
    General Manager, Internal Audit. Joined HSBC in 1986. Appointed a Group General
    Manager in 2002.</font></p>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">P
      J Lawrence</FONT></B></p>
<P><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 44. Chief
    Executive Officer, HSBC Singapore. Joined HSBC in 1982. Appointed a Group
    General Manager on 1 August 2005.</font></P>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">M
      Leung</FONT></B></P>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 53. Global
    Co-Head Commercial Banking. Joined HSBC in 1978. Appointed a Group General
    Manager on 1 August 2005.</font></p>
</div>
<div style="float: right; width:48%">
<P>  <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">B McDonagh</FONT></B></P>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 47. Chief Operating Officer, HSBC Bank USA, N.A. Joined HSBC in 1979. Appointed a Group General Manager on 1 August 2005.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R C F Or</FONT></B>
<P><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 56. Vice-Chairman
    and Chief Executive, Hang Seng Bank Limited and Executive Director, The Hongkong
    and Shanghai Banking Corporation Limited. Joined HSBC in 1972. Appointed
    a Group
General Manager in 2000.</font></P>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">K Patel</FONT></B></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 57. Chief Executive Officer, South Africa branch of HSBC Bank plc and Head of Africa. Joined HSBC in 1984. Appointed a Group General Manager in 2000.</FONT></P>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">R C Picot</FONT></B></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 48. Group Chief Accounting Officer. Joined HSBC in 1993. Appointed a Group General Manager in 2003.</FONT></P>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">B Robertson</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 51. Group General Manager, Credit and Risk. Joined HSBC in 1975. Appointed a Group General Manager in 2003.</FONT></P>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">M R P Smith,</FONT></B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> OBE</FONT></p>
<P><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 49. President
    and Chief Executive Officer, The Hongkong and Shanghai Banking Corporation
    Limited. Chairman, Hang Seng Bank Limited. Joined HSBC in 1978. Appointed
    a Group General
Manager in 2000.</font></P>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">I A Stewart</FONT></B></P>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 47. Head
    of Transaction Banking, Corporate, Investment Banking and Markets. Joined
HSBC in 1980. Appointed a Group General Manager in 2000.</font></p>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">P E Stringham</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 56. Group General Manager, Marketing. Joined HSBC in 2001. Appointed a Group General Manager in 2001.</FONT></P>
<p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">P A Thurston</FONT></B></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 52. Group General Manager, Personal Financial Services, Asia-Pacific. Joined HSBC in 1975. Appointed a Group General Manager in 2003.</FONT></P>
<P><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">PT S Wong</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Age 54. Executive Director, Hong Kong and Mainland China of The Hongkong and Shanghai Banking Corporation Limited. Joined HSBC 28 February 2005. Appointed a Group General Manager on 1
April 2005.</FONT></P>
<P>&nbsp;</P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">188</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page></font>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a name="p189"></a></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C &nbsp; H O
    L D
I N G S &nbsp; P L C</FONT></p>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3">Report of </FONT></B><font size="3"><B>the
Directors</B></FONT>
</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>

<P>&nbsp;</P>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><b>Results
      and dividends for 2005</b></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>


<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC reported profit before tax of US$20,966 million. Profit attributable
to shareholders of HSBC Holdings, transferred to retained earnings, was US$15,081
million, a 16.8 per cent return on average total shareholders&#146; equity.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>First, second and third interim dividends for 2005, each of US$0.14 per ordinary share, were paid on 6 July 2005, 5 October 2005 and 19 January 2006 respectively. Note 11 on the Financial Statements gives more information on the dividends declared in 2005. On 6 March 2006, the Directors declared a fourth interim dividend for 2005 of US$0.31 per ordinary share in lieu of a final dividend, which will be payable to ordinary shareholders on 11 May 2006 in cash in US dollars, or in sterling or Hong Kong dollars at exchange rates to be determined on 2 May 2006, with a scrip dividend alternative. As the fourth interim dividend for 2005 was declared after the balance sheet date it has not been included as a creditor at 31 December 2005. The reserves available for distribution at 31 December 2005 are US$10,643 million.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>A
      first dividend of US$14.294444 per 6.20 per cent non-cumulative US dollar
      preference share, Series A (&#145;Series A dollar preference share&#146;), equivalent to a dividend of US$0.357361 per Series A American Depositary Shares (&#145;Series A ADS&#146;),
      each of which represents one-fortieth of a Series A dollar preference share,
      was paid on 15 December 2005.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Further information about the results is given in the consolidated income statement on page 236.</FONT></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><b>Principal
      activities and business review</b> </font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Through its subsidiaries and associates, HSBC provides a comprehensive
range of banking and related financial services. HSBC operates through long-established
businesses and has an international network in 76 countries and territories in
Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. Taken
together, the five largest customers of HSBC do not account for more than one
per cent of HSBC&#146;s income.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The principal acquisitions and disposals made during the year were:</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2></FONT></font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In June 2005,
    US$430 million was invested in the initial public offering of Bank of Communications
    Co. Limited, maintaining the Group&#146;s investment at 19.9 per cent.</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">
    </font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2></FONT></font><FONT size=2>In August 2005, a further 9.91 per cent of Ping An Insurance (Group)
Company of China Ltd. was</FONT></font></P>
</div>
<div style="float: right; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> acquired for
    US$1,039 million, bringing the Group's aggregate holding to 19.9 per cent.</FONT></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In December 2005, Metris Companies Inc. was acquired for US$1,595 million.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In
      October 2005, the Group&#146;s interest in Framlington Group Limited was
      sold for US$156 million.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>A
      review of the development of the business of HSBC undertakings during the
      year and an indication of likely future developments are given in the &#145;Description of Business&#146; on
      pages 7 to 19.</FONT>
</font></P>
<P>&nbsp;
</P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><b>Share
      capital and reserves</b> </font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The following events in relation to the share capital of HSBC Holdings occurred during the year:</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Ordinary shares of US$0.50 each</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2><i>Scrip dividends</i></FONT>
</font></P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
   <TD width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,944,042
       ordinary shares were issued at par on 20 January 2005 to shareholders
       who elected to receive new shares in lieu of the 2004 third interim dividend.
      The market value per share used to calculate shareholders&#146; entitlements to new shares was US$16.9969, being the US dollar equivalent of &pound;8.934.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,142,444
       ordinary shares were issued at par on 4 May 2005 to shareholders who elected
       to receive new shares in lieu of the 2004 fourth interim dividend. The
      market value per share used to calculate shareholders&#146; entitlements to new shares was US$15.8923, being the US dollar equivalent of &pound;8.371.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,694,641
       ordinary shares were issued at par on 6 July 2005 to shareholders who
       elected to receive new shares in lieu of the 2005 first interim dividend.
      The market value per share used to calculate shareholders&#146; entitlements to new shares was US$15.8448, being the US dollar equivalent of &pound;8.656.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,180,779
       ordinary shares were issued at par on 5 October 2005 to shareholders who
       elected to receive new shares in lieu of the 2005 second interim dividend.
      The market value per share used to calculate shareholders&#146; entitlements to new shares was US$16.2305, being the US dollar equivalent of &pound;9.032.</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;   </font></TD>
</TR>
</TABLE>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><i>
  <FONT size=2>All-Employee share plans</FONT>
</i></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,692,885
        ordinary shares were issued at prices ranging from &pound;5.3496 to &pound;8.442
    per share in connection with the exercise of options under</font></td>
  </tr>
</table>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
</font>
<P align="center">&nbsp;
</P>
<P align="center"><FONT size=2 face="sans-serif">189</FONT><font face="sans-serif">
</font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p190"></a><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C &nbsp; H O
    L D
I N G S &nbsp; P L C</FONT></p>

<p><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><B>Report of
the Directors </B>(<font size="2">continued</font>)</FONT></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>

<div style="float: left; width: 48%">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2> the
      HSBC Holdings savings-related share option plans. Options over 8,607,677
    ordinary shares lapsed.</font> </font></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,705,594
       ordinary shares were issued at &#8364;10.525 per share in connection with a Plan d&#146;Epargne
       Entreprise for the benefit of non-UK resident employees of HSBC France
      and its subsidiaries.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
       over 26,994,655 ordinary shares were awarded at nil consideration on 24
       May 2005 to over 48,700 HSBC employees resident in nearly 60 countries
       and territories under the HSBC Holdings savings-related share option plans.
       The options are exercisable within six months following the third or fifth
       anniversary of the commencement of the relevant savings contracts on 1
       August 2005 at a price of &pound;6.6792 per share, a 20 per cent discount
       to the average market value over the five business days immediately preceding
      the date of the invitation.</FONT></TD>
</TR>
</TABLE>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><i>
  <FONT size=2>Discretionary share incentive plans</FONT>
</i></font></P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
   <TD width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,205,883
       ordinary shares were issued at prices ranging from &pound;2.1727 to &pound;7.46
       per share in connection with the exercise of options under the HSBC Holdings
      Executive Share Option Scheme. Options over 530,920 ordinary shares lapsed.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,764,081
       ordinary shares were issued at prices ranging from &pound;6.91 to &pound;8.712
       per share in connection with the exercise of options under the HSBC Holdings
      Group Share Option Plan. Options over 6,393,502 ordinary shares lapsed.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
       over 552,526 ordinary shares were awarded at nil consideration on 21 June
       2005 under The HSBC Share Plan. The options are normally exercisable between
       the third and fourth anniversaries of the award at a price of &pound;8.794
      per share, the market value of the ordinary shares on the date of award.</FONT></TD>
</TR>
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.</FONT></TD>
   <TD valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
       over 74,985 ordinary shares were awarded at nil consideration on 30 September
       2005 under The HSBC Share Plan. The options are normally exercisable between
       the third and tenth anniversaries of the award at a price of &pound;9.17
      per share, the market value of the ordinary shares on the date of award.</FONT></TD>
</TR>
</TABLE>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><i>
  <FONT size=2>HSBC Finance</FONT>
</i></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">324,726
        ordinary shares were issued at US$9.60 in connection with the early settlement
    of HSBC Finance 8.875 per cent Adjustable Conversion-</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rate Equity
    Security Units.</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">878,224
        ordinary shares were issued at prices ranging from US$15.51 to US$16.86
        in connection with the vesting of Restricted Stock Rights under HSBC
        Finance share plans that have been converted into rights over HSBC Holdings
    ordinary shares.</font></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif"><i>
  <FONT size=2>Authority to repurchase ordinary shares</FONT>
</i></font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At the Annual
        General Meeting in 2005, shareholders renewed the authority for the Company
        to make market repurchases of up to 1,119,000,000 ordinary shares. The
        Directors have not exercised this authority. In accordance with the terms
        of a waiver granted by the Hong Kong Stock Exchange on 19 December 2005,
        HSBC Holdings will comply with the applicable law and regulation in the
        UK in relation to the holding of any shares in treasury and with the
        conditions of the waiver, in connection with any shares it may hold in
    treasury.</font></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Non-cumulative US dollar preference shares of US$0.01 each</FONT>
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On 22 September
        and 6 October 2005, a total of US$1,450 million was raised by the issue
        of a total of 1,450,000 non-cumulative US dollar preference shares of
        US$0.01 each (the &#145;Series A dollar preference shares&#146;) which
        trade in the form of Series A ADS. The Series A dollar preference shares
        were issued to bearer for a consideration of US$1,000 each and qualify
        as core Tier 1 capital in HSBC&#146;s regulatory capital base. The aggregate
        nominal value of the Series A dollar preference shares which have been
        issued is US$14,500. The net proceeds after expenses were approximately
        US$1,405 million, which was used to support the development of HSBC Holdings
    and further strengthen HSBC&#146;s capital base.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>A non-cumulative
        fixed-rate dividend of 6.20 per cent per annum is payable quarterly on
        the Series A dollar preference shares. Dividends will be payable at the
        sole and absolute discretion of the Board of HSBC Holdings and will not
        be payable if the payment of the dividend would cause HSBC Holdings not
        to meet the applicable capital adequacy requirements of the UK Financial
        Services Authority, or the profits of HSBC Holdings available for distribution
        as dividends are not sufficient to enable HSBC Holdings to pay in full
        both dividends on the Series A dollar </font></font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">preference
    shares and dividends on any other of</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></td>
  </tr>
</table>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
</font>
<P>&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">190</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p191"></a><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">its shares
        that are scheduled to be paid on the same date and that have an equal
        right to dividends. HSBC Holdings may not declare or pay dividends or
        distributions on any class of its shares ranking lower in the right to
        dividends than the Series A dollar preference shares nor redeem nor purchase
        in any manner any of its other shares ranking equal to or lower than
        the Series A dollar preference shares, unless it has paid in full, or
        set aside an amount to provide for payment in full, the dividends on
    the Series A dollar preference shares for the then-current dividend period.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Holders
        of the Series A dollar preference shares will only be entitled to attend
        and vote at general meetings of shareholders of HSBC Holdings if the
        dividend payable on the Series A dollar preference shares has not been
        paid in full for four consecutive dividend payment dates. In such circumstances,
        holders of the Series A dollar preference shares will be entitled to
        vote on all matters put to general meetings until such time as HSBC Holdings
        shall have paid in full a dividend on the Series A dollar preference
        shares. The Series A dollar preference shares carry no rights of conversion
    into ordinary shares of HSBC Holdings.</font> </font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Subject
        to the prior consent of the UK Financial Services Authority, HSBC Holdings
        may redeem the Series A dollar preference shares in whole (but not in
        part only) at any time on or after 16 December 2010, at a redemption
        price equal to US$1,000 per Series A dollar preference share (which is
        equal to US$25 per Series A ADS) together with any accrued and unpaid
        dividends for the then-current dividend period up to the date fixed for
    redemption.</font> </font></td>
  </tr>
</table>

<P><i><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Authority to allot shares</FONT></font></i></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At the
        Annual General Meeting in 2005 shareholders renewed the authority for
        the Directors
        to allot new shares. The authority was to allot up to 2,238,000,000 ordinary
        shares, 10,000,000 non-cumulative preference shares of &pound;0.01 each,
        10,000,000 non-cumulative preference shares of US$0.01 each and 10,000,000
    non-cumulative preference shares of &#8364;0.01 each.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Other than
        as described in paragraphs 1 to 13 and 15 above, the Directors did not
    allot any shares during 2005.</font> </font></td>
  </tr>
</table>


<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><b>Employee
    share option plans</b> </font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>

<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>To help align the interests of employees with those</FONT></font></P>
</div>
<div style="float: right; width: 48%">

<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> of shareholders,
    share options are granted under all-employee share plans. Since 2005, discretionary
    options have not been granted on a widespread basis. The following are particulars
    of outstanding employee share options, including those held by employees
    working under employment contracts that are regarded as &#145;continuous
    contracts&#146; for
    the purposes of the Hong Kong Employment Ordinance. The options were granted
    at nil consideration. No options have been granted to substantial shareholders,
    suppliers of goods or services, or in excess of the individual limit for
    each share plan. No options were cancelled during the year. Employee share
    plans are subject to the following limits on the number of HSBC Holdings
    ordinary shares that may be subscribed for. In any 10-year period not more
    than 10 per cent of the HSBC Holdings ordinary shares in issue from time
    to time (approximately 1,137 million HSBC Holdings ordinary shares at 6 March
    2006) may in aggregate become issuable pursuant to the grant of options or
    be issued other than pursuant to options under all-employee share plans.
    In any 10-year period not more than 5 per cent of the HSBC Holdings ordinary
    shares in issue from time to time (approximately 568 million HSBC Holdings
    ordinary shares on 6 March 2006) may in aggregate be put under option under
    The HSBC Share Plan or be issuable pursuant to the HSBC Holdings Group Share
    Option Plan, the HSBC Executive Share Option Scheme, the HSBC</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Holdings Restricted Share Plan 2000 or The HSBC Share Plan. The number of HSBC Holdings ordinary shares that may be issued on exercise of all options granted on or after 27 May 2005 under The HSBC Share Plan and any other plans must not exceed 1,119,000,000 HSBC Holdings ordinary shares. Under the HSBC Holdings savings-related share option plans, The HSBC Share Plan, HSBC</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Holdings
Group Share Option Plan and the HSBC Holdings Executive Share Option Scheme there
were options outstanding over 341,281,540 HSBC Holdings
ordinary shares at 31 December 2005. Particulars of options over HSBC Holdings
shares held by Directors of HSBC Holdings are set out on pages 215 to 232 of
the Directors&#146; Remuneration Report.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><i>
  <FONT size=2>All-employee share plans</FONT>
</i></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The HSBC Holdings Savings-Related Share Option Plan and the HSBC Holdings Savings-Related Share Option Plan: International are all-employee share plans under which eligible HSBC employees (those employed within the Group on the first working day</FONT>
<font size=2>of the year of grant)
are granted options to acquire HSBC Holdings ordinary shares. Employees may make
contributions of up to &pound;250 (or equivalent)</font></font></P>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
</font>
<P align="center">&nbsp;
</P>
<P align="center"><FONT size=2 face="sans-serif">191</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p192"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=1>H S B
        C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><font size="3">Report of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
</font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<div style="float: left; width: 48%">

<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2> overall each month
over a period of three or five years which may be used on the third or fifth
anniversary of the commencement of the relevant savings contract, at their election,
to exercise the options; alternatively the employee may elect to have the savings
(plus interest) repaid in cash. The options are exercisable within six months
following the third or fifth anniversary of the commencement of the relevant
savings contract. In the case of redundancy, retirement on grounds of injury
or ill health, retirement at or after normal retirement age, the transfer of
the employing business to another party, or a change of control of the employing
company, options may be exercised before completion of the relevant savings contract.
Following approval at the 2005 Annual General Meeting, the HSBC Holdings Savings-Related
Share</FONT>
<FONT size=2>Option Plan: International will offer the choice of options over one year in addition to the existing</FONT></font></P>
</div>
<div style="float: right; width: 48%">

<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> three and five
    year terms. Employees will also be able to save and have option prices expressed
    in US dollars, Hong Kong dollars or euros. Options granted over a one-year
    period will be exercisable within three months following the first anniversary
    of the commencement of the savings contract. Under the HSBC Holdings Savings-Related
    Share Option Plan and the HSBC Holdings Savings-Related Share Option Plan:
    International the option exercise price is determined by reference to the
    average market value of the ordinary shares on the five business days immediately
    preceding the invitation date, then applying a discount of 20 per cent (except
    for the one-year options granted under the US sub-plan where a 15 per cent
    discount will be applied). The all-employee share plans will terminate on
    27 May 2015 unless the Directors resolve to terminate the plans at an earlier
    date.</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">
    </font></P>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
</font>
<P>&nbsp;</P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><b><FONT size=2>HSBC Holdings Savings-Related Share Option Plan</FONT><br>
</b><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&pound;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>3</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>4</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
</TR>
<TR>
   <TD align="left" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 1999</FONT></TD>
   <TD width=9% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3980</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee">&nbsp;</TD>

   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2004</FONT></TD>
   <TD width=2% align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2005</FONT></TD>
   <TD width=2% align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD width=9% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">199,542</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee">&nbsp;</TD>

   <TD width=9% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD width=9% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">166,335</FONT></TD>
   <TD width=2% align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD width=9% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,207</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee">&nbsp;</TD>

   <TD width=9% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee">&nbsp;</TD>

</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Apr 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0299</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2005</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2006</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,085,436</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,722,684</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">204,222</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158,530</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Apr 2001</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.7536</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2004</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2005</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68,525</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,156</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,369</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Apr 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.7536</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2006</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2007</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,728,076</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">186,369</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">213,351</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,328,356</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3224</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2005</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2006</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,474,971</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,393,516</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,678</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,777</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3224</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2007</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2008</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,212,972</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125,068</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">281,882</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,806,022</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2003</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2006</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2007</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,878,002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">303,561</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,981</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,880,460</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2008</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2009</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,049,424</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">236,973</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,021,175</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,791,276</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2004</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4720</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2007</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2008</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,255,200</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,818</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">634,349</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,550,033</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4720</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2009</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2010</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,327,198</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,850</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">554,868</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,728,480</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
<TR>
   <TD align="left" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 May 2005</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6792</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2008</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2009</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,779,913</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,631</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">195,390</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,582,892</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 May 2005</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6792</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2010</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2011</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,890,418</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">568</FONT></TD>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136,735</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,753,115</FONT></TD>
   <TD align="right">&nbsp;</TD>

</TR>
</TABLE>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD width="3%" valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to six months beyond the normal exercise period.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           closing price per share on 23 May 2005, the day before the options
    were awarded, was &pound;8.68.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.15.</FONT></I></font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">192</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p193"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><b>
  <FONT size=2>HSBC Holdings Savings-Related Share Option Plan: International<br>
</FONT></b><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&pound;)</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>3</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>4</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="center">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="center">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 1999</FONT></TD>
   <TD width=7% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3980</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2004</FONT></TD>
   <TD width=2% align="center">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2005</FONT></TD>
   <TD width=2% align="center">&nbsp;</TD>
   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">170,388</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103,666</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,722</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=11% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Apr 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0299</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2005</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2006</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,687,141</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,377,189</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">849,721</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">460,231</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Apr 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.7536</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2004</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2005</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">374,043</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,864</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">288,179</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Apr 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.7536</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2006</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2007</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,341,245</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,748</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,127</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,275,370</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3224</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2005</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2006</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,063,749</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,691,243</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250,711</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">121,795</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3224</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2007</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,151,329</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,457</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,291</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,099,581</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2006</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2007</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,459</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,459</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2009</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,488</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,488</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 May 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2006</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2007</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,384,589</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76,043</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">820,236</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,488,310</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 May 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2009</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,265,693</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,748</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">240,748</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,009,197</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4720</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2007</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,524</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,524</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4720</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2009</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2010</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,488</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">357</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,766</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,365</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 May 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4720</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2007</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,118,832</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,169</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">860,067</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,235,596</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 May 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.4720</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2009</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2010</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,272,604</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,479</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">169,196</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,096,929</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 May 2005</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6792</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2009</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,304,413</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,202</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">316,101</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,986,110</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 May 2005</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6792</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Aug 2010</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2011</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,019,911</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">191</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,113</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,949,607</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to six months beyond the normal exercise period.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           closing price per share on 23 May 2005, the day before the options
    were awarded, was &pound;8.68.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.22.</FONT></I></font></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2 face="sans-serif">Discretionary share option plans</FONT><i>
  </i></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The HSBC Share Plan and previously the HSBC Holdings Group Share
Option Plan and the HSBC Holdings Executive Share Option Scheme, are discretionary
share option plans under which HSBC employees, based on performance criteria
and potential, have been granted options to acquire HSBC Holdings ordinary shares.
Since 1996 the vesting of these options has been subject to the attainment of
pre-determined performance criteria, except within HSBC France (which was acquired
in 2000) where performance criteria are being phased in. The maximum value of
options which may be granted to an employee in any one year under The HSBC Share
Plan (when taken together with any Performance Share awards made under The HSBC
Share Plan) is 700 per cent of the employee&#146;s annual salary at the date of grant. Whilst having flexibility to make total awards of options and Performance Shares at this level in certain exceptional circumstances, the Remuneration Committee does not intend seven times salary to be the normal level of award. Under the HSBC Holdings Group Share Option Plan the maximum value of options which could have been granted to an employee in any one year (together with any Performance Share awards under the HSBC Holdings Restricted Share Plan 2000) was 150 per cent of the employee&#146;s
annual salary at the date of grant plus any bonus paid for the previous year
(or in exceptional circumstances 225</FONT>
</font></P>
</div>
<div style="float: right; width: 48%">

<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>per cent). Subject to achievement of the performance condition where applicable, options are generally exercisable between the third and tenth anniversary of the date of grant. Employees of a subsidiary that is sold or transferred out of HSBC may exercise options awarded under the HSBC Holdings Group Share Option Plan within six months of the sale or transfer regardless of whether the performance condition is met.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Remuneration Committee favours the use of Performance Shares and Restricted Shares and, following the introduction of The HSBC Share Plan in 2005, does not intend to continue granting discretionary options on any widespread basis. There are locations, and there may be particular circumstances in the future, however, where option grants may be appropriate.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The exercise price of options granted under The HSBC Share Plan, and previously under the HSBC Holdings Group Share Option Plan, is the higher of the average market value of the ordinary shares on the five business days prior to the grant of the option or the market value of the ordinary shares on the date of grant of the option. The exercise price of options granted under the HSBC Holdings Executive Share Option Scheme was the market value of the ordinary shares on the business day prior to the grant of the option. The HSBC Share Plan will terminate on 27 May 2015 unless the Directors resolve to terminate the Plan at an earlier date.</FONT>
</font></P>
</div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><br clear="all">
<font face="TimesNewRoman,Times New Roman,Times,serif">
<p>&nbsp;</p>
<P align="center">
  <FONT size=2 face="sans-serif">193</FONT>
</P>
</font></font>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p194"></a><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report of
      the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>


<P><font face="TimesNewRoman,Times New Roman,Times,serif"><b><FONT size=2>HSBC Holdings Executive Share Option Scheme</FONT><br>
</b><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&pound;)</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>3</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Mar 1995</FONT></TD>
   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.1727</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Mar 1998</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Mar 2005</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100,500</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100,500</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=11% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 1996</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.3334</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 1999</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350,670</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142,401</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">208,269</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 Mar 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0160</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 Mar 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 Mar 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">781,911</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">209,092</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">572,819</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Aug 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.7984</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Aug 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Aug 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,625</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,625</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Mar 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.2767</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Mar 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Mar 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,433,143</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">369,532</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,063,611</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Mar 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3754</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Mar 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,318,365</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,223,911</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89,668</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,004,786</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Aug 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.4210</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Aug 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Aug 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142,658</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,750</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117,908</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Aug 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.8710</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Aug 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Aug 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,000</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.4600</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2003</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,845,939</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,135,697</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441,252</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,268,990</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to twelve months beyond the normal exercise period.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.03.</FONT></I></font></TD>
</TR>
</TABLE>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The HSBC Holdings Executive Share Option Scheme expired on 26 May 2000. No options have been granted under the Scheme since that date.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><b>
<FONT size=2>HSBC Holdings Group Share Option Plan</FONT><br>
</b><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&pound;)</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">year</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>3</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">year</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>4</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">year</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Oct 2000</FONT></TD>
   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.6420</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Oct 2003</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Oct 2010</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">389,352</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,467</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">371,885</FONT></TD>
   <TD width=2%>&nbsp;</TD>


</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.7120</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2004</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Apr 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44,805,457</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,274,514</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,289,115</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39,241,828</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Aug 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.2280</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Aug 2004</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Aug 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">317,230</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,200</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,075</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">262,955</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 May 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.4050</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 May 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 May 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,613,475</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,128,292</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,217,131</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44,268,052</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Aug 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.4550</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Aug 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Aug 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">444,625</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">410,625</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.9100</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2013</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54,801,850</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">138,475</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,832,345</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,831,030</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Aug 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.1300</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Aug 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Aug 2013</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">569,070</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,990</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">555,080</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Nov 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.1350</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Nov 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Nov 2013</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,069,800</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,069,800</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.2830</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2014</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62,319,187</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">148,600</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,953,979</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60,216,608</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 Aug 2004</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.6500</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 Aug 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 Aug 2014</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">339,860</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,100</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">337,760</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Apr 2005</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.3620</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Apr 2015</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,470,195</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,300</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,416,895</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to twelve months beyond the normal exercise period.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           closing price per share on 19 April 2005, the day before the options
    were awarded, was &pound;8.29.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.19.</FONT></I></font></TD>
</TR>
</TABLE>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The HSBC Holdings Group Share Option Scheme expired on 26 May 2005. No options have been granted under the Scheme since that date.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><b>
<FONT size=2>The HSBC Share Plan</FONT>
<br>
</b><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&pound;)</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">period</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">period</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">period</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Jun 2005</FONT></TD>
   <TD width=7% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.794</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Jun 2008</FONT></TD>
   <TD width=2% align="center">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Jun 2009</FONT></TD>
   <TD width=2% align="center">&nbsp;</TD>
   <TD width=9% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=7% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">552,526</FONT></TD>
   <TD width=2%><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>3</FONT></SUP></font></TD>
   <TD width=7% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=7% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>


   <TD width=11% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">552,526</FONT></TD>
   <TD width=2%>&nbsp;</TD>


</TR>
<TR>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Sep 2005</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.170</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Sep 2008</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Sep 2015</FONT></TD>
   <TD align="center">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,985</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74,985</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>May be advanced to an earlier date in certain circumstances, e.g. on the death of a participant.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Exercise date may be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to 12 months beyond the normal exercise period.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           closing price per share on 20 June 2005, the day before the options
    were awarded, was &pound;8.78.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           closing price per share on 29 September 2005, the day before the options
    were awarded, was &pound;9.21.</FONT></I></font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">194</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p195"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>HSBC France and subsidiary company plans</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>When it was acquired in 2000, HSBC France and certain of its subsidiary companies operated employee share option plans under which options could be granted over their respective shares. No further options will be granted under any of these subsidiary company plans. The following are details of options to acquire shares in HSBC France and its subsidiaries.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">  <FONT size=2><b>HSBC France</b><br>
<I>shares of &#8364;5</I></FONT></font></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD width="9%" align="right">&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="10%" align="right"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="10%" align="right"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="9%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD width="2%">&nbsp;</TD>

   <TD width="9%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD width="2%">&nbsp;</TD>

   <TD width="9%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD width="2%">&nbsp;</TD>

</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>1</FONT></SUP></font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Jun 1995</FONT></TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34.00</FONT></TD>
  <TD>&nbsp;</TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22
    Jun 1997</FONT></TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22
    Jun 2005</FONT></TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,000</FONT></TD>
  <TD>&nbsp;</TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,000</FONT></TD>
  <TD>&nbsp;</TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
  <TD>&nbsp;</TD>
  <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 May 1996</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35.52</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 May 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 May 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64,500</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44,500</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 May 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37.05</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 May 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215,560</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,560</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">162,000</FONT></TD>
   <TD>&nbsp;</TD>

</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Apr 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73.50</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Apr 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">388,298</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103,054</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">285,244</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Apr 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81.71</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Apr 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">588,422</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">112,920</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">475,502</FONT></TD>
   <TD>&nbsp;</TD>

</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Apr 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142.50</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Apr 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">860,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">94,250</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">765,750</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>Following
          exercise of the options, the HSBC France shares will be exchanged for
          HSBC Holdings ordinary shares in the same ratio as for the acquisition
          of HSBC France (13 HSBC Holdings ordinary shares for each HSBC France
          share). At 31 December 2005, The HSBC Holdings Employee Benefit Trust
          2001 (No. 1) held 21,102,823 HSBC Holdings ordinary shares which may
          be exchanged for HSBC France shares arising from the exercise of these
    options.</font></i></font></td>
  </tr>
</table>

<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Banque Chaix</b><br>
    <i>shares
of &#8364;16</i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2000</FONT></TD>
   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">105.94</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Dec 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,000</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,000</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=8% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</table>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>HSBC de Baecque
Beau</b></font><b><br>
</b><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>shares
of no par value</font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Dec 2000</FONT></TD>
   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61.66</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Dec 2003</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Dec 2005</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,500</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,500</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</table>
<p><b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banque de Savoie</font><br>
</b>  <font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>shares
of &#8364;16</font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 1999</FONT></TD>
   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64.79</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 2004</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Mar 2005</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Jun 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69.52</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Jun 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Dec 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,100</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,100</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</table>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Banque Dupuy
de Parseval</b></font><b><br>
</b><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>shares
of &#8364;20</font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2000</FONT></TD>
   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36.36</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2005</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Jul 2005</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Jun 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39.48</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Jun 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Sep 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</table>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Cr&eacute;dit
Commercial du Sud Ouest</b></font><b><br>
</b><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>shares
of &#8364;15.25</font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 1999</FONT></TD>
   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95.89</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 2004</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Mar 2005</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,500</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,500</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width="2%" align="right">&nbsp;</TD>

   <TD width="8%" align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102.29</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Jun 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Dec 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<p align="center"><font size=2 face="sans-serif">195</font></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p196"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font><font face="TimesNewRoman,Times New Roman,Times,serif"></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"><P><font face="TimesNewRoman,Times New Roman,Times,serif">
  </font><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B
  C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
</font></font>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>HSBC Private Bank France<br>
  </b><I>shares
        of &#8364;2</I></FONT>
</font></P>
<font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"></font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></FONT><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>1</FONT></SUP></font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Dec 1999</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.84</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Dec 2000</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Dec 2009</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">170,500</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,350</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">91,150</FONT></TD>
   <TD width=2%><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Mar 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.44</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 Jun 2004</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Dec 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">149,460</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,300</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82,160</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 May 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.80</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 May 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 May 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">254,025</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,750</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">229,275</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Sep 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.475</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Sep 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Oct 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">331,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">302,000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Oct 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22.22</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Oct 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Oct 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">225,450</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,375</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">195,075</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=1>1</FONT></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>Following
            exercise of the options, the HSBC Private Bank France shares will
            be exchanged for HSBC Holdings ordinary shares in the ratio of 1.83
            HSBC Holdings ordinary shares for each HSBC Private Bank France share.
            At 31 December 2005, The CCF Employee Benefit Trust 2001 held 1,452,775
            HSBC Holdings ordinary shares which may be exchanged for HSBC Private
    Bank France shares arising from the exercise of these options.</font></i></font></td>
  </tr>
</table>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Netvalor</b></font><b><br>
  </b><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>shares
of &#8364;415</font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Dec 1999</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">415</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Dec 2004</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Dec 2006</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,410</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,410</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Dec 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">415</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Dec 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Dec 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,270</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,270</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
</TR>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>Netvalor
            was sold by HSBC France on 2 August 2005 and all outstanding options
    lapsed at that date.</font></i></font></td>
  </tr>
</table>
<p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Sinopia Asset
Management</b></font><br>
<font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>shares
of &#8364;</font><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>0.50</font></i></font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD align="right">&nbsp;</TD>

  <TD align="right">&nbsp;</TD>

  <TD align="right">&nbsp;</TD>

  <TD align="right">&nbsp;</TD>

  <TD align="right">&nbsp;</TD>

  <TD align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
    at</font></TD>
  <TD align="right">&nbsp;</TD>

  <TD align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</font></TD>
  <TD align="right">&nbsp;</TD>

  <TD align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</font></TD>
  <TD align="right">&nbsp;</TD>

  <TD align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
    at</font></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during
    year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&sup1;</font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Oct 1999</FONT></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.80</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Oct 2004</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Apr 2005</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,000</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,000</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18 Feb 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.66</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18 Feb 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18 Aug 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>Following
            exercise of the options, the Sinopia shares were exchanged for HSBC
            Holdings ordinary shares in the ratio of 2.143 HSBC Holdings ordinary
            shares for each Sinopia share, such shares being delivered from The
    CCF Employee Benefit Trust 2001.</font></i></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2><b>HSBC UBP<br>
</b><I>shares of &#8364;16</I></FONT>
</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
    (&#8364;)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Jul 2000</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47.81</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Jul 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Jan 2006</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,400</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,400</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>HSBC Finance and subsidiary company plans</FONT></B></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Following the acquisition of HSBC Finance in 2003, all outstanding options and equity-based awards over HSBC Finance common shares were converted into rights to receive HSBC Holdings ordinary shares in the same ratio as the share exchange offer for the acquisition of HSBC Finance (2.675 HSBC</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Holdings ordinary shares for each HSBC Finance common share) and the exercise prices per share were adjusted accordingly. No further options will be granted under any of these plans.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>All
      outstanding options and other equity-based awards over HSBC Finance common
      shares granted</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>before
14 November 2002, being the date the</FONT></font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>transaction
      was announced, vested on completion of the acquisition. Options and equity-based
      awards granted on or after 14 November
  2002 will be exercisable on their original terms, save that they have been
      adjusted to reflect the exchange ratio.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>At
      31 December 2005, the HSBC (Household) Employee Benefit Trust 2003 held
      3,006,623 HSBC Holdings ordinary shares and 2,198,829 American Depositary
      Shares (&#145;ADSs&#146;), each of which represents five HSBC Holdings
      ordinary shares, which may be used to satisfy the exercise of employee
      share options.</FONT>
</font></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">196</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p197"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">HSBC Finance</FONT><FONT size=2><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><B>1984 Long-Term Executive Incentive Compensation Plan<br>
</B><I>HSBC Holdings ordinary shares of US$0.50</I></FONT>
</font></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Feb 1995</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.09</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Feb 1996</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Feb 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">148,142</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">148,142</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Nov 1995</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.43</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Nov 1996</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Nov 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">283,131</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">283,131</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;8.91.</font></i></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="sans-serif">HSBC Finance</FONT><FONT size=2><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>1996 Long-Term Executive Incentive Compensation Plan<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year<SUP>1</SUP></FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Nov 1996</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.43</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Nov 1997</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Nov 2006</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,006,469</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">399,244</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">607,225</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 May 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.29</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 May 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 May 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200,630</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,063</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">180,567</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Nov 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.60</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Nov 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Nov 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,016,020</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">627,350</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,388,670</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jun 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.08</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jun 1999</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jun 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">802,500</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">802,500</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jul 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.21</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jul 1999</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jul 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,250</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,250</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Nov 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.71</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Nov 1999</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Nov 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,695,629</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">152,475</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,543,154</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17 May 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.99</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17 May 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17 May 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">334,375</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">334,375</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Jun 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.32</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Jun 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Jun 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200,625</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200,625</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Aug 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.96</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Aug 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Aug 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">345,077</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">345,077</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Nov 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.96</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Nov 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Nov 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,869,841</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,869,841</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Jun 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.70</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Jun 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Jun 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,846</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,846</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Feb 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.26</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Feb 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Feb 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,875</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,875</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Nov 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.40</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Nov 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Nov 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,379,208</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,379,208</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Nov 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.37</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Nov 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12 Nov 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,571,322</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,571,322</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2003</FONT></TD>
   <TD align="left" bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>2</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,111,494</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">753,689</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,357,805</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD width="3%" valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;8.81.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>25 per cent of the original award is exercisable on each of the first, second, third and fourth anniversaries of the date of award. May be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I></font></TD>
</TR>
</TABLE>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">HSBC Finance</FONT><FONT size=2><B><br>
1996 Long-Term
Executive Incentive Compensation Plan</B></FONT><SUP>1</SUP><br>
<i><font size=2>HSBC
Holdings ordinary shares of US$0.50</font></i></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vesting</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vesting</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">vested</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>2</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year<SUP>3</SUP></FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 2002</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 2007</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,222</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,405</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,817</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,789,084</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">598,947</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,531</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,132,606</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Dec 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Dec 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Dec 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,701</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,564</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,137</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Dec 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Dec 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Dec 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,846</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,944</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,902</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Dec 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Dec 2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Dec 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164,514</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59,286</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,375</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">91,853</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Jan 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Jan 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Jan 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jan 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jan 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jan 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,432</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,432</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Feb 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Feb 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Feb 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,635</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,501</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Feb 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Feb 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Feb 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">187,518</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,125</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">147,393</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Mar 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Mar 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Mar 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD width="3%" valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Awards of Restricted Stock Rights which represent a right to receive shares for nil consideration if the employee remains in the employment of HSBC Finance at the date of vesting.</FONT></I></font></TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Restricted Stock Rights vest one-third on each of the third, fourth and fifth anniversaries of the date of award. May be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I></font></TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The
           weighted average closing price of the shares immediately before the
    dates on which rights vested was &pound;9.41.</FONT></I></font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">197</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p198"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
</font>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif"><p><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>HSBC Finance</b><br>
  <B>Non-Qualified Deferred Compensation Plan for Restricted Stock Rights</B><font face="TimesNewRoman,Times New Roman,Times,serif"><i><br>
  HSBC
Holdings ordinary shares of US$<font size=2>0.50</font></i></font></FONT></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"></font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rights at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vesting</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vesting</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">vested</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 May 2000</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 May 2002</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 May 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">181,125</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">181,125</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which rights vested was &pound;8.61.</font></i></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>HSBC Finance</b><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>Non-Qualified Deferred Compensation Plan for Stock Option Exercises<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I>
</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Feb 1991</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.48</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 Feb 1992</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Jul 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,819</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,819</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.00.</font></i></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>Beneficial Corporation</b><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>1990 Non-Qualified Stock Option Plan<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I>
</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 1995</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.00</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 1996</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 2005</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177,600</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177,600</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 1996</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.86</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 1997</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Nov 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">289,704</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,529</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">244,175</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Dec 1996</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.54</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Dec 1997</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13 Dec 2006</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,624</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,624</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Nov 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.20</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Nov 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14 Nov 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131,248</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131,248</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Nov 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.39</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Nov 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Nov 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">405,274</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,328</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">383,946</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Dec 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.68</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Dec 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Dec 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,624</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,406</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,218</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.00.</font></i></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>Beneficial Corporation</b><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>BenShares Equity Participation Plan<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I>
</font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 1997</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.87</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 1998</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jan 2007</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,317</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,926</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,391</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 1997</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.04</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 1998</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15 Nov 2007</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,696</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,977</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,719</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;8.98.</font></i> </font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>Renaissance Holdings, Inc.</b><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>Amended and Restated 1997 Incentive Plan<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during year</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Oct 1997</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.25</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Oct 1998</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Oct 2007</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,739</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,414</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,325</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.25</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 1999</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,424</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,424</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Oct 1998</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.74</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Oct 1999</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Oct 2008</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,606</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">803</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">803</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.24</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jan 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,024</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,024</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;8.98.</font></i></font></td>
  </tr>
</table>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">198</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p199"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>Bank of Bermuda plans</FONT></B></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Following the acquisition of Bank of Bermuda in February 2004, all outstanding options over Bank of Bermuda shares were converted into rights to receive HSBC Holdings ordinary shares based on the consideration of US$40 for each Bank of Bermuda share and the average closing price of HSBC Holdings ordinary shares, derived from the London Stock Exchange Daily Official List, for the five</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>business days preceding the closing date of the acquisition. No
further options will be granted under any of these plans.</FONT> </font></P>

<p><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>All
      outstanding options over Bank of Bermuda shares vested on completion of
      the acquisition. At 31 December 2005, the HSBC (Bank of Bermuda) Employee
      Benefit Trust 2004 held 2,796,182 HSBC Holdings ordinary shares which may
      be used to satisfy the exercise of these options.</font> </font></p>
</div><br clear="all">
<p>&nbsp;</p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>Bank of
Bermuda</b><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>Executive Share Option Plan 1997<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during period</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during period</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jul 1998</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.61</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jul 1999</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jul 2008</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,813</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,813</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Feb 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.40</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Feb 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 Feb 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,464</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,780</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,684</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Aug 1999</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.10</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Aug 2000</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Aug 2009</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,331</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,331</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Feb 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.21</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Feb 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Feb 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,925</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,540</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,249</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,136</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Apr 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.37</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Apr 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7 Apr 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">385</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">385</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 May 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.21</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 May 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 May 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,411</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,411</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jun 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.04</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jun 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Jun 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,649</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,649</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jul 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.11</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jul 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 Jul 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">166,454</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120,215</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,239</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Sep 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.31</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Sep 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 Sep 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,458</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,458</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Jan 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.27</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Jan 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Jan 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">161,829</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">161,829</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=1>The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was &pound;9.14</font></i></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><b>Bank of Bermuda</b><br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>Share Option Plan 2000<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during period</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during period</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Jan 2001</FONT></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.27</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Jan 2002</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 Jan 2011</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">161,829</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,972</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134,857</FONT></TD>
   <TD width=2% bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Feb 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.41</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Feb 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Feb 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,067,606</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,972</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">245,300</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">799,334</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Mar 2001</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.39</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Mar 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29 Mar 2011</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">270</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">270</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Apr 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.57</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Apr 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Apr 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">539</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">539</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Jun 2001</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.35</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Jun 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Jun 2011</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,091</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,091</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Jul 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.87</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Jul 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Jul 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">224,631</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,146</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158,485</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28 Aug 2001</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.39</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28 Aug 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28 Aug 2011</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,486</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,486</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26 Sep 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.79</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26 Sep 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26 Sep 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">459,651</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,706</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">448,945</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Jan 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.11</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Jan 2003</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Jan 2012</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,678</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,678</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Jan 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.60</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Jan 2003</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Jan 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,226</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,226</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 Feb 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.09</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 Feb 2003</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 Feb 2012</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,421,151</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,976</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">323,361</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,051,814</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 Feb 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.41</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 Feb 2003</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 Feb 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,383</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,383</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Jul 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.84</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Jul 2003</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 Jul 2012</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,260</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,260</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.34</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 2003</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9 Sep 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,299</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,299</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Dec 2002</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.27</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Dec 2003</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 Dec 2012</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,130</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,130</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Feb 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.69</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Feb 2004</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 Feb 2013</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359,867</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">134,355</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,167</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">199,345</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 2003</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.97</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 2004</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Apr 2013</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,541</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,541</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.85</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2004</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 Apr 2013</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,853</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,853</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <I><FONT size=1>The
              weighted average closing price of the shares immediately before
    the dates on which options were exercised was &pound;9.04.</FONT></I></font><font face="TimesNewRoman,Times New Roman,Times,serif"> </font></font></td>
  </tr>
</table>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">199</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p200"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
</font>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Bank of Bermuda<br>
</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>Directors&#146; Share Option Plan<br>
</FONT></B></font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"></font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options at</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date of</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">lapsed</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price (US$)</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during period</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during period</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Sep 1999</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.02</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Sep 2000</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 Sep 2009</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,706</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
      <TD width=2% align="right">&nbsp;</TD>


   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% align="right">&nbsp;</TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,706</FONT></TD>
   <TD width=2%>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Sep 2000</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.31</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Sep 2001</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20 Sep 2010</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,440</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,440</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28 Mar 2001</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.76</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28 Mar 2002</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28 Mar 2011</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,205</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,697</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,508</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2002</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.01</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2003</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3 Apr 2012</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,328</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,904</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,424</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2003</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.23</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2004</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30 Apr 2013</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,808</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,808</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Valuation of
    freehold and leasehold land and buildings</b></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>HSBC&#146;s
      freehold and long leasehold properties, together with all leasehold properties
      in Hong Kong, were valued in 2005. The value of these
properties was US$1.1 billion in excess of their carrying amount in the consolidated
balance sheet.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Further details are included in Note 23 on the Financial Statements on page 298.</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Corporate Governance
          Report</b></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The information set out on pages 184 to 233 and information incorporated by reference constitutes the Corporate Governance Report of HSBC Holdings.</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Board of Directors</b></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The objective of the management structures within HSBC, headed by the Board of Directors of HSBC Holdings and led by the Group Chairman, is to deliver sustainable value to shareholders.</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Implementation of the strategy set by the Board is delegated to the Group Management Board under the leadership of the Group Chief Executive.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      Board sets the strategy for HSBC through the five-year strategic plan and
      approves the annual operating plans presented by management for the achievement
      of the strategic objectives. The annual operating plans ensure the efficient
      disposition of HSBC&#146;s resources for the achievement of these objectives.
      The Board delegates the management and day to day running of HSBC to the
      Group Management Board but retains to itself approval of certain matters
      including annual plans and performance targets, procedures for monitoring
      and control of operations, specified senior appointments, acquisitions
      and disposals above predetermined thresholds and any substantial change
      in balance sheet management policy.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Board of Directors meets regularly and Directors receive information between meetings</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>about the activities of committees and developments in HSBC&#146;s
business. All Directors have full and timely access to all relevant information
and may take independent professional advice if necessary.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HSBC Holdings has a unitary Board of </FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Directors.
The authority of each Director is exercised in Board Meetings where the Board
acts collectively as a unit. At 6 March 2006 the Board
comprises five executive and 15 non-executive Directors. The roles of Group Chairman
and Group Chief Executive are separated and held by experienced executive Directors.
Before assuming the role of Group Chairman in 1998, Sir John Bond had been the
Group Chief Executive for five years. The Group Chairman&#146;s knowledge of HSBC&#146;s
complex and widespread geographical business from his previous service as Group
Chief Executive has been a considerable benefit to HSBC.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>On 28 November 2005, it was announced that S K Green, the Group Chief Executive since 2003, would succeed Sir John Bond as Group Chairman at the conclusion of the 2006 Annual General Meeting on 26 May 2006 and that M F Geoghegan would succeed S K Green as Group Chief Executive. Sir Brian Moffat, the senior independent non-executive Director and the Chairman of the Nomination Committee, wrote to shareholders regarding these appointments.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>He
      explained that the decision by the Board to appoint S K Green as Group
      Chairman was made after a thorough selection process. This was conducted
      by the Nomination Committee, assisted by external advisers, and included
      extensive benchmarking against external candidates. The Committee considered
      carefully the requirements of the position in terms of HSBC&#146;s size, geographical spread and complexity; the need for full time executive commitment and experience of international banking at the highest level; and took account of the need for the Group Chairman to have a wide range of skills, the capacity for strategic thinking and the ability to sustain and enhance the Group&#146;s
      corporate character. The Committee also</FONT>
</font></P>
</div><br clear="all">
<p>&nbsp;</p>
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<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>took into consideration the need for the Group Chairman to be able to work closely and effectively with the Group Chief Executive, to have the authority to run the Board and to have the personal standing to represent HSBC externally at the highest level. Job specifications for the Group Chairman and the Group Chief Executive, setting out their respective authorities and responsibilities, have been agreed by the Board. The Nomination Committee came to the unanimous conclusion that S K Green was the outstanding candidate.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>S K Green joined HSBC in 1982. He was Group Treasurer from 1992 to 1998, and Executive Director, Corporate, Investment Banking and Markets from 1998 to 2003, when he was appointed to his current position. He has worked in Hong Kong, New York, the Middle East and London, and has immense international experience and knowledge of HSBC. The Committee concluded that S K Green is superbly well qualified to serve as Group Chairman.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>S
        K Green&#146;s successor as Group Chief Executive will be M F Geoghegan, who has led HSBC Bank, HSBC&#146;s principal subsidiary in the United Kingdom, since 2004. He too is highly qualified for his new position and his appointment also has the unanimous support of the Board. Mr Geoghegan has 33 years&#146; experience
        with HSBC and has worked in 10 countries in North and South America,
Asia, the Middle East and Europe.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Nowadays, success in financial services depends in a large measure on the relative strengths of competing management teams. Planning management succession is key to this, has long been established in the Group and the plan is regularly reviewed by the non-executive Directors.</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Furthermore, HSBC is a remarkable organisation with a distinctive character and culture. The business is managed through international teamwork and HSBC believes this is best achieved by management continuity and amongst colleagues who have similar values. By way of example, the top 50 executives have a combined service approaching 1,000 years with HSBC, although 20 per cent of these executives have joined the Group in the last six years, thus ensuring there is a balance of new talent to help run the business.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Directors believe strongly that these appointments are in the best interests of the shareholders. The appointments have the unanimous support of the Directors and have been made after consulting with representatives of major institutional investors and explaining the succession planning and independent external search process.</FONT></font></P></div>
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<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Executive Directors are employees who carry out executive functions in HSBC in addition to their duties as Directors. Non-executive Directors are not HSBC employees and do not participate in the daily business management of HSBC. Non-executive Directors bring an external perspective, constructively challenge and help develop proposals on strategy, scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. The non-executive Directors have a wealth of experience across a number of industries and business sectors, including the leadership of large, complex multinational enterprises. The roles of non-executive Directors as members of Board committees are set out below. It is estimated that non-executive Directors spend 24 days per annum on HSBC business after an induction phase, with Committee members devoting significant additional time. The
names and brief biographical particulars of the Directors are listed on pages 184 to 188.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
        Board considers all of the non-executive Directors to be independent
      in character and judgement. Baroness
        Dunn and H Sohmen have served on the Board for more than nine years,
      however, and in that respect only, do not meet the usual criteria for independence
        set out in the UK Combined Code on corporate governance. The Board has
        therefore determined Lord Butler, R K F Ch&#146;ien, J D Coombe, R A Fairhead, W K L Fung, S Hintze, J W J Hughes-Hallett, Sir John Kemp-Welch, Sir Brian Moffat, Sir Mark Moody-Stuart, S M Robertson, S W Newton and Sir Brian Williamson to be independent. In reaching its determination of each non-executive Director&#146;s independence the Board has concluded that there are no relationships or circumstances which are likely to affect a Director&#146;s
        judgement and any relationships or circumstances which could appear to
do so were considered not to be material.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, each non-executive Director determined by the Board to be independent has provided confirmation of his or her independence to HSBC Holdings.</FONT></font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
        Directors who served during the year were W F Aldinger, Sir John Bond,
        Lord Butler, R K F Ch&#146;ien,
        J D Coombe, Baroness Dunn, D G Eldon, R A Fairhead, D J Flint, W K L
        Fung, M F Geoghegan, S K Green, S Hintze, J W J Hughes-Hallett, A W Jebson,
        Sir
        John Kemp-Welch, Sir Brian Moffat, Sir Mark Moody-Stuart, S W Newton,
H Sohmen, C S Taylor and Sir Brian Williamson.</FONT></font></P>
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<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
</font>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
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<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>C S Taylor resigned as a Director on 14 March 2005, W F Aldinger resigned as a Director on 29 April 2005 and D G Eldon retired as a Director on 27 May 2005. J D Coombe and J W J Hughes-Hallett were appointed Directors with effect from 1 March 2005.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>S M Robertson was appointed a Director with effect from 3 January 2006. Having been appointed since the Annual General Meeting in 2005, he will retire at the forthcoming Annual General Meeting and offer himself for re-election.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Sir John Bond, A W Jebson and Sir John Kemp-Welch will retire at the conclusion of the forthcoming Annual General Meeting and will not therefore seek re-election.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Baroness Dunn, M F Geoghegan, S K Green, Sir Mark Moody-Stuart, H Sohmen and Sir Brian Williamson will retire by rotation at the forthcoming Annual General Meeting and offer themselves for re-election.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Board has undertaken an evaluation of its performance and that of its committees. This evaluation covered board composition and capabilities; dynamics; strategy; corporate governance; and the performance of individual Directors. In undertaking this review the Group Chairman held structured meetings with each Director using a framework adapted from that employed in the two previous reviews. The report on the evaluation of the Board and its committees has been reviewed by the Board and has been used by the non-executive Directors, led by Sir Brian Moffat, in their evaluation of the performance of the Group Chairman. The review concluded that the board and its committees were functioning effectively. The Group Audit Committee, the Remuneration Committee, the Nomination Committee and the Corporate Social Responsibility Committee have also each undertaken a review of their terms of reference and their
own effectiveness in 2005.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Following the review of the Board, the Group Chairman has confirmed that the Directors standing for re-election at the Annual General Meeting continue to perform effectively and to demonstrate commitment to their roles. It is the intention of the Board of HSBC Holdings to continue to review its performance and that of its Directors annually.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Seven
      regular Board meetings were held during 2005. Sir John Bond, Lord Butler,
      R K F Ch&#146;ien, Baroness
      Dunn, D J Flint, W K L Fung, M F Geoghegan, S K Green, S Hintze, A W Jebson,
      Sir John Kemp-Welch, Sir Brian Moffat, Sir Mark Moody-Stuart, S W Newton,
      H Sohmen and</FONT>
</font></P></div>
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<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Sir Brian Williamson attended all of the Board meetings. R A Fairhead attended five of the Board meetings. W F Aldinger and C S Taylor attended the two Board meetings held before they ceased to be Directors. D G Eldon attended all four Board meetings held before his retirement. J D Coombe and J W J Hughes-Hallett attended all five of the Board meetings held following their appointments.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>During 2005, the non-executive Directors and the Group Chairman met three times to discuss Board performance and succession planning, and the non-executive Directors met once without the Group Chairman to discuss his performance.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In addition to the meetings of the principal Committees referred to below, ten other meetings of committees of the Board were held during the year to discharge business delegated by the Board.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>All Directors attended the 2005 Annual General Meeting.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Board regularly reviews reports on progress against financial objectives, on business developments and on investor issues and external relations and receives reports from the Chairmen of Board Committees, the Group Chief Executive and the Chief Operating Officer. The Board also receives regular reports and presentations on strategy and developments in the customer groups and principal geographical areas. Regular reports are also provided to the Board, the Group Audit Committee and the Group Management Board on credit exposures and the loan portfolio, asset and liability management, liquidity, litigation and compliance and reputational issues. The agenda and supporting papers are distributed in advance of all Board and Committee meetings to allow time for appropriate review and to facilitate full discussion at the meetings.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Directors have free and open contact with management at all levels. Group Managing Directors and Group General Managers meet informally with Directors after Board meetings. Board offsite visits are made each year to enable Directors to see at first hand subsidiary company operations at their operating environments and to meet local management, employees and customers. In 2005 the Board visited Bermuda, India and the HSBC Management Training College in Hertfordshire, United Kingdom.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Board ensures all Directors, including non-executive Directors, develop an understanding of the views of major shareholders through attendance at analyst meetings following results announcements and other <I>ad hoc</I> meetings with investors and their representative bodies. In April 2005, the Board held</FONT>
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  <FONT size=2>an informal meeting with representatives of institutional shareholders to discuss corporate governance matters. An Investor Day, attended by executive and non-executive Directors, was held in September 2005. During 2005, major shareholders were consulted on the employee share plan proposals considered at the 2005 Annual General Meeting and the succession plans for the Group Chairman and Group Chief Executive.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Group Chairman, Group Chief Executive and the Group Finance Director hold regular meetings with institutional investors and report to the Board on those meetings.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Sir Brian Moffat, Deputy Chairman and senior independent non-executive Director, is available to shareholders should they have concerns which contact through the normal channels of Group Chairman, Group Chief Executive, Group Finance Director or other executives has failed to resolve or for which such contact would be inappropriate. Sir Brian Moffat may be contacted through the Group Company Secretary at 8 Canada Square, London E14 5HQ.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
        Group Chairman&#146;s principal
        commitments outside HSBC are as a non-executive Director of Ford Motor
        Company and of Vodafone Group plc.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Full, formal and tailored induction programmes with particular emphasis on internal controls, are arranged for newly appointed Directors to enable them to familiarise themselves with HSBC. Opportunities to update and develop skills and knowledge, through externally-run seminars and through briefings by senior executives, are provided to all Directors. The terms and conditions of appointments of non-executive Directors are available for inspection at 8 Canada Square, London E14 5HQ and will be made available for 15 minutes before the Annual General Meeting and during the Meeting itself.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Articles of Association of HSBC Holdings provide that Directors are entitled to be indemnified out of the assets of the Company against claims from third parties in respect of certain liabilities arising in connection with the performance of their functions, in accordance with the provisions of the UK</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Companies Act 1985. Indemnity provisions of this nature have been in place during the financial year but have not been utilised by the Directors.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>None of the Directors had, during the year or at the end of the year, a material interest, directly or indirectly, in any contract of significance with HSBC Holdings or any of its subsidiary undertakings.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
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    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Board
          committees</b></font></font></td>
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<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The Board has appointed a number of committees consisting of certain Directors, Group Managing Directors and, in the case of the Corporate Social Responsibility Committee, certain co-opted non-director members. The following are the principal committees:</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>Group Management Board</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>The Group Management Board meets regularly and operates as a general management committee under the direct authority of the Board. The objective of the Group Management Board is to maintain a reporting and control structure whereby all of the line operations of HSBC are accountable to individual members of the Group Management Board, who in turn report to Group Chairman or Group Chief Executive. The members of the Group Management Board are S K Green (Chairman), Sir John Bond, D J Flint, M F Geoghegan and A W Jebson, all of whom are executive Directors, and V H C Cheng, C-H Filippi, S T Gulliver, D D J John, S N Mehta, Y A Nasr and J J Studzinski, all of whom are Group Managing Directors.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Group Management Board exercises the powers, authorities and discretions of the Board in so far as they concern the management and day to day running of HSBC in accordance with such policies and directions as the Board may from time to time determine. Matters reserved for approval by the Board include annual plans and performance targets, procedures for monitoring and control of operations, specified senior appointments, acquisitions and disposals above predetermined thresholds and any substantial change in balance sheet management policy. The Group Management Board sub-delegates credit, investment and capital expenditure authorities to its members.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>Group Audit Committee</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>The Group Audit Committee meets regularly with HSBC&#146;s senior financial, internal audit, legal and compliance management and the external auditor to consider HSBC Holdings&#146; financial reporting, the nature and scope of audit reviews and the effectiveness of the systems of internal control and compliance. The members of the Group Audit Committee throughout 2005 were Sir Brian Moffat (Chairman), R K F Ch&#146;ien,
      R A Fairhead and Sir John Kemp-Welch. J D Coombe was appointed a member
    of the Committee with effect from 1 July 2005. J W J Hughes-Hallett has been
      appointed a member of the Committee with effect from 1 June 2006. All members
      of the
      Committee are</FONT>
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<font face="TimesNewRoman,Times New Roman,Times,serif"><P><font face="TimesNewRoman,Times New Roman,Times,serif">
  </font><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B
  C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
</font></font>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
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  <P><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>independent non-executive Directors.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
        Board has determined that Sir Brian Moffat, R A Fairhead and J D Coombe
        are independent according to SEC criteria, may be regarded as audit committee
        independent financial experts for the purposes of section 407 of the
        Sarbanes-Oxley Act and as having recent and relevant financial experience.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Since 2004 appointments to the Committee have been made for periods of up to three years, extendable by no more than two additional three-year periods, so long as members continue to be independent.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Formal and tailored induction programmes are held for newly appointed Committee members and appropriate training is provided on an ongoing and timely basis.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>There
        were seven meetings of the Group Audit Committee during 2005. Sir John
        Kemp-Welch and Sir Brian Moffat
        attended all of the meetings; R K F Ch&#146;ien attended five meetings;
        R A Fairhead attended six meetings; and J D Coombe attended each of the
        five
        meetings held following his appointment.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>At the beginning of each meeting, the Committee has the opportunity to meet with the external auditor, without management present, to facilitate the discussion of any matter relating to its remit and any issue arising from the audit. Similar arrangements have been adopted for the Committee to meet with the internal auditor.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The terms of reference of the Committee, which are reviewed annually, are available at www.hsbc.com/committeeg. To ensure consistency of scope and approach by subsidiary company audit committees, the Group Audit Committee has established minimum core terms of reference for those committees. These are in the course of being adopted.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Group Audit Committee is accountable to the Board and assists the Board in meeting its responsibilities for maintaining an effective system of internal control and compliance and for meeting its external financial reporting obligations. The Committee is directly responsible on behalf of the Board for the selection, oversight and remuneration of the external auditor. The Committee receives frequent comprehensive reports from the Group General Manager Credit and Risk, the Head of Group Compliance, the Group General Manager, Legal and Compliance, the Group General Manager Internal Audit and the Head of Group Security and receives periodic presentations from other functional heads and line management.</FONT>
  </font></P>
</div>
<div style="float: right; width: 48%">
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Regular
        comprehensive reports on the work of the internal audit function are submitted
        to the Committee.
        These reports include reports on frauds and special investigations and
        summaries of internal audit findings, regulatory reports and external auditors&#146; reports.
        The Committee also receives summaries of periodic peer reviews of the internal
        audit functions around HSBC.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
        Committee undertakes an annual review of the effectiveness of HSBC&#146;s
        system of internal control. This is described on page 208. The Committee
        receives regular updates on changes
        in law, regulations and accounting standards and practices and the preparations
        being made to respond to those requirements, including the preparations
        for reporting on the review of internal financial reporting controls required
        by section 404 of the Sarbanes-Oxley Act.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Committee reports on its activities at each Board meeting and, twice annually, produces a written summary of its activities.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Committee has approved procedures for the receipt, retention and handling of complaints regarding accounting, internal accounting controls and auditing matters. The Committee receives regular reports regarding the nature, investigation and resolution of material complaints and concerns from the Head of Group Compliance.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Committee reviews and monitors the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements. The Committee receives reports from the external auditor on its own policies and procedures regarding independence and quality control and oversees the appropriate rotation of audit partners within the external auditor.</FONT>
  </font></P>
  <P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
        Group Audit Committee has adopted policies for the pre-approval of specific
        services that may be provided
        by the principal auditor, KPMG Audit Plc and its affiliates (&#145;KPMG&#146;),
        since 2003. These policies are kept under review and amended as necessary
        to meet the dual objectives of ensuring that HSBC benefits in a cost effective
        manner from the cumulative knowledge and experience of its auditor, whilst
        also ensuring that the auditor maintains the necessary degree of independence
        and objectivity. These pre-approval policies apply to all services where
        HSBC Holdings or any of its subsidiaries pays for the service, or is a
        beneficiary or addressee of the service and has selected, or influenced
        the choice of,
        KPMG. All services entered into with KPMG during 2005 were pre-approved
        by the Group Audit Committee or were entered into</FONT>
  </font></P>
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<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>under pre-approval policies established by the Group Audit Committee.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The pre-approved services relate to the provision of objective advice, attestation type services or opinions on areas such as controls and are used as an input into management decision-making. They fall into the following four categories:</FONT>
</font></P>
<P><b><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Audit services</FONT>
</font></b></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>In addition to the statutory audit appointments, which are approved
      by the Group Audit Committee, this category includes services that are
    normally provided by the independent auditor in connection with statutory
    and regulatory
      filings or engagements, such as reviews of interim financial information,
      letters to securities underwriters in connection with debt or equity offerings,
      the
      inclusion of auditors&#146; reports in filings with the SEC and certain
      reports on internal control over financial reporting.</FONT>
</font></P>
<P><b><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Audit-related services</FONT>
</font></b></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>These services are those provided by the principal auditor that
      are reasonably related to the performance of the audit or review of the
    Group&#146;s
      financial statements. Examples of such services are due diligence services
      provided in connection with potential acquisitions, audits or reviews of
      employee benefit plans, <I>ad hoc</I> attestation or agreed-upon procedures reports (including reports requested by regulators), and accounting and regulatory advice on actual or contemplated transactions.</FONT>
</font></P>
<P><b><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Tax services</FONT>
</font></b></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>This category includes both tax advice and compliance services. Examples of such services are advice on national and local income taxation matters, (including assistance in data gathering for preparation, review and submission as agent of tax filings), advice on tax consequences of management-proposed transactions and assistance in responding to tax examinations by governmental authorities. The pre-approved tax services explicitly exclude proposals for tax structures unconnected with a contemplated transaction and whose main motive is to reduce taxation.</FONT>
</font></P>
<P><b><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Other services</FONT>
</font></b></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>This category includes various other assurance and advisory services, such as training, or advice or assurance provided on specific elements of financial data and models, IT security and advice, and providing due diligence on financial reviews of HSBC customers and private equity investments.</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>All services provided by KPMG relating to the implementation of section 404 of the Sarbanes-Oxley Act were specifically pre-approved by the Group Audit Committee.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>An analysis of the remuneration paid in respect of audit and non-audit services provided by KPMG for each of the last two years is disclosed in Note 8 on the Financial Statements.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Committee has recommended to the Board that KPMG Audit Plc be reappointed as Auditor at the forthcoming Annual General Meeting.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>Remuneration Committee</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>The role of the Remuneration Committee and its membership are
      set out in the Directors&#146; Remuneration Report on page 215.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>Nomination Committee</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>The Nomination Committee is responsible for leading the process for Board appointments and for identifying and nominating, for approval by the Board, candidates for appointment to the Board. Before recommending an appointment to the Board, the Committee evaluates the balance of skills, knowledge and experience on the Board and, in the light of this, identifies the role and capabilities required for a particular appointment. Candidates are considered on merit against these criteria. Care is taken to ensure that appointees have enough time to devote to HSBC. All Directors are subject to election by shareholders at the Annual General Meeting following their appointment and to re-election at least every three years. The members of the Nomination Committee throughout 2005 were Sir Brian Moffat (Chairman), Lord Butler, Baroness Dunn and Sir Brian Williamson.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>There were three Nomination Committee meetings during 2005, each of which was attended by all members.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Following each meeting the Committee reports to the Board on its activities.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The terms of reference of the Committee are available at www.hsbc.com/committeen.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2></FONT></font><FONT size=2>The appointments of J D Coombe,</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>J W J Hughes-Hallett and S M Robertson as non-executive Directors were made on the advice and recommendation of the Nomination Committee. An external consultancy was used in connection with these appointments.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>As set out on page 205, the Committee conducted the selection process which recommended to the Board that S K Green succeed Sir John Bond</FONT>
</font></P></div><br clear="all">
<p>&nbsp;</p>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2 face="sans-serif">205</FONT>
</font></P>
</font>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p206"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
</font>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>as Group Chairman at the conclusion of the 2006 Annual General Meeting and that M F Geoghegan succeed S K Green as Group Chief Executive.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      Committee makes recommendations to the Board concerning plans for succession
      for both executive and non-executive
      Directors; the appointment of any Director to executive or other office;
      suitable candidates for the role of senior independent Director; the re-election
      by shareholders of Directors retiring by rotation; the renewal of the terms
      of office of non-executive Directors; membership of Board Committees, in
      consultation with the Group Chairman and the chairman of such committee
      as appropriate; any matters relating to the continuation in office of any
      Director
      at any time; Directors&#146; fees and committee fees for the Company and
      any of its subsidiaries as appropriate; and appointments and re-appointments
      to the Boards of Directors of major subsidiary companies as appropriate.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Committee regularly reviews the structure, size and composition (including the skills, knowledge and experience required) of the Board and makes recommendations to the Board as appropriate. It keeps under review the leadership needs of HSBC, with a view to ensuring the continued ability of HSBC to compete effectively in the marketplace. The Board has satisfied itself that the Nomination Committee has in place appropriate plans for orderly succession to the Board and Senior Management positions as well as procedures to ensure an appropriate balance of skills and experience within HSBC and on the Board.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>Corporate Social Responsibility Committee</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>The Corporate Social Responsibility Committee is responsible for overseeing Corporate Social Responsibility and Sustainability policies, principally environmental, social and ethical matters and for advising the Board, committees of the Board and executive management on such matters. The terms of reference of the Committee are available at www.hsbc.com/committeec. The members of the Committee throughout 2005 were Lord Butler (Chairman), W K L Fung, S Hintze, each of whom is an independent non-executive Director, and G V I Davis, E M Diggory and Lord May, who are non-Director members of the Committee. C S Taylor, a former independent non-executive Director, was a member of the Committee until 14 March 2005. Sir Mark Moody-Stuart, an independent non-executive Director, was appointed a member of the Committee from 29 April 2005.</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>There were four meetings of the Corporate Social Responsibility Committee during 2005. Following each meeting the Committee reports to the Board on its activities.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2></FONT></font><FONT size=2>Further information is available in HSBC&#146;s</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>Corporate Social Responsibility Report 2005</FONT></I><FONT size=2>, available in April 2006.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Corporate
            Governance Codes</b> </font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>HSBC is committed to high standards of corporate governance. HSBC Holdings complied throughout the year with the applicable code provisions of the Combined Code on Corporate Governance issued by the Financial Reporting Council. The terms of reference of the Group Audit Committee and the Remuneration Committee were modified in February 2005 to incorporate certain provisions set out in the Code on Corporate Governance Practice in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited which came into effect on 1 January 2005. HSBC Holdings has complied throughout the year with all other applicable code provisions of the Code on Corporate Governance Practices in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      Board of HSBC Holdings has adopted a code of conduct for transactions in
      HSBC Group securities by Directors
      that complies with The Model Code in the Listing Rules of the Financial
      Services Authority and with The Model Code for Securities Transactions
      by Directors
      of Listed Issuers (&#145;Hong Kong Model Code&#146;) set out in the Rules
      Governing the Listing of Securities on The Stock Exchange of Hong Kong
      Limited, save that The Stock Exchange of Hong Kong has granted certain
      waivers from
      strict compliance with the Hong Kong Model Code, primarily to take into
      account accepted practices in the UK, particularly in respect of employee
      share plans.
      Following a specific enquiry, each Director has confirmed he or she has
      complied with the code of conduct for transactions in HSBC Group securities
      throughout
      the year.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <B><FONT size=2>Differences in HSBC Holdings/New York Stock Exchange corporate governance practices</FONT></B>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>Under the New York Stock Exchange&#146;s (&#145;NYSE&#146;)
      corporate governance rules for listed companies, as a NYSE-listed foreign
      private issuer,
      HSBC Holdings must disclose any significant ways in which its corporate
    governance practices differ from those followed by US companies subject to
    NYSE listing
      standards. HSBC Holdings believes the following to</FONT>
  <font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>be the
  significant differences between its corporate</font></font></font></P>
</div><br clear="all">
<P align="left">&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="sans-serif">206</FONT>
</font></P>
</font>
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<div style="page-break-before:always"></div>
<page><a name="p207"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2> governance practices and NYSE corporate governance rules applicable
  to US companies.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>US
        companies listed on the NYSE are required to adopt and disclose corporate
        governance guidelines. The Listing
        Rules of the UK Financial Services Authority require each listed company
        incorporated in the United Kingdom to include in its Annual Report and
        Accounts a narrative statement of how it has applied the principles of
        the Combined
        Code on Corporate Governance issued by the Financial Reporting Council
        (&#145;Combined Code&#146;)
        and a statement as to whether or not it has complied with the code provisions
        of the Combined Code throughout the accounting period covered by the
        Annual Report and Accounts. A company that has not complied with the
        Code provisions,
        or complied with only some of the Code provisions or (in the case of
        provisions whose requirements are of a continuing nature) complied for
        only part of
        an accounting period covered by the report, must specify the Code provisions
        with which it has not complied, and (where relevant) for what part of
        the reporting period such non-compliance continued, and give reasons
        for any
        non-compliance. As stated above, HSBC Holdings complied throughout 2005
        with the applicable code provisions of the Combined Code. The Combined
        Code does
        not require HSBC Holdings to disclose the full range of corporate governance
        guidelines with which it complies.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Under
        NYSE standards, companies are required to have a nominating/corporate
      governance committee, composed
        entirely of independent directors. In addition to identifying individuals
        qualified to become board members, this committee must develop and recommend
        to the board a set of corporate governance principles. HSBC&#146;s Nomination Committee, which follows the requirements of the Combined Code, includes a majority of members who are independent. All members of the Committee are non-executive Directors and three of the four members, including the Committee chairman, are independent non-executive Directors. The Committee&#146;s
        terms of reference do not require the Committee to develop and recommend
        corporate governance principles for HSBC Holdings. As stated above, HSBC
        Holdings is subject to the corporate governance principles of the Combined
        Code.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Pursuant
        to NYSE listing standards, non-management directors must meet on a regular
        basis without management
        present and independent directors must meet separately at least once
      per year. During 2005, HSBC Holdings&#146; non-executive Directors met
      three times as a group with the Group</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Chairman,
but with no other executive Directors</FONT></font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>present,
      and met once as a group without the Group Chairman or other executive Directors
        present.
        HSBC Holdings&#146; practice, in this regard, complies with the Combined
        Code.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In
        accordance with the requirements of the Combined Code, HSBC Holdings
      discloses in its annual report how the
        Board, its committees and the Directors are evaluated and the results
      of the evaluation (on pages 202 to 203) and it provides extensive information
        regarding Directors&#146; compensation in the Directors&#146; Remuneration Report (on pages 215 to 232). The terms of reference of HSBC Holdings&#146; Audit,
        Nomination and Remuneration Committees are available at www.hsbc.com/committeeb.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>NYSE
        listing standards require US companies to adopt a code of business conduct
        and ethics for directors,
        officers and employees, and promptly disclose any waivers of the code
      for directors or executive officers. In addition to the Group Business
      Principles
        and Values, which apply to the employees of all HSBC companies, pursuant
        to the requirements of the Sarbanes-Oxley Act the Board of HSBC Holdings
        has adopted a Code of Ethics applicable to the Group Chairman, the Group
        Finance Director and Group Chief Accounting Officer. HSBC Holdings&#146; Code
        of Ethics is available on www.hsbc.com/codeofethics or from the Group
        Company Secretary at 8 Canada Square, London E14 5HQ. If the Board amends
        or waives
        the provisions of the Code of Ethics, details of the amendment or waiver
        will appear at the same website address. During 2005 HSBC Holdings made
        no amendments to its Code of Ethics and granted no waivers from its provisions.
        The Group Business Principles and Values is available on www.hsbc.com/businessprinciplesandvalues.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Under
        NYSE listing rules applicable to US companies, independent directors
      must comprise a majority of the board
        of directors. Currently, over half of HSBC Holdings&#146; Directors are
        independent.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Under
        the Combined Code the HSBC Holdings Board determines whether a director
        is independent in character
        and judgement and whether there are relationships or circumstances which
        are likely to affect, or could appear to affect, the director&#146;s
        judgement. Under the NYSE rules a director cannot qualify as independent
        unless the board affirmatively determines that the director has no material
        relationship with the listed company; in addition the NYSE rules prescribe
        a list of circumstances in which a director cannot be independent. The
        Combined Code requires a company&#146;s
board to</FONT> <font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>assess
director independence by affirmatively</font></font></font></font></font></P></div><br clear="all">
<P>&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2 face="sans-serif">207</FONT>
</font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p208"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
</font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
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<P>&nbsp;</P>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>concluding that the director is independent of management and
    free from any business or other relationship that could materially interfere
    with the exercise of independent judgement.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Lastly,
      a chief executive officer of a US company listed on the NYSE must annually
      certify that he or she is
      not aware of any violation by the company of NYSE corporate governance
      standards. In accordance with NYSE listing rules applicable to foreign
      private issuers,
      HSBC Holdings&#146; Group Chairman is not required to provide the NYSE
      with this annual compliance certification. However, in accordance with
      rules applicable
      to both US companies and foreign private issuers, the Group Chairman is
      required promptly to notify the NYSE in writing after any executive officer
      becomes
      aware of any material non-compliance with the NYSE corporate governance
      standards applicable to HSBC Holdings.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Since July 2005 HSBC Holdings has been required to submit annual and interim written affirmations of compliance with applicable NYSE corporate governance standards, similar to the affirmations required of NYSE listed US companies. The first annual affirmation was submitted to the NYSE in August 2005.</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>

<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Internal
            control</b> </font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The Directors are responsible for internal control in HSBC and for reviewing its effectiveness.</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Procedures
have been designed for safeguarding assets against unauthorised use or disposition;
for maintaining proper accounting records;
      and for the reliability of financial information used within the business
      or for publication. Such procedures are designed to manage rather than
    eliminate the risk of failure to achieve business objectives and can only
    provide reasonable
      and not absolute assurance against material misstatement, errors, losses
      or
      fraud. The procedures also enable HSBC Holdings to discharge its obligations
      under the Handbook of Rules and Guidance issued by the Financial Services
      Authority, HSBC&#146;s lead regulator.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      key procedures that the Directors have established are designed to provide
      effective internal control within HSBC and accord with the Internal Control:
      Revised Guidance for Directors on the Combined Code issued by the Financial
      Reporting Council. Such procedures for the ongoing identification, evaluation
      and management of the significant risks faced by HSBC have been in place
      throughout the year and up to 6 March 2006, the date of approval of the <I>Annual
      Report and Accounts</I></FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>2005</FONT></I><FONT size=2>.
In the case of companies acquired during the</FONT></font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>year,
      including Metris Companies Inc., the internal controls
      in place are being reviewed against HSBC&#146;s benchmarks and integrated
      into HSBC&#146;s
        systems.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>HSBC&#146;s
key internal control procedures include the following:</FONT></font></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Authority
        to operate the various subsidiaries is delegated to their respective
        chief executive officers within limits set by the Board of Directors
        of HSBC Holdings or by the Group Management Board under powers delegated
        by the Board. Sub-delegation of authority from the Group Management Board
        to individuals requires these individuals, within their respective delegation,
        to maintain a clear and appropriate apportionment of significant responsibilities
        and to oversee the establishment and maintenance of systems of controls
        appropriate to the business. The appointment of executives to the most
        senior positions within HSBC requires the approval of the Board of Directors
    of HSBC Holdings.</font> </td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Functional,
        operating, financial reporting and certain management reporting standards
        are established by Group Head Office management for application across
        the whole of HSBC. These are supplemented by operating standards set
        by functional and local management as required for the type of business
    and geographical location of each subsidiary.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Systems
        and procedures are in place in HSBC to identify, control and report on
        the major risks including credit, changes in the market prices of financial
        instruments, liquidity, operational error, breaches of law or regulations,
        unauthorised activities and fraud. Exposure to these risks is monitored
        by asset and liability committees and executive committees in subsidiaries
        and by the Group Management Board for HSBC as a whole. A Risk Management
        meeting, chaired by the Group Finance Director, is held each month. The
        Risk Management meeting addresses asset and liability management issues.
        Minutes of the Risk Management meeting are submitted to the Group Management
    Board and the Group Audit Committee.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Processes
        are in place to identify new risks from changes in market practices or
        customer behaviours which could expose HSBC to heightened risk of loss
        or reputational damage. During 2005 additional attention was directed
        towards evolving best practice in the areas of internet fraud, counterparty
    risk management </font><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>policy
    following the publication of the Corrigan</FONT></font></font></td>
  </tr>
</table></div><br clear="all">
<p>&nbsp;</p>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">208</FONT></font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p209"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2> </FONT></font></p>
</font>
<div style="float: left; width: 48%">
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>report
            in July 2005 and responding to new public policy initiatives governing
    sales practices.</font> </font></font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Periodic
        strategic plans are prepared for customer groups, global product groups,
        key support functions and certain geographies within the framework of
        the Group Strategic Plan. Operating plans are prepared and adopted by
        all HSBC companies annually, setting out the key business initiatives
    and the likely financial effects of those initiatives.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Centralised
        functional control is exercised over all computer system developments
        and operations. Common systems are employed for similar business processes
        where practicable. Credit and market risks are measured and reported
        on in subsidiaries and aggregated for review of risk concentrations on
    a Group-wide basis.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Responsibilities
        for financial performance against plans and for capital expenditure,
        credit exposures and market risk exposures are delegated with limits
        to line management in the subsidiaries. In addition, functional management
        in Group Head Office is responsible for setting policies, procedures
        and standards in the following areas of risk: credit risk; market risk;
        liquidity risk; operational risk; IT risk; insurance risk; accounting
        risk; tax risk; legal and regulatory compliance risk; human resources
        risk; reputational risk and purchasing risk; and for certain global product
    lines.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Policies
        to guide subsidiary companies and management at all levels in the conduct
        of business to safeguard the Group&#146;s reputation are established
        by the Board of HSBC Holdings and the Group Management Board, subsidiary
        company boards, board committees or senior management. Reputational risks
        can arise from social, ethical or environmental issues, or as a consequence
        of operational risk events. As a banking group, HSBC&#146;s good reputation
        depends upon the way in which it conducts its business but it can also
        be affected by the way in which clients, to which it provides financial
    services, conduct their business.</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The internal
        audit function, which is centrally controlled, monitors the effectiveness
        of internal control structures across the whole of HSBC. The work of
        the internal audit function is focused on areas of greatest risk to HSBC
        as determined by a risk-based approach. The head of this function reports
    to the Group Chairman</font><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>and
    the Group Audit Committee.</font> </font></td>
  </tr>
</table></div>
<div style="float: right; width: 48%">
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management
        is responsible for ensuring that recommendations made by the internal
        audit function are implemented within an appropriate and agreed timetable.
        Confirmation to this effect must be provided to internal audit. Management
        must also confirm annually to internal audit that offices under their
        control have taken or are in the process of taking the appropriate actions
        to deal with all significant recommendations made by external auditors
    in management letters or by regulators following regulatory inspections.</font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The Group Audit Committee has kept under review the effectiveness of this system of internal control and has reported regularly to the Board of Directors. The key processes used by the Committee in carrying out its reviews include: regular reports from the heads of key risk functions; the production annually of reviews of the internal control framework applied at Group Head Office and major operating subsidiary level measured against HSBC benchmarks, which cover all internal controls, both financial and non-financial; semi-annual confirmations from chief executives of principal subsidiary companies that there have been no material losses, contingencies or uncertainties caused by weaknesses in internal controls; internal audit reports; external audit reports; prudential reviews; and regulatory reports.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      Directors, through the Group Audit Committee, have conducted an annual
      review of the effectiveness of HSBC&#146;s system of internal control covering all material controls, including financial, operational and compliance controls and risk management systems. The Group Audit Committee has received confirmation that management has taken or is taking the necessary action to remedy any failings or weaknesses identified through the operation of HSBC&#146;s
      framework of controls.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
      </font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Reputational and operational risks</b></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>HSBC regularly
      updates its policies and procedures for safeguarding against reputational
      and operational risks. This is an evolutionary process which
takes account of The Association of British Insurers&#146; guidance on best practice when responding to social, ethical and environmental (&#145;SEE&#146;)
risks.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>The
      safeguarding of HSBC&#146;s reputation is of paramount importance to its
      continued prosperity and is the responsibility of every member of staff.
      HSBC has always aspired to the highest standards of conduct and, as a matter
      of routine, takes account of reputational risks to its business. The training
      of</FONT>
    <font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Directors
on appointment includes reputational matters.</font> </font></font></font></P></div><br clear="all">
<p>&nbsp;</p>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">209</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p210"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"></font></font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Reputational
          risks, including SEE matters, are considered and assessed by the Board,
          the Group Management
          Board, subsidiary company boards, board committees and/or senior management
          during the formulation of policy and the establishment of HSBC standards.
          Standards on all major aspects of business are set for HSBC and for
          individual subsidiary companies, businesses and functions. These policies,
          which
            form an integral part of the internal control systems, are communicated
            through
          manuals and statements of policy and are promulgated through internal
            communications and training. The policies cover SEE issues and set
            out operational procedures
          in all areas of reputational risk, including money laundering deterrence,
          environmental impact, anti-corruption measures and employee relations.
          The policy manuals address risk issues in detail and co-operation between
          head
          office departments and businesses is required to ensure a strong adherence
          to HSBC&#146;s risk management system and its corporate social responsibility
          practices.</FONT>
  </font>
</font></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Internal
      controls are an integral part of how HSBC conducts its business. HSBC&#146;s manuals and statements of policy are the foundation of these internal controls. There is a strong process in place to ensure controls operate effectively. Any significant failings are reported through the control mechanisms, internal audit and compliance functions to subsidiary company audit committees and to the Group Audit Committee, which keeps under review the effectiveness of the system of internal controls and reports regularly to HSBC Holdings&#146; Board.
      In addition, all HSBC businesses and major functions are required to review
      their control procedures and to make regular reports about any losses arising
      from operational risks.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>HSBC
      provides information in its Corporate Social Responsibility Report and
      website (www.hsbc.com/csr) on
      the extent to which it has complied with its social, ethical and environmental
      risk management policies. Aspects covered include: how HSBC is implementing
      and applying the Equator Principles to manage the environmental and social
      risks in project finance; employee diversity; environmental management;
      and health and safety. HSBC is using the guidelines of the Global Reporting
      Initiative
      in producing its 2005 Corporate Social Responsibility Report. Third party
      scrutiny of the assertions made in the report is provided through an assurance
      process conducted by URS Verification Limited, including a commentary in
      the report and on the HSBC website. HSBC&#146;s direct environmental</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>performance
data is verified by Den Norske Veritas. HSBC also participates in the Dow Jones</FONT></font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Sustainability
  Index, FTSE4Good and Business in the Community&#146;s Environment Index. HSBC&#146;s</FONT>
  </font><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=2>Corporate
  Social Responsibility Report 2005</FONT></I><FONT size=2> will be available at
  www.hsbc.com/csrreport from late-April 2006.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Financial
                risk management</b></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The financial risk management objectives and policies of HSBC Holdings and its subsidiary undertakings included in the consolidation, in relation to the use of financial instruments, together with an analysis of the exposure to price, credit, liquidity and cash flow risks, as required under the Companies Act and International Financial Reporting Standards are set out in the risk management section of the Financial Review on pages 115 to 172 and in Note 17 and part of Note 47 on the Financial Statements on pages 285 and 375 respectively.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
</font></font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Health
                and safety</b></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The maintenance
      of appropriate health and safety standards throughout HSBC remains a key
      responsibility of all managers and HSBC is committed
    to actively managing all health and safety risks associated with its business.
      HSBC&#146;s objectives are to identify, remove, reduce or control material
      risks of fires and of accidents or injuries to employees and visitors.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Health and Safety Policies, Group standards and procedures are set by Group Fire and Safety and are implemented by Health, Safety and Fire Coordinators based in each country in which HSBC operates.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>HSBC
      faces a range of threats from terrorists and criminals across the world.
      In particular, over recent
      years the threat from international terrorism has become significant in
      a number of areas where HSBC operates. This threat has mainly manifested
      itself
      in bomb attacks such as the one in Istanbul in 2003 in which HSBC&#146;s
      Turkish headquarters building was attacked. Despite suffering tragic loss
      of life and major damage, existing security measures and well-managed contingency
      procedures ensured the business was able to return to normal operations
      the following day.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Group Security provides regular risk assessments in areas of increased risk to assist management in judging the level of terrorist threat. In addition, Regional Security functions conduct regular security reviews to ensure measures to</FONT>
    <font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>protect
    HSBC staff, buildings, assets and information are appropriate for the level
  of threat.</font> </font></font></P>
</div><br clear="all">
<P align="left">&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="sans-serif">210</FONT>
</font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p211"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></p>
</font>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Communication
                    with shareholders</b></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Communication
      with shareholders is given high priority. Extensive information about HSBC&#146;s
      activities is provided in the <I>Annual Report and Accounts</I>, <I>Annual
      Review </I>and the <I>Interim Report </I>which are sent to shareholders
      and are available on www.hsbc.com. There is regular dialogue with institutional
      investors and enquiries from individuals on matters relating to their shareholdings
      and the business of HSBC are welcomed and are dealt with in an informative
      and timely manner. All</FONT>
<FONT size=2>shareholders
are encouraged to attend the Annual General Meeting or the informal meeting of</FONT></font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>shareholders
  held in Hong Kong to discuss the progress of HSBC.</FONT>
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Directors&#146; interests</b></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>According
      to the registers of Directors&#146; interests maintained
      by HSBC Holdings pursuant to section 325 of the Companies Act 1985 and
    section 352 of the Securities and Futures Ordinance of Hong Kong, the Directors
    of
      HSBC Holdings at the year-end had the following interests, all beneficial
      unless otherwise stated, in the shares and loan capital of HSBC and its
associated corporations:</FONT></font></P></div><br clear="all">
<p>&nbsp;</p>
<P><I><FONT size=2>HSBC Holdings ordinary shares of US$0.50</FONT></I> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR align="right">
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD colspan="13" align="center"><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005</FONT><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font></TD>
   <TD>&nbsp;</TD>
</TR>
<TR align="right">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan="13"><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="right">
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jointly</FONT></TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Percentage</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR align="right">
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At</FONT></TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Child</FONT></TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">with</FONT></TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of ordinary</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR align="right">
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Beneficial</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">under 18</FONT></TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">another</FONT></TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">shares</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR align="right">
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">owner</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">or spouse</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trustee</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">person</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
   <TD>&nbsp;</TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests</FONT></TD>
   <TD align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in issue</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>

  <TD>&nbsp;</TD>
  <TD align="center"><font size="2">&nbsp;</font></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir John Bond</FONT></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">451,531</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">389,897</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,743</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">121,160</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">514,800</FONT></TD>
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   <TD width=8% align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD width=2% bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">R K F Ch&#146;ien</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,796</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,835</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,835</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">J D Coombe</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,659</FONT></TD>
   <TD bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>2</FONT></SUP></font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,000</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,195</FONT></TD>
   <TD bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>3</FONT></SUP></font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,195</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Baroness Dunn</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164,411</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">141,560</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,650</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>3</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">170,210</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D J Flint</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81,271</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54,726</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,000</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81,726</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">W K L Fung</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">328,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">328,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">328,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M F Geoghegan</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,795</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73,536</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73,536</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S K Green</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">243,659</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">233,434</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,359</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,355</FONT></TD>
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   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">295,148</FONT></TD>
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   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S Hintze</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,037</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,037</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,037</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">J
    W J Hughes-Hallett</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,053,983</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>2</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,119,229</FONT></TD>
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   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,119,229</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.02</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A W Jebson</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">83,628</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108,099</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108,099</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Sir
    John Kemp-Welch</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96,800</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">127,300</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,000</FONT></TD>
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   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">140,300</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir Brian Moffat</FONT></TD>
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   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,632</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,632</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Sir
    Mark Moody-Stuart</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,840</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">840</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>3</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,840</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S W Newton</FONT></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,170</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,391</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,391</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">H Sohmen</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,270,147</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,302,274</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,067,873</FONT></TD>
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   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,370,147</FONT></TD>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.03</FONT></TD>
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</TR>
<TR>
   <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Sir
    Brian Williamson</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,865</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,543</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,543</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
   <TD align="right" bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.00</FONT></TD>
   <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
</TABLE><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Details
           of executive Directors&#146; other interests in HSBC Holdings ordinary shares of US$0.50 arising from share option plans, The HSBC Share Plan and the HSBC Holdings Restricted Share Plan 2000 are set out in the Directors&#146; Remuneration
    Report on pages 215 to 232.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Interests
    at 1 March 2005 &#150; date of appointment.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Non-beneficial.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Interests held by private investment companies.</FONT></I></font></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Sir
      John Bond has an interest as beneficial owner in &pound;290,000 of HSBC
      Capital Funding (Sterling 1) L.P. 8.208 per cent Non-cumulative Step-up
      Perpetual Preferred Securities, which he held throughout the year.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>S
      K Green has an interest as beneficial owner in &#8364;75,000 of HSBC Holdings plc 5&frac12; per cent Subordinated Notes 2009 which he held throughout the year. During the year he ceased to have an interest in &pound;100,000
      of HSBC Bank plc 9 per cent</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Subordinated Notes 2005.</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>J
      W J Hughes-Hallett has a non-beneficial interest as Trustee in &pound;4,700,000
      of HSBC Capital Funding (Sterling 1) L.P. 8.208 per cent Non-cumulative
      Step-up Perpetual Preferred Securities, which he acquired during the year.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>During
      the year, H Sohmen ceased to have a corporate interest in &pound;1,200,000
      of HSBC Bank plc 9 per cent Subordinated Notes 2005.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
          Directors of HSBC France, S K Green and M F Geoghegan each have an
interest as beneficial</font></font></font></font></P></div><br clear="all">
<p>&nbsp;</p>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">211</FONT></font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p212"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"></font></font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>owner
          in one share of &#8364;5 in that company, which they held throughout
          the year. The Directors have waived their rights to receive dividends
          on these shares
          and
          have undertaken to transfer these shares to HSBC on ceasing to be Directors
          of HSBC France.</FONT>
  </font>
</font></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>As Directors of HSBC Private Banking Holdings (Suisse), S K Green and M F Geoghegan each have an interest as beneficial owner in one share of CHF1,000, which they held during the year. The Directors have waived their rights to receive dividends on these shares and have undertaken to transfer these shares to HSBC on ceasing to be Directors of HSBC Private Banking Holdings (Suisse).</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>At
      31 December 2005, the aggregate interests under the Securities and Futures
      Ordinance of Hong Kong of the executive Directors in HSBC Holdings ordinary
      shares of US$0.50 (each of which represents less than 0.01 per cent of
      the shares in</FONT>
</font><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>issue,
unless otherwise stated), including interests</FONT></font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>arising
      through share option plans, the Restricted Share Plan and The HSBC Share
        Plan are:
        Sir John Bond &#150; 1,663,088 (0.01 per cent of shares in issue); D J
        Flint &#150; 668,647; M F Geoghegan &#150; 549,492; S K Green &#150; 1,097,718
        (0.01 per cent of shares in issue); and A W Jebson &#150;709,751.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>No
      directors held any short positions as defined in the Securities and Futures
      Ordinance of Hong Kong. Save as
      stated above and in the Directors&#146; Remuneration Report, none of the
      Directors had an interest in any shares or debentures of any HSBC or associated
      corporation at the beginning or at the end of the year, and none of the
      Directors or members of their immediate family was awarded or exercised
      any right to
      subscribe for any shares or debentures during the year.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Since the end of the year, the interests of each of the following Directors have increased by the number of HSBC Holdings ordinary shares shown against their name:</FONT>
</font></P></div><br clear="all">
<p>&nbsp;</p>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>HSBC
Holdings ordinary shares of US$</font><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>0.50</font></i></font></i></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right">&nbsp;</TD>

   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Child</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right">&nbsp;</TD>

   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right">&nbsp;</TD>

   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Beneficial</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">under 18</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jointly with</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Beneficiary</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">owner</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">or spouse</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">another person</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of a trust</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir John Bond</FONT></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67</FONT></TD>
   <TD width=2% align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>1</FONT></SUP></font></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT></TD>
   <TD width=2% align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>2</FONT></SUP></font></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD width=2% align="left"><font size="2">&nbsp;</font></TD>
   <TD width=10% align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,846</FONT></TD>
   <TD width=2%><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>3</FONT></SUP></font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">R K F Ch&#146;ien</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">429</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Baroness Dunn</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,222</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D J Flint</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">492</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>5</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,045</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>6</FONT></SUP></font></TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M F Geoghegan</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">533</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>7</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,106</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>6</FONT></SUP></font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S K Green</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,040</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>8</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">141</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,903</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>6</FONT></SUP></font></TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A W Jebson</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">933</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,192</FONT></TD>
   <TD><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>6</FONT></SUP></font></TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir Brian Moffat</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S W Newton</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir Brian Williamson</FONT></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143</FONT></TD>
   <TD align="left"><font face="TimesNewRoman,Times New Roman,Times,serif"><SUP><FONT size=2>4</FONT></SUP></font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD align="left"><font size="2">&nbsp;</font></TD>
   <TD align="right"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD align="left">&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
   <TD width="3%" valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Comprises the automatic reinvestment of dividend income by an Individual Savings Account and Personal Equity Plan manager (35 shares), the acquisition of shares in the HSBC Holdings UK Share Ownership Plan through regular monthly contributions (25 shares) and the automatic reinvestment of dividend income on shares held in the plan (7 shares).</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>The automatic reinvestment of dividend income by an Individual Savings Account and Personal Equity Plan manager.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Comprises scrip dividend on awards held under The HSBC Share Plan and the HSBC Holdings Restricted Share Plan 2000 (9,915 shares) and on shares held in a Trust (931 shares).</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Scrip dividend.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Comprises scrip dividend on shares held as beneficial owner (425 shares), the acquisition of shares in the HSBC Holdings UK Share Ownership Plan through regular monthly contributions (25 shares), the automatic reinvestment of dividend income on shares held in the plan (7 shares) and by the automatic reinvestment of dividend income by an Individual Savings Account and Personal Equity Plan manager (35 shares).</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Scrip dividend on awards held under The HSBC Share Plan and the HSBC Holdings Restricted Share Plan 2000.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Exercise of an option awarded in 2000 under the HSBC Savings-Related Share Option Plan: International; options over 26 shares lapsed.</FONT></I></font></TD>
</TR>
<TR>
   <TD valign="top"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
   <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><I><FONT size=1>Comprises scrip dividend on shares held as beneficial owner (2,008 shares), the acquisition of shares in the HSBC Holdings UK Share Ownership Plan through normal monthly contributions (25 shares) and the automatic reinvestment of dividend income on shares held in the plan (7 shares).</FONT></I></font></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>S M Robertson held, on his appointment as a Director on 3 January 2006, a non-beneficial interest as Trustee in 36,195 HSBC Holdings ordinary shares.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Since the end of the year, the non-beneficial interests of J W J Hughes-Hallett as Trustee of two</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Trusts have decreased by a net 44,194 HSBC Holdings ordinary shares.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>There
have been no other changes in Directors&#146; interests from 31 December 2005 to the date of this Report. Any subsequent changes up to the last practicable date before the publication of the &#145;Notice</FONT></font></P></div><br clear="all">
<P>&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">212</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p213"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<div style="float: left; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>of Annual General Meeting&#146; will be set out in the notes
      to that Notice.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>At 31 December 2005, Directors and Senior Management held, in aggregate, beneficial interests in 26,043,491 HSBC Holdings ordinary shares (0.2 per cent of the issued ordinary shares).</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3"></font><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Employee
    involvement</b> </font></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>HSBC Holdings
      continues to regard communication with its employees as a key aspect of
      its policies. Information is given to employees about
      employment matters and about the financial and economic factors affecting
      HSBC&#146;s performance through management channels, an intranet site accessible to all HSBC&#146;s
      employees worldwide, in-house magazines and by way of attendance at internal
      seminars and training programmes. Employees are encouraged to discuss operational
      and strategic issues with their line management and to make suggestions
      aimed at improving performance. The involvement of employees in the performance
      of HSBC is further encouraged through participation in bonus and share
      plans
      as
      appropriate.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>About
        half of all HSBC employees now participate in one or more of HSBC&#146;s
        employee share plans.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
        </font></P>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Employment
    of disabled persons</b> </font></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>HSBC Holdings continues to be committed to providing equal opportunities to employees. The employment of disabled persons is included in this commitment and the recruitment, training, career development and promotion of disabled persons is based on the aptitudes and abilities of the individual. Should employees become disabled during employment, every effort is made to continue their employment and, if necessary, appropriate training is provided.</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Supplier
    payment policy</b></font></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>HSBC Holdings subscribes to the Better Payment Practice Code for all suppliers, the four principles of which are: to agree payment terms at the outset and stick to them; to explain payment procedures to suppliers; to pay bills in accordance with any contract agreed with the supplier or as required by law; and to tell suppliers without delay when an invoice is contested and settle disputes quickly.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>Copies of, and information about, the Code are available from: The Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET; and the internet at www.dti.gov.uk/publications.</FONT>
</font></P></div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>It
        is HSBC Holdings&#146; practice to organise payment to its suppliers through a central accounts function operated by its subsidiary, HSBC Bank. Included in the balance with HSBC Bank is the amount due to trade creditors which, at 31 December 2005, represented 22 days&#146; average
        daily purchases of goods and services received from such creditors, calculated
        in accordance with the Companies Act 1985, as amended by Statutory Instrument
        1997/571.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
        </font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Notifiable
    interests in share capital</b> </font></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>According to the register maintained by HSBC Holdings under section 211 of the Companies Act 1985:</FONT></font></P>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Legal and
        General Investment Management Limited gave notice on 11 June 2002 that
        it had an interest in 284,604,788 HSBC Holdings ordinary shares, representing
      3.01 per cent of the ordinary shares in issue at that date;</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Barclays
        PLC gave notice on 2 June 2005 that it had an interest in 351,871,399
        HSBC Holdings ordinary shares representing 3.14 per cent of the ordinary
      shares in issue on that date; and</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
        Suisse First Boston gave notice on</font><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>30
        November 2005 that it had an interest in 553,491,660 HSBC Holdings ordinary
        shares, representing 4.89 per cent of the ordinary shares in issue at
      that date.</font></font></td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>There are no notifiable interests in the equity share capital recorded in the register maintained under section 336 of the Securities and Futures Ordinance of Hong Kong.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>In compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited at least 25 per cent of the total issued share capital of HSBC Holdings has been held by the public at all times during 2005 and up to the date of this Report.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Dealings
    in HSBC Holdings shares</b> </font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Except for dealings as intermediaries by HSBC Bank, HSBC Financial Products (France) and The Hongkong and Shanghai Banking Corporation, which are members of a European Economic Area exchange, neither HSBC Holdings nor any subsidiary undertaking has bought, sold or redeemed any securities of HSBC Holdings during the year ended 31 December 2005.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Donations</b> </font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>During the year, HSBC made charitable donations totalling US$81.4 million. Of this amount,</FONT></font></P></div><br clear="all">
<P>&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="sans-serif">213</FONT>
</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p214"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<font face="TimesNewRoman,Times New Roman,Times,serif"></font></font>
<p><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">H S B C&nbsp;&nbsp;&nbsp;H
    O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><font size="3">Report
        of the Directors</font> </B><font size="3">(<font size="2">continued</font>)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>US$28.9 million was given for charitable purposes in the United Kingdom.</FONT>
  </font>
</font></font></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>No political donations were made during the year.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2>At
      the Annual General Meeting in 2003 shareholders gave authority for HSBC
      Holdings and HSBC Bank to make
      EU political donations and incur EU political expenditure up to a maximum
      aggregate sum of &pound;250,000 and &pound;50,000 respectively over a four-year
      period as a precautionary measure in light of the wide definitions in The
      Political Parties, Elections and Referendums Act 2000. These authorities
      have not been used.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
      </font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Annual
      General Meeting</b></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>The Annual General Meeting of HSBC Holdings will be held at the Barbican Hall, Barbican Centre, London EC2 on Friday 26 May 2006 at 11.00am.</FONT>
</font></P>
</div>
<div style="float: right; width: 48%">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>An informal meeting of shareholders will be held at Level 28,
      1 Queen&#146;s Road Central, Hong Kong on Tuesday 23 May 2006 at 4.30pm.</FONT>
</font></P>
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
  <FONT size=2>A live webcast of the Annual General Meeting will be available on www.hsbc.com. From shortly after the conclusion of the Meeting until 30 June 2006 a recording of the proceedings will be available on www.hsbc.com.</FONT></font><font size="3" face="TimesNewRoman,Times New Roman,Times,serif">
  </font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size="3" face="TimesNewRoman,Times New Roman,Times,serif"><b>Auditor</b></font></font></font></font></font></font></font></td>
  </tr>
  <tr>
    <td><hr size="2" noshade>
    </td>
  </tr>
</table>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>KPMG Audit Plc has expressed its willingness to continue in office. The Group Audit Committee and the Board recommend that it be reappointed. A resolution proposing the reappointment of KPMG Audit Plc as auditor of HSBC Holdings and giving authority to the Group Audit Committee to determine its remuneration will be submitted to the forthcoming Annual General Meeting.</FONT></font><font face="TimesNewRoman,Times New Roman,Times,serif">
  </font></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="50%"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>On
    behalf of the Board</font></font></font></font></td>
    <td width="50%">&nbsp;</td>
  </tr>
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2> R
    G Barber, <i>Secretary</i></font></font></font></font></td>
    <td align="right"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>6
    March 2006</font> </font></font></font></td>
  </tr>
</table></div><br clear="all">
<font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif">
<P align="left">&nbsp;</P>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="sans-serif">214</FONT></font></P>
</font></font><font face="sans-serif">
</font>
<hr noshade align="center" width="100%" size="2">

<page><a name="p215"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>


<p><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146; Remuneration
  Report</FONT></B></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td><b><FONT size="3" face="UniversLT55,Arial,Helvetica,sans-serif">Remuneration
      Committee</FONT></b></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Remuneration Committee meets regularly to consider human resource issues, particularly terms and conditions of employment, remuneration, retirement benefits, development of high
potential employees and key succession planning. The Remuneration Committee seeks to respond to the variety of environments and circumstances which are faced by different businesses in different markets at different times and has in place
appropriate policies and procedures to monitor the size of the potential remuneration awards and resulting company liabilities. The Remuneration Committee reviews the incentive plans on an ongoing basis to ensure that they remain effective and
appropriate to HSBC&#146;s circumstances and prospects.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The members of the Remuneration Committee throughout 2005 were Sir Mark Moody-Stuart (Chairman), W K L Fung, S Hintze and Sir John Kemp-Welch. J D Coombe has
been appointed a member of the Committee with effect from 1 June 2006.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">There were seven meetings of the Remuneration Committee during 2005. S Hintze, Sir Mark Moody-Stuart and Sir John Kemp-Welch attended all of these meetings
and W K L Fung attended six meetings. Following each meeting the Committee reports to the Board on its activities. The terms of reference of the Committee are available at www.hsbc.com/committeer.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Towers
  Perrin, a firm of specialist human resources consultants, has been appointed
  by the Committee to provide independent advice on executive remuneration issues.
  As a global firm, Towers Perrin also provides other remuneration, actuarial
  and retirement consulting services to various parts of HSBC. Other than the
  provision of expert advice in these areas to the Remuneration Committee and
  to HSBC, Towers Perrin have no connection with HSBC. Other consultants are used
  from time to time to validate their findings. The Remuneration Committee also
  receives advice from the Group General Manager, Human Resources, J C S Rankin
  until 31 December 2005 and P W Boyles since 1 January 2006, and the Senior Executive,
  Group Reward Management, P M Wood.</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td> <B><FONT size="3" face="UniversLT55,Arial,Helvetica,sans-serif">General
      Policy on Employees</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As with most businesses, HSBC&#146;s performance depends on the quality and commitment of its people. Accordingly, the Board&#146;s stated strategy is to attract, retain and motivate the
very best people.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In a business that is based on trust and relationships, HSBC&#146;s broad policy is to look for people who want to make a long-term career with the
organisation since trust and relationships are built over time.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Remuneration is an important component in people&#146;s decisions on which company to join, but it is not the only one; it is HSBC&#146;s experience that
people are attracted to an organisation with good values, fairness, the potential for success and the scope to develop a broad, interesting career.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within the authority delegated by the Board of Directors, the Remuneration Committee is responsible for determining the remuneration policy of HSBC including
the terms of bonus plans, share plans and other long-term incentive plans, and for agreeing the individual remuneration packages of executive Directors and other senior Group employees. No Directors are involved in deciding their own
remuneration.</FONT></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
  Remuneration Committee applies the following key principles:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to ensure
      that the total remuneration package</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(salary,
      bonus, long-term incentive awards and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">other benefits) is competitive
      in relation to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">comparable
      organisations in each of the</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">countries or regions in which HSBC operates;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to offer
      fair and realistic salaries with an</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">important
      element of variable pay, differentiated</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">by performance;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">through
      awards of shares (and in limited</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">circumstances,
      share options) to recognise high</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">performance and retain key talent;
      and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">since 1996,
      to follow a policy of moving</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">progressively
      from defined benefit to defined</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">contribution Group pension schemes
      for new</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">employees
      only.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In line
      with these principles:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">employees&#146;
      salaries are reviewed annually in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">context
      of individual and business performance,</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">market practice, internal
      relativities and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">competitive
      market pressures. Allowances and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">benefits are largely determined
      by local market</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">practice;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">employees
      participate in various bonus</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">arrangements.
      The level of performance-related</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">variable pay depends upon the
      performance of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">constituent
      businesses and the individual</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">concerned. Variable bonus plans
      emphasise</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">revenue
      growth whilst retaining a strong link to</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">expense control; other key measures
      taken into</font></td>
  </tr>
</table>
</div>
<p>&nbsp;</p>
<p><br clear="all">
</p>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">215</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page> <a name="p216"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
  D I N G S &nbsp; P L C</FONT></P>
<p><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146; Remuneration
  Report </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">account
      in determining individual bonus levels</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">include
      customer relationships; full utilisation of</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">professional skills; and adherence
      to HSBC&#146;s</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">ethical
      standards, internal controls and</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">procedures. Bonus ranges are
      reviewed in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">context
      of prevailing market practice; and</font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has
      a long history of paying close</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">attention
      to its customers in order to provide</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">value for shareholders. This
      has been achieved</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
      ensuring that the interests of HSBC and its</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">employees are aligned with those
      of its</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">shareholders
      and that HSBC&#146;s approach to risk</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">management serves the interests
      of all.</font><br> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accordingly,
      employees are encouraged to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">participate
      in the success they help to create,</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">through participating in the
      HSBC Holdings</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">savings-related
      share option plans and in local</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">share ownership and profit sharing</font>
      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">arrangements.</font></td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following a comprehensive review of share-based remuneration arrangements, The HSBC Share Plan was approved at the 2005 Annual General Meeting. The
arrangements for the most senior executives of HSBC are described under &#145;Long-term incentive plan&#146; on page 219.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Below
     the senior executive level and in the context of an employee&#146;s total
     remuneration  package, the practice of awarding share options at all levels
     within HSBC has
  been reviewed. </FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commencing
   with awards made in 2005, restricted shares will be granted to a substantially

  smaller number of executives than those who previously received share options,
   with awards focused on those individuals who bring key talents and high levels

  of performance to the Group. These awards will normally vest after three years,
   subject to the individual remaining in employment. Awards of share options
  will
  only be granted in limited circumstances. For those who will normally no longer
   be eligible to receive awards of shares or share options, variable bonus arrangements

  have been reviewed and enhanced, as appropriate, taking account of local markets.
   Such changes may include an element of deferral.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2003, under the HSBC Holdings Group Share Option Plan, share option awards were made to some 35,000 high performing employees (approximately the top 20
per cent of performers) below senior management who are still with HSBC. The awards included those at the most junior levels in the organisation. Of the awards of share options, over 95 per cent were granted subject to the achievement of the same
performance conditions as apply to awards of shares under the HSBC Holdings</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Restricted Share Plan 2000 (as described under &#145;Arrangements from 2000-2004&#146; on pages 221 to 223, below). In addition, in some areas, performance was rewarded by bonuses rather
than share options. Awards of share options with performance conditions were relatively modest, but form an important part of performance motivation of frontline staff. The range of awards was up to 10,000 shares under option with an average award
of 1,100. With a recent share price of &#163;9.50 and an option price of &#163;6.91 this would translate to an average gain of &#163;2,850. Some 60 per cent of those granted awards in 2003 received awards of 1,000 shares under option or
fewer.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Total Shareholder Return (TSR) comparison with the defined Benchmark is not due to be made until 31 March 2006. As at 28 February 2006 HSBC&#146;s TSR,
while showing growth of 67 per cent since the beginning of the measurement period in March 2003, is lower than the Benchmark TSR. A performance condition based on a single TSR test against a comparator group is very sensitive to the relative
position at the start of the measurement period. HSBC&#146;s share price at the start of the measurement period for the 2003 awards under the HSBC Holdings Group Share Option Plan was at an unusually high level compared to historical relationships
within the comparator group. Several companies in the comparator group have subsequently recovered from the historically low ratings they experienced in 2003, thereby affecting HSBC&#146;s relative TSR performance over the measurement
period.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">While not currently meeting the TSR performance condition for the 2003 awards under the HSBC Holdings Group Share Option Plan, HSBC Holdings has delivered
impressive and sustained performance and shareholder returns over the same period. EPS for 2002 (which was calculated on a UK GAAP basis, excluding goodwill amortisation) was US&#36;0.76 and for 2005 (now prepared under IFRSs) it was US&#36;1.36,
representing an increase of 79 per cent. Dividends per share have grown by 38 per cent over the same period. The cash return on cash invested has improved from 12.9 per cent in 2002 to 15.7 per cent in 2005.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
     light of the above, the Committee has decided that if the performance condition

  is not satisfied at the end of March 2006, the Committee will exercise its
    discretion  to waive the performance condition in respect of the 2003 awards
    under the HSBC Holdings
     Group Share Option Plan. This waiver will not apply to awards with performance

  conditions which were granted to senior executives under the</FONT></P>
</div><br clear="all">
<P align="left">&nbsp; </P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">216</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p217"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">French sub-plan of the HSBC Holdings Group Share Option Plan.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To encourage greater participation in the HSBC Holdings Savings-Related Share Option Plan: International, two amendments were approved at the 2005 Annual
General Meeting. The first was the introduction of the facility to save and have option prices expressed in US dollars, Hong Kong dollars and euros as well as in pounds sterling. The maximum savings limit of &#163;250 per month will continue to
apply but be converted to the other currencies on a consistent and appropriate date. The second amendment gives individuals the choice of options over one year in addition to three and five year terms. This change carries tax advantages in certain
jurisdictions.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The impact on earnings per share of granting share options which are to be satisfied by the issue of new shares is shown in diluted earnings per share on the
face of the consolidated income statement, with further details disclosed in Note 12 on the Financial Statements on page 276. The effect on basic earnings per share of exercising all outstanding share options would be to dilute it by 0.42 per
cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employee share plans are subject to the following limits on the number of HSBC Holdings ordinary shares that may be subscribed for. In any 10-year period not
more than 10 per cent of the HSBC Holdings ordinary shares in issue from time to time (approximately 1,137 million at 6 March 2006) may in aggregate become issuable pursuant to the grant of options or be issued other than pursuant to options under
all-employee share plans. In any 10-year period not more than 5 per cent of the HSBC Holdings ordinary shares in issue from time to time (approximately 568 million ordinary shares at 6 March 2006) may in aggregate be put under option under The HSBC
Share Plan or be issuable pursuant to the HSBC Holdings Group Share Option Plan, the HSBC Executive Share Option Scheme, The HSBC Holdings Restricted Share Plan 2000 or The HSBC Share Plan. The number of HSBC Holdings ordinary shares that may be
issued on exercise of all options granted on or after 27 May 2005 under The HSBC Share Plan and any other plans must not exceed 1,119,000,000 HSBC Holdings ordinary shares. In the 10-year period to 31 December 2005, less than 600,000,000 HSBC
Holdings ordinary shares had been issued or could become issuable under all-employee share plans and less than 350 million HSBC Holdings ordinary shares had been issued or could become issuable under discretionary employee share plans, including the
HSBC Holdings Group Share Option Plan, the HSBC Holdings Restricted Share Plan 2000 and The HSBC Share Plan.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The new UK pensions tax regime introduced by the Finance Act 2004 means that the current pension arrangements may cease to be tax effective for some
employees. The changes become effective from 6 April 2006. In anticipation of these changes, the Remuneration Committee established some principles when formulating its policy response:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD width="3%"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT></TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the cost
      of executive pension provision should not increase;</FONT></TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT>      </TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC should
      not compensate individuals for changes in the tax regime; and</FONT></TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.</FONT>
    </TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC should
      make available an effective alternative form of reward where current pension
      provision is no longer tax effective for senior executives.</FONT></TD>
  </TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">After taking advice and considering market data, all UK employees whose pension arrangements may cease to be a tax effective reward mechanism with defined
benefit pension provision will be offered the following choices:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%" valign=top> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT>
    </TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">retain
      their current pension plan membership; or</FONT></TD>
  </TR>
  <TR>
    <TD valign=top>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign=top> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT>
    </TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">opt-out
      of the current pension plan to receive either (i) a salary supplement, paid
      monthly, in lieu of pension provision; or (ii) a pension promise from HSBC
      that will pay the same benefit as if the executive had continued in the
      current plan (provided on an unfunded basis).</FONT></TD>
  </TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK employees whose pension arrangements may cease to be a tax effective reward mechanism with defined contribution pension provision will be offered the
following choices:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD width="3%"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT></TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">retain
      their current pension plan membership; or</FONT></TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT>
    </TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">a salary
      supplement, paid monthly, in lieu of pension provision of the same amount
      as the current employer pension contribution.</FONT></TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><B><FONT size="3" face="UniversLT55,Arial,Helvetica,sans-serif">Directors
      and Senior Management</FONT></B></td>
  </tr>
  <tr>
    <td><hr noshade align="center" size="2"> </td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s operations are substantial, diverse and international; for example, over 79 per cent of profit before tax is derived from outside the United Kingdom.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC Holdings&#146; Board comprises 15 non-executive Directors and five executive Directors. With businesses in 76 countries and territories, HSBC aims
to attract Directors with a variety of experience, both in its key areas of activity and internationally. The Board currently includes nationals of four different countries. The five executive Directors, seven Group Managing Directors and 29 Group
General Managers have in total more than 945 years of service with HSBC.</FONT></P>
</div><br clear="all">
<P align="right">&nbsp; </P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">217</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p218"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
  D I N G S &nbsp; P L C</FONT></P>
<p><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146; Remuneration
  Report </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b>Directors&#146; fees</b></FONT></p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors&#146; fees are regularly reviewed and compared with other large international companies. The current fee, which was approved by shareholders in 2004, is &#163;55,000 per annum.
With effect from 1 January 2005, all executive Directors waived their rights to receive a Director&#146;s fee from HSBC Holdings. Having considered comprehensive data it is clear that the current Director&#146;s fee is below the level paid in other
major UK companies. The approval of shareholders will therefore be sought at the 2006 Annual General Meeting for the fee for non-executive Directors to be increased to &#163;65,000 per annum with effect from 1 January 2006.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition, non-executive Directors receive, from 1 January 2006, the following fees:</FONT></P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chairman,
      Audit Committee</FONT></TD>
      <TD width=20% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;50,000
        p.a.</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Member,
      Audit Committee</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;20,000
      p.a.</FONT></TD>
  </TR>
</TABLE>
<P>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">During 2005, seven Audit Committee meetings were held. A Director&#146;s commitment to each meeting, including preparatory reading and review, can be 15 hours or
more.</FONT></I></P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chairman,
      Remuneration Committee</FONT></TD>
      <TD width=20% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;40,000
        p.a.</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Member,
      Remuneration Committee</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;20,000
      p.a.</FONT></TD>
  </TR>
</TABLE>
<P align="left"> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">During
  2005, seven meetings of the Remuneration Committee were held.</FONT></I></P>
  <table width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
    <tr valign="bottom">
      <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chairman,
        Nomination Committee</font></td>
      <td width=20% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;30,000
        p.a.</font></td>
    </tr>
    <tr valign="bottom">
      <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Member,
        Nomination Committee</font></td>
      <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;20,000
        p.a.</font></td>
    </tr>
  </table>
  <P align="left"> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">During
  2005, three meetings of the Nomination Committee were held.</FONT></I></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chairman,
      Corporate Social</font></td>
      <td width="20%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp; <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Responsibility
      Committee</font></td>
    <td align="right"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;30,000
      p.a.</font></td>
  </tr>
  <tr>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Member,
      Corporate Social</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp; <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Responsibility
      Committee</font></td>
    <td align="right"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;20,000
      p.a.</font></td>
  </tr>
</table>
<P>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">During 2005, four meetings of the Corporate Social Responsibility Committee were held.</FONT></I></P>
<FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Executive
Directors</FONT>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The executive Directors are experienced executives with detailed knowledge of the financial services business in various countries. In most cases there has been a need to attract them
from abroad to work in the United Kingdom.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consistent
  with the principles applied by the Committee to employees generally, there are
  four key components to the executive Directors&#146; remuneration:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">salary;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">annual cash
      bonus;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">long-term
      incentives; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">pension.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">To
      ensure that the executive Directors&#146;</font></td>
  </tr>
</table>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">remuneration packages are competitive having regard to the broad international nature of the Group, each year the Remuneration Committee considers market data on senior executive
remuneration arrangements within organisations that are considered key competitors.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
  2005, a review of the competitive peer groups was undertaken to ascertain their
  continued relevance to roles at HSBC Holdings. The review resulted in a slight
  change in the composition and emphasis of the peer groups so that for the 2006
  review they consisted primarily of:</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">FTSE30 companies
      with significant</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">international
      operations in the US and/or in</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Asia-Pacific. This peer group
      comprised 22</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">companies
      and representative companies</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">include: Anglo American plc, AstraZeneca plc,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Barclays
      PLC, BP p.l.c., Diageo plc,</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">GlaxoSmithKline plc, Prudential plc, Reckitt</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benckiser
      plc, Rio Tinto plc, The Royal Bank of</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">Scotland Group plc, Royal Dutch Shell plc,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Standard
      Chartered PLC, Unilever PLC and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vodafone
      Group plc.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">European
      banks with significant domestic and/or</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">global
      operations/influences. These banks</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">include ABN AMRO Holding N.V.,
      Banco</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bilbao
      Vizcaya Argentaria S.A., Banco</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">Santander Central Hispano S.A., Credit Suisse</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group
      and Deutsche Bank AG.</font></td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Although not used for setting remuneration benchmarks, the Remuneration Committee also considers it important to be mindful of trends in the level and
structure of executive reward in the United States banking sector. Market information is monitored for major US institutions of a comparable size and complexity to HSBC Holdings, including: Bank of America Corporation, Citigroup Inc. and JPMorgan
Chase &amp; Co.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The level of awards available to the executive Directors under the annual cash bonus scheme and as Performance Shares is entirely dependent on performance.
Remuneration policy for executive Directors is intended to provide competitive rates of base salary but with the potential for the majority of the value of the remuneration package to be delivered in the form of both short and long-term incentives.
This typically results in base salary comprising around 30 per cent of total direct pay and the remaining 70 per cent split between annual bonus and the expected value of Performance Share awards.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Each component of executive Directors&#146; remuneration is explained in detail below as it</FONT></P>
</div><br clear="all">
<P align="left">&nbsp; </P>
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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">applies to 2006 and, as far as possible, for subsequent years. Any changes in policy for subsequent years will be described in future reports on Directors&#146; remuneration.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Salary</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Committee reviews salary levels for executive Directors each year in the same context as other employees. With reference to market practice and taking account of the international
nature of the Group, the Committee benchmarks the salary of each Director and member of Senior Management against those of comparable executives in large, diverse companies.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Base salaries with effect from March 2006 will be:</FONT></P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      John Bond</FONT></TD>
    <TD width=2% align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;</FONT></B>
    </TD>
      <TD width=15% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">1,400,000</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      J Flint</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">575,000</FONT></B></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M
      F Geoghegan</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1,000,000</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      K Green</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1,250,000</FONT></B></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
      W Jebson</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">550,000</FONT></B></TD>
  </TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To assist with a smooth transition to the revised organisation structure announced in November 2005 and with the aim of having only one salary adjustment per
year, the salary increases for S K Green and M F Geoghegan incorporate adjustments for their new appointments as Group Chairman and Group Chief Executive respectively.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Annual cash bonus</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash bonuses for executive Directors are based on two key factors: individual performance, taking into account, as appropriate, results against plan of the business unit or performance of
the support function for which the individual is responsible; and Group performance, measured by comparing operating profit before tax with plan. The Remuneration Committee has discretion to eliminate extraordinary items when assessing bonuses, if
the main cause did not arise during the current bonus year.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Measurement against these key performance factors may result in discretionary cash bonuses of up to 250 per cent of basic salary for executive
Directors.</FONT></P>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Long-term incentive plan</FONT></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term incentive plans are designed to reward the delivery of sustained financial growth of HSBC. So as to align the interests of the Directors and senior employees more closely with
those of shareholders, the vesting of Performance Share awards is subject to the attainment of predetermined performance criteria.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As part of the comprehensive review of share-based remuneration in 2004-2005, the Remuneration Committee considered whether the continued use of Performance
Shares was appropriate. The Committee considered several other types of arrangement but concluded that Performance Shares remain the most appropriate vehicle for HSBC&#146;s executive Directors and Senior Management.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following approval at the 2005 Annual General Meeting, The HSBC Share Plan has replaced the HSBC Holdings Restricted Share Plan 2000 and the HSBC Holdings
Group Share Option Plan as the plan under which long-term incentive awards are made.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The vesting of Performance Share awards under The HSBC Share Plan is more challenging and highly geared to performance than under the previous arrangements.
Vesting is now based on two independent measures, relative TSR and growth in earnings per share, both of which are considered by the Remuneration Committee to be key measures of the Group&#146;s overall business success.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards under The HSBC Share Plan can be up to a maximum of seven times salary. Whilst having flexibility to make awards at this level in certain exceptional
circumstances, the Remuneration Committee does not intend seven times salary to be the normal level of award. The average face value of the awards proposed for executive Directors is 2.3 times base salary; proposed individual awards are set out in
the table below. The average face value of awards proposed for 2006 for Group Managing Directors and Group General Managers is 1.6 times salary; no award is higher than four times salary.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further details of the performance conditions and vesting arrangements for The HSBC Share Plan are set out below. A summary of the arrangements relevant to
previous awards of Performance Shares under The HSBC Holdings Restricted Share Plan 2000 is also given.</FONT></P>
<P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006 awards</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Remuneration Committee is proposing that the conditional awards shown in the table below should be made to executive Directors in 2006. The table shows the face value of the full
conditional awards and their approximate expected value.</FONT></P>
</div><br clear="all">
<P align="right">&nbsp; </P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">219</FONT></P>
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<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></P>
<p><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146; Remuneration
  Report </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
  <TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Face</FONT></B></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Expected</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">value</FONT></B></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">value</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left><font size="2">&nbsp;</font> </TD>
      <TD align=right> <B></B>
      </TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
      <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=right><font face="Times New Roman, Times, serif"> <B></B>
      </font></TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
        J Flint</FONT></TD>
      <TD width="1%" align=left bgcolor="#EEEEEE">&nbsp;</TD>
      <TD width=10% align=right bgcolor="#EEEEEE"> <B><FONT size=2 face="Times New Roman, Times, serif">1,600</FONT></B></TD>
      <TD width="2%" align=left bgcolor="#EEEEEE"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD width="1%" align=left bgcolor="#EEEEEE"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD width=10% align=right bgcolor="#EEEEEE"> <B><FONT size=2 face="Times New Roman, Times, serif">704</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M
        F Geoghegan</FONT></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></B></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">880</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
        K Green</FONT></TD>
      <TD align=left bgcolor="#EEEEEE">&nbsp;</TD>
      <TD align=right bgcolor="#EEEEEE"> <B><FONT size=2 face="Times New Roman, Times, serif">2,500</FONT></B></TD>
      <TD align=left bgcolor="#EEEEEE"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=left bgcolor="#EEEEEE"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=right bgcolor="#EEEEEE"> <B><FONT size=2 face="Times New Roman, Times, serif">1,100</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD colspan="2" align=left><hr size="1" noshade></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD colspan="2" align=left><hr size="1" noshade></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">6,100</FONT></B></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2,684</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD colspan="2" align=left><hr size="2" noshade></TD>
      <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD colspan="2" align=left><hr size="2" noshade></TD>
    </TR>
  </TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The higher face value of these awards reflects the significantly more challenging vesting schedule of The HSBC Share Plan where maximum value will only be
released to the individual if Group performance is at a very high level.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Trustee to the Plan will be provided with funds to acquire HSBC Holdings ordinary shares at an appropriate time after the announcement of the annual
results.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir John Bond and A W Jebson, who are to retire at the conclusion of the forthcoming Annual General Meeting, will not receive long-term incentive awards in
2006.</FONT></P>
  <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Performance
  conditions</FONT></B>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards of
    Performance Shares under The HSBC Share Plan are divided into two equal parts
    subject to separate performance conditions measured over a three-year performance
    period (&#145;the performance period&#146;):</FONT></P>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr align="left" valign="top">
      <td width="3%">&#8226;</td>
      <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the Total
        Shareholder Return award (&#145;TSR</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">award&#146;):
        one half of the award of Performance</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">Shares will be subject to a relative
        TSR</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">measure.
        TSR is defined as the growth in share</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">value and declared dividend income,
        measured</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
        sterling, during the relevant period. In</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">calculating TSR, dividend income
        is assumed to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">be
        reinvested in the underlying shares. As the</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">comparator group includes companies
        listed on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">overseas
        markets, a common currency is used to</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">ensure that TSR is measured on
        a consistent</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">basis;
        and</font></td>
    </tr>
    <tr align="left" valign="top">
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr align="left" valign="top">
      <td>&#8226;</td>
      <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the earnings
        per ordinary share award (&#145;EPS</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">award&#146;):
        the other half of the Performance Share</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">award will be based upon
        the absolute growth in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">EPS
        achieved by HSBC Holdings. For this</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">purpose, EPS means the profit
        attributable to the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">shareholders
        (expressed in US dollars), divided</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">by the weighted average number
        of ordinary</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">shares
        in issue and held outside the Group</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">during the year in question.</font></td>
    </tr>
  </table>
  <P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The TSR award is based on HSBC&#146;s ranking against a comparator group of 28 major banks. The comparator group will generally comprise the largest banks in
the world measured in terms of market capitalisation, having regard to the geographic</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">spread and the nature of the activities of each bank. The Remuneration Committee will use these criteria in selecting any replacements to the comparator group that may be necessary during
the performance period, for example because a bank ceases to exist or to be quoted or if its relevance to HSBC as a comparator significantly diminishes.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The TSR comparator group at 6 March 2006 comprises ABN AMRO Holding N.V., Banco Bilbao Vizcaya Argentaria S.A, Banco Santander Central Hispano S.A., Bank of
America Corporation, The Bank of New York Company, Inc., Barclays PLC, BNP PARIBAS S.A., Citigroup Inc., Cr&eacute;dit Agricole S.A., Credit Suisse Group, Deutsche Bank AG, HBOS plc, JPMorgan Chase &amp; Co., Lloyds TSB Group plc, Mitsubishi Tokyo
Financial Group, Inc., Mizuho Financial Group, Inc., Morgan Stanley, National Australia Bank Limited, Royal Bank of Canada, The Royal Bank of Scotland Group plc, Soci&eacute;t&eacute; G&eacute;n&eacute;rale, Standard Chartered PLC, UBS AG,
UniCredito Italiano S.p.A., US Bancorp, Wachovia Corporation, Wells Fargo &amp; Company and Westpac Banking Corporation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The extent to which the TSR award will vest will be determined on a sliding scale based on HSBC Holdings&#146; relative TSR ranking against the comparator
group. The opening calculation of the share price component within HSBC Holdings&#146; TSR will be the average market price over the 20 trading days commencing on the day when the annual results are announced, which in 2006 is 6 March. The starting
point will be, therefore, the average over the period 6 March to 31 March 2006 inclusive. The end point will be the average market price over the 20 trading days commencing on the day on which the annual results are announced three years later. TSR
for comparator group constituents will be calculated over the same two periods.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For TSR performance in line with the bank ranked 14th, only 30 per cent of the conditional TSR award will vest; if HSBC&#146;s performance is in line with or
above the bank ranked 7th in the ranked list all of the TSR award shares will vest.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vesting between the 14th and 7th ranked banks will be based on HSBC&#146;s position against the ranked list. In simple terms, the percentage vesting will
start at 30 per cent and will rise in 10 per cent increments for each position that HSBC achieves higher than the 14th bank in the ranked list until full vesting is achieved for TSR performance equal to or greater than the 7th bank in the ranked
list. Where HSBC&#146;s performance falls between these incremental steps, account will be taken of HSBC&#146;s TSR performance</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
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<div style="float: left; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">relative to the banks immediately above and below it.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For example, if HSBC&#146;s TSR falls half way between the bank ranked 12th (where, a release of 50 per cent of the TSR award would occur) and the bank
ranked 13th (where a release of 40 per cent of the TSR award would occur), then the actual proportion of the TSR award released would be 45 per cent, i.e. half way between 40 per cent and 50 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For the EPS award, the base measure shall be EPS for the financial year preceding that in which the award is made (&#145;the base year&#146;). EPS will then
be compared with the base year over three consecutive financial years commencing with the year in which the award is made. Incremental EPS shall be calculated by expressing as a percentage of the EPS of the base year the difference each year of the
three-year performance period between the EPS of that year and the EPS of the base year (with a negative percentage for any year in which the EPS is less than the EPS of the base year). These percentages will then be aggregated to arrive at the
total incremental EPS for the performance period. In the event that the published EPS for the base year is restated during the performance period to adjust for changes in accounting standards, that restated EPS will be used for the purposes of the
EPS performance condition.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The percentage of the conditional EPS award vesting will depend upon the absolute growth in EPS achieved over the three years. 30 per cent of the EPS award
will vest if the incremental EPS over the performance period is 24 per cent or more.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The percentage of shares vesting will rise on a straight line proportionate basis to 100 per cent if HSBC&#146;s incremental EPS over the performance period
is 52 per cent or more.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No element of the TSR award will vest if over the three-year performance period HSBC&#146;s TSR is below that of the bank ranked 14th in the comparator group
list and no element of the EPS award will vest if HSBC&#146;s incremental EPS over the performance period is less than 24 per cent.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To the extent that the performance conditions have not been met at the third anniversary, the shares awarded will be forfeited.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition, awards will not vest unless the Remuneration Committee is satisfied that HSBC Holdings&#146; financial performance has shown a sustained
improvement in the period since the award date.</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In determining whether HSBC has achieved a sustained improvement in performance the Remuneration Committee will take account of all relevant factors but in
particular the historical comparison against the comparator group in the following areas:</FONT></P>
  <TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
    <TR align="left" valign="top">
      <TD width="3%"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT>
      </TD>
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">revenue
        growth;</FONT></TD>
    </TR>
    <TR align="left" valign="top">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
    </TR>
    <TR align="left" valign="top">
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT>        </TD>
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">revenue
        mix;</FONT></TD>
    </TR>
    <TR align="left" valign="top">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
    </TR>
    <TR align="left" valign="top">
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.</FONT>        </TD>
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost
        efficiency;</FONT></TD>
    </TR>
    <TR align="left" valign="top">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
    </TR>
    <TR align="left" valign="top">
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.</FONT></TD>
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
        performance as measured by risk-adjusted revenues; and</FONT></TD>
    </TR>
    <TR align="left" valign="top">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
    </TR>
    <TR align="left" valign="top">
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.</FONT>        </TD>
      <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cash
        return on cash invested, dividend performance and total shareholder return.</FONT></TD>
    </TR>
  </TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following the three-year performance period, the conditions applying to awards of Performance Shares under The HSBC Share Plan will be tested and vesting
will take place shortly afterwards. Shares released will include additional shares equivalent to the value of the dividends payable on the vested shares over the performance period, where permitted by the laws of the relevant
jurisdiction.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If events occur which cause the Remuneration Committee to consider that a performance condition has become unfair or impractical, the right is reserved to
the Remuneration Committee, if it considers it appropriate to do so, to amend, relax or waive the condition.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards will vest in full immediately in cases of death. In the event of redundancy, retirement on grounds of injury or ill health, early retirement by
agreement, normal retirement and where a participant ceases to be employed by HSBC, awards will normally vest at the end of the vesting period on a time-apportioned basis to the extent that the performance conditions have been satisfied. In the
event of a change of control, awards will normally vest immediately and on a time-apportioned basis to the extent that the TSR performance condition has been satisfied. Awards will normally be forfeited if the participant is dismissed or resigns
from HSBC. In all these circumstances the Committee retains discretion to ensure fair and reasonable treatment.</FONT></P>
<P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Arrangements from 2000-2004</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For awards made from 2000 to 2004, vesting was linked to the attainment of predetermined TSR targets over a three-year period from date of award as set out below.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The TSR performance condition for awards of Performance Shares remained the same from 1999 to 2003. For awards made in 2004, changes were made</FONT></P>
</div><br clear="all">
<P align="right">&nbsp; </P>
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<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>



<P> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146;
  Remuneration Report </FONT></B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">to the peer group and re-testing provisions were eliminated such that awards will lapse if the performance condition is not satisfied after the initial three-year performance
period.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A benchmark for HSBC Holdings&#146; TSR, weighted by market capitalisation, was established which takes account of the TSR performance of:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%" align="left" valign=top> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT><font size="2">&nbsp;
      &nbsp; &nbsp; </font></div></TD>
    <TD> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">a
        peer group of nine banks weighted by market capitalisation which were
        considered most relevant to HSBC in terms of size and international scope.
        For performance periods up to and including the one beginning in 2003,
        this group comprised ABN AMRO Holding N.V., The Bank of East Asia, Limited,
        Citigroup Inc., Deutsche Bank AG, JPMorgan Chase &amp; Co., Lloyds TSB
        Group plc, Mitsubishi Tokyo Financial Group Inc., Oversea-Chinese Banking
        Corporation Limited and Standard Chartered PLC. To be more relevant to
        HSBC in terms of size and international scope, this peer group was amended
        for conditional awards made in 2004 by the replacement of Lloyds TSB Group
        plc, Oversea-Chinese Banking Corporation Ltd., Mitsubishi Tokyo Financial
        Group Inc. and The Bank of East Asia, Limited with Bank of America Corporation,
        The Royal Bank of Scotland Group plc, Banco Santander Central Hispano
        S.A. and UBS AG;</FONT></div></TD>
  </TR>
  <TR>
    <TD align="left" valign="top"><div align="left"><font size="2"></font></div></TD>
    <TD><div align="left"><font size="2"></font></div></TD>
  </TR>
  <TR>
    <TD align="left" valign=top> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT><font size="2">&nbsp;
        &nbsp; &nbsp; </font></div></TD>
    <TD> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        five largest banks from each of the US, the UK, continental Europe and
        the Far East, other than any within paragraph 1 above, weighted by market
        capitalisation; and</FONT></div></TD>
  </TR>
  <TR>
    <TD align="left" valign="top"><div align="left"><font size="2"></font></div></TD>
    <TD><div align="left"><font size="2"></font></div></TD>
  </TR>
  <TR>
    <TD align="left" valign=top> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.</FONT><font size="2">&nbsp;
        &nbsp; &nbsp; </font></div></TD>
    <TD> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        banking sector of the Morgan Stanley Capital International World Index,
        excluding any within paragraph 1 or paragraph 2 above, weighted by market
        capitalisation.</FONT></div></TD>
  </TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">By combining the weighted average TSR for each of the above three groups and weighting that average so that 50 per cent is applied to paragraph 1, 25 per
cent is applied to paragraph 2 and 25 per cent is applied to paragraph 3, a single TSR benchmark for market comparison was determined.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The extent to which each award will vest will be determined by reference to HSBC Holdings&#146; TSR measured against the TSR benchmark. For each award the
opening calculation of the share price component within HSBC Holdings&#146; TSR was the average market price over the 20 trading days commencing on the day when the annual results were announced. TSR for the benchmark constituents was based on their
published share prices on the 20th trading day after the annual results were announced. If HSBC Holdings&#146; TSR over the</FONT></P>
</div>
<div style="float: left; width: 4%">
</div>
<div style="float: right; width: 48%">
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
    period exceeds the benchmark TSR, awards with a value, at the date of grant,
    of up to 100 per cent of the individual&#146;s earnings (base salary and bonus
    in respect of the previous performance year), will vest. For higher value
    awards, the greater of 50 per cent of the award or the number of shares equating
    at the date of grant to 100 per cent of the individual&#146;s earnings, will
    vest at this level of performance. If HSBC Holdings&#146; TSR over the performance
    period places it within the upper quartile of the ranked list of the banks
    comprising the benchmark, these higher value awards will vest in full. For
    performance between the median and the upper quartile, vesting will be on
    a straight-line basis.</FONT></P>
  <P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Performance Shares awarded in 2000 passed their three-year TSR performance condition in March 2003 and vested on the fifth anniversary of the award, 10
March 2005. The Performance Shares awarded in 2001 and 2002 have passed their three-year TSR performance conditions and will vest on the fifth anniversaries of the awards, 13 March 2006 and 8 March 2007 respectively.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For awards made in 2003 the initial performance period is three years. If the upper quartile performance target is achieved at the third anniversary of the
date of award then an additional award equal to 20 per cent of the initial Performance Share award will be made and will vest at the same time as the original award to which it relates. However, regardless of whether the upper quartile is achieved,
full vesting and transfer of the shares will not generally occur until the fifth anniversary of the date of grant. For awards made in 2004 the conditions are the same but, if the performance test is not passed at the third anniversary, the shares
will be forfeited.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition to these performance conditions, none of the outstanding awards will vest unless the Remuneration Committee is satisfied that, during the
performance period, HSBC has achieved sustained growth. The Remuneration Committee retains discretion to recommend early release of shares awarded in certain circumstances, for example, retirement, redundancy or ill health.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Where events occur which cause the Remuneration Committee to consider that the performance conditions have become unfair or impractical the right is reserved
for the Committee to amend or substitute the performance conditions. The Committee believes that the continued use of a single TSR measure in the awards made in 2003 and 2004 may give rise to unfairness given that EPS for 2002 (which was calculated
on a UK GAAP basis,</FONT></P>
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<P>&nbsp;</P>
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<div style="float: left; width: 48%">
  <P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">excluding goodwill amortisation) was US&#36;0.76 and for 2005 (now prepared under IFRSs) it was US&#36;1.36, representing an increase of 79 per cent. Dividends per share have grown by 38
per cent over the same period and the share price has risen by 51.3 per cent from 31 March 2003 to 28 February 2006. The cash return on cash invested has improved from 12.9 per cent in 2002 to 15.7 per cent in 2005. The Committee intends to
undertake a review of the appropriateness of the single TSR performance measure for Performance Share awards made in 2003 and 2004. As part of this review the Committee will ensure appropriate consultation is undertaken with shareholders and their
representatives.</FONT></P>
<P>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total Shareholder Return</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The graphs below show HSBC Holdings&#146; TSR performance against the benchmark TSR for Performance Shares awarded in March 2002 (graph 1), the Financial Times-Stock Exchange
(&#145;FTSE&#146;) 100 Index (graph 2), the Morgan Stanley Capital International (&#145;MSCI&#146;) World Index (graph 3) and MSCI Financials Index (graph 4) over the three-year period to March 2005. These measures have been chosen as they are the
main published indices against which HSBC monitors its performance.</FONT></P>
<P align="center">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Graph 1: HSBC TSR and Benchmark TSR</FONT></B></P>
<IMG src="b822899-18x9x1.jpg" width="100%" border=0> <BR>
<P align="center">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Graph 2: HSBC TSR and FTSE 100 Index</FONT></B></P>
<IMG src="b822899-18x9x2.jpg" width="100%" border=0> <BR>
</div>
<div style="float: left; width: 4%">
</div>
<div style="float: right; width: 48%">

<P align="center">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Graph 3: HSBC TSR and MSCI World Index</FONT></B></P>
<IMG src="b822899-18x9x3.jpg" width="100%" border=0> <BR>
<P align="center">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Graph 4: HSBC TSR and MSCI Financials Index</FONT></B></P>
<IMG src="b822899-18x9x4.jpg" width="100%" border=0> <BR>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pursuant to the Directors&#146; Remuneration Report Regulations 2002, graph 5 below shows HSBC Holdings&#146; TSR performance against the FTSE 100 Index, for
the five-year period ended 31 December 2005. The FTSE 100 has been chosen as this is a recognised broad equity market index of which HSBC Holdings is a member.</FONT></P>
<P align="center">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Graph 5: HSBC TSR and FTSE 100 Index</FONT></B></P>
<p><IMG src="b822899-18x9x5.jpg" width="100%" border=0> <BR>
    <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Source: Datastream</FONT></I></p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Pensions</FONT><BR>
</p>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The pension entitlements earned by the executive Directors during the year are set out on pages 228 and 229.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Service contracts and terms of appointment</FONT></B></P>
  <P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    policy is to employ executive Directors on one-year rolling contracts although,
    on recruitment, longer initial terms may be approved by the Remuneration Committee.
    The Remuneration Committee will, consistent with the best interests of</FONT></P>
  <P>&nbsp;</P>
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<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>
<P> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146;
  Remuneration Report </FONT></B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">(continued)</FONT></P>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the Group, seek to minimise termination payments. </FONT></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No current executive
    Director has a service contract with HSBC Holdings or any of its subsidiaries
    with a notice period in excess of one year or with provisions for predetermined
    compensation on termination which exceeds one year&#146;s salary and benefits in kind. There are no provisions for compensation upon early termination of any current executive Directors&#146; service
  contracts.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the case of W F Aldinger, who retired as a Director on 29 April 2005, there was an exception to the general policy on Directors&#146; service contracts.
Details of the arrangements relating to W F Aldinger, which were also set out in the 2004 Directors&#146; Remuneration Report, are set out below. W F Aldinger entered into a new employment agreement with HSBC Finance on 14 November 2002 (&#145;the
2002 employment agreement&#146;) for a term of three years, such term to commence on the effective date of the acquisition of HSBC Finance by HSBC. The three-year term, and certain other terms, of the 2002 employment agreement represented an
exception to HSBC&#146;s normal policy for executive Directors&#146; service contracts, but the details of the terms, background and reasons for this were set out in the Discloseable Transaction Circular relating to the acquisition of HSBC Finance
sent to shareholders on 26 February 2003 in advance of the Extraordinary General Meeting to approve the acquisition. The terms of the 2002 employment agreement were consistent with practice in the United States. The effective date of the
acquisition, and commencement date of the 2002 employment agreement, was 28 March 2003. In connection with W F Aldinger&#146;s retirement on 29 April 2005, the terms of the 2002 employment agreement, were amended by an agreement (&#145;amendment
agreement&#146;) entered into between HSBC Finance and Mr Aldinger, as referred to below. The Remuneration Committee reviewed the financial and other terms which were reflected in the amendment agreement. Having reviewed the relevant factors and
circumstances, the Committee considered that these financial and other terms were appropriate and in order and in the best interests of the Group.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
    the term of the 2002 employment agreement Mr Aldinger was entitled to be paid
    an annual base salary equal to his annual base salary as at the date of the
    merger agreement between HSBC Finance and HSBC (US&#36;1 million) and an annual
    bonus in an amount at least equal to the annual average of Mr Aldinger&#146;s
    bonuses earned with respect to the three-year period ended 2001, pro rated
    for any partial year (US&#36;4 million). Within 30 days of the effective date
    of the acquisition,</FONT></P>
  <P>&nbsp;</P>
</div>
<div style="float: left; width: 4%">
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mr Aldinger received a one-time special retention grant of HSBC Holdings ordinary shares under the HSBC Holdings Restricted Share Plan 2000 with a value equal to US&#36;10 million on
terms that these Restricted Shares would vest in three equal instalments on each of the first three anniversaries of the effective date, as set out on page 231. After each of the first and second anniversaries of the effective date, subject to the
approval of the Trustee of the HSBC Holdings Restricted Share Plan 2000, Mr Aldinger was entitled to receive an additional grant of HSBC Holdings ordinary shares with a value equal to at least US&#36;5.5 million. The purpose of these arrangements
was to retain the services of Mr Aldinger through the initial integration of HSBC Finance. HSBC considered it essential that the experience, knowledge and skills of Mr Aldinger be retained for the benefit of HSBC shareholders.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under the 2002 employment agreement, if Mr Aldinger&#146;s employment was terminated by him during its term for &#145;good reason&#146;, or by HSBC Finance
for reasons other than &#145;cause&#146; or disability, he was entitled to: a </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">pro rata </FONT></I><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">target
annual bonus for the financial year of the date of termination; a payment equal to his annual base salary, plus the average of his annual bonuses with respect to the three-year period ended 2001, times the number of full and partial months from the
date of termination until the third anniversary of the effective date, divided by 12; the immediate vesting and exercisability of each stock option, restricted stock award and other equity-based award or performance award (or cash equivalent) that
is outstanding as at the date of termination and treatment as retirement eligible for purposes of exercising any such award; for the remainder of his life and that of his current spouse, continued medical and dental benefits at HSBC Finance&#146;s
cost; and his retirement benefits (as set out on page 228) in a lump sum.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following discussion with Mr Aldinger, it was agreed that Mr Aldinger would retire as Chairman and Chief Executive of HSBC Finance and HSBC North America
Holdings Inc on 29 April 2005 and would retire as a director of HSBC Holdings on the same date and resign from his directorships and other appointments with Group companies. As indicated above, the original purpose of the 2002 employment agreement
was to retain the services of Mr Aldinger through the initial integration of HSBC Finance with the Group&#146;s other North American businesses. The discussions with Mr Aldinger about his retirement before the expiry of the three-year term took into
account that the integration process had been completed successfully and faster than expected.</FONT></P>
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<div style="float: left; width: 48%">

<P> &nbsp;&nbsp;&nbsp;&nbsp;<font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Under
  the amendment agreement, Mr Aldinger was entitled to receive, on termination
  of the 2002 employment agreement on 29 April 2005, the same terms and benefits
  (summarised above) as if his employment had been terminated by him for &#145;good
  reason&#146; or by HSBC Finance for reasons other than &#145;cause&#146; or
  disability, except that he would not be entitled to receive the 2005 restricted
  share award (or cash equivalent) with a value to at least US&#36;5.5 million
  that he would have been entitled to receive on or before 28 April 2005. Mr Aldinger
  did, however, receive a payment of US&#36;4.6 million in lieu of salary and
  bonus in respect of the remainder of the three-year period. The amendment agreement
  also provided that the &#145;non-competition&#146; provision in the 2002 employment
  agreement for a period of one year after termination of his employment, and
  certain other restrictions, will continue to apply. Under this provision he
  may not become associated with certain competitive entities that are actively
  engaged in the consumer lending business (including mortgage and credit card
  lending).</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Sir
  John Bond is employed on a rolling contract dated 14 July 1994 which requires
  12 months&#146; notice to be given by either party.</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">D
  G Eldon, who retired as a Director on 27 May 2005, was employed on a rolling
  contract dated 1 January 1968 which required three months&#146; notice to be
  given by either party.</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">D
  J Flint is employed on a rolling contract dated 29 September 1995 which requires
  12 months&#146; notice to be given by the Company and nine months&#146; notice
  to be given by Mr Flint.</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">M
  F Geoghegan, who is to stand for re-election at the forthcoming Annual General
  Meeting, is employed on a rolling contract dated 25 May 2004 which requires
  12 months&#146; notice to be given by either party.</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">S
  K Green, who is to stand for re-election at the forthcoming Annual General Meeting,
  is employed on a rolling contract dated 9 March 1998 which requires 12 months&#146;
  notice to be given by either party.</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">A
  W Jebson is employed on a rolling contract dated 14 January 2000 which requires
  12 months&#146; notice to be given by either party.</FONT></font></P>
  <P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Members
    of Senior Management are employed on service contracts which generally provide
    for a term of service expiring at the end of a period of up to two years,
    or the individual&#146;s sixtieth birthday, whichever is earlier.</FONT></font></P>
  <P>&nbsp;</P>
</div>
<div style="float: left; width:4%">
</div>
<div style="float: right; width: 48%">

<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-executive
  Directors are appointed for fixed terms not exceeding three years, subject to
  their re-election by shareholders at subsequent Annual General Meetings. Non-executive
  Directors have no service contract and are not eligible to participate in HSBC&#146;s
  share plans. Non-executive Directors&#146; terms of appointment will expire
  as follows: in 2006, Sir John Kemp-Welch; in 2007, Lord Butler, R K F Ch&#146;ien,
  Baroness Dunn, R A Fairhead, W K L Fung, S Hintze, Sir Brian Moffat, Sir Mark
  Moody-Stuart and H Sohmen; in 2008, J D Coombe and J W J Hughes-Hallett; and
  in 2009, S W Newton, S M Robertson and Sir Brian Williamson.</FONT></font></P>
<font size="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other
directorships</FONT></B><BR>
</font>
<P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Executive Directors,
  if so authorised by either the Nomination Committee or the Board, may accept
  appointments as non-executive Directors of suitable companies which are not
  part of HSBC. Approval will not be given for executive Directors to accept a
  non-executive directorship of more than one FTSE 100 company. When considering
  a non-executive appointment, the Nomination Committee or Board will take into
  account the expected time commitment of such appointment. The time commitment
  for executive Directors&#146; external appointments will be reviewed as part
  of the annual Board review. Any remuneration receivable in respect of an external
  appointment is normally paid to the HSBC company by which the executive Director
  is employed, unless otherwise approved by the Remuneration Committee.</FONT></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Sir
  John Bond retains his fees as a non-executive Director of the Ford Motor Company,
  which are provided partly in the form of restricted shares, which become unrestricted
  over a period of five years. During 2005 the fees received were US&#36;80,000
  in cash and US&#36;120,000 deferred into Ford common stock units. In addition,
  Ford provides US&#36;200,000 of life assurance and US&#36;500,000 of accidental
  death or dismemberment insurance. The life assurance can be continued after
  retirement from the Board or Sir John Bond could elect to have it reduced to
  US&#36;100,000 and receive US&#36;15,000 a year for life. The accidental death
  or dismemberment insurance ends upon retirement from the Board.</FONT></font></P>
<P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">W
  F Aldinger retained his fees as a non-executive Director of Illinois Tool Works,
  Inc. and as a non-executive Director of AT&amp;T Corp. During the period to
  his retirement as a Director of HSBC Holdings on 29 April 2005, the fee received
  from Illinois Tool Works, Inc. was US&#36;53,000 in the form of deferred stock
  and the fee received from AT&amp;T Corp. was US&#36;52,803. In addition, AT&amp;T
  Corp.</FONT></font></P>
</div><br clear="all">
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">225</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p226"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>
<P> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146;
  Remuneration Report </FONT></B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp; </P>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">provide travel
  accident insurance when on AT&amp;T Corp. company business and US&#36;100,000
  of life assurance.</FONT></P>
<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Employees&#146; emoluments</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Set out below is information in respect of the five individuals who are not Directors of HSBC Holdings whose emoluments (excluding commissions or bonuses related to the revenue or profits
generated by employees individually or collectively with others engaged in similar activities) were the highest in HSBC for the year ended 31 December 2005.</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basic
      salaries, allowances and benefits in &nbsp;kind</FONT></TD>
    <TD width="15%" align=right bgcolor="#eeeeee"><B><FONT size=2 face="Times New Roman, Times, serif">2,248</FONT></B>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pension
      contributions</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">698</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bonuses
      paid or receivable</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">32,272</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inducements
      to join paid or receivable</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Compensation
      for loss of office:</FONT></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      contractual</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      other</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">35,218</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      (US&#36;000)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">63,980</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
  </TR>
</TABLE>
</div>
<div style="float: right; width: 48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Their emoluments
  are within the following bands:</FONT></p>
  <TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
    <TR valign="bottom">
      <TD rowspan="2" align=left>&nbsp;</TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Number
        of</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Employees</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=right bgcolor="#eeeeee"> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,900,001</FONT>
          <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
          &#163;5,000,000</FONT></div></TD>
      <TD width="15%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=right> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,100,001</FONT>
          <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
          &#163;5,200,000</FONT></div></TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=right bgcolor="#eeeeee"> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,800,001</FONT>
          <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
          &#163;6,900,000</FONT></div></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=right> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,000,001</FONT>
          <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
          &#163;8,100,000</FONT></div></TD>
      <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B></TD>
    </TR>
    <TR valign="bottom">
      <TD align=right bgcolor="#eeeeee"> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,200,001</FONT>
          <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
          &#163;10,300,000</FONT></div></TD>
      <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B></TD>
    </TR>
  </TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
      basic salaries of Group Managing Directors and Group General Managers are
      within the following bands:</FONT> </TD>
    </TR>
  <TR valign="bottom">
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></TD>
    <TD width=20% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
      of</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Group
      Managing</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Directors
      and Group</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">General
      Managers</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150,001</FONT>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; &#163;250,000</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250,001</FONT>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; &#163;350,000</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350,001</FONT>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; &#163;450,000</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">450,001</FONT>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; &#163;550,000</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
  </TR>
</TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The aggregate remuneration of Directors and Senior Management for the year ended 31 December 2005 was US&#36;124,431,000.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The aggregate amount set aside or accrued to provide pension, retirement or similar benefits for Directors and Senior Management for the year ended 31
December 2005 was US&#36;9,869,000.</FONT></P>
<P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
  31 December 2005, executive Directors and Senior Management held, in aggregate,
  options to subscribe for 6,169,982 HSBC Holdings ordinary shares under the HSBC
  Holdings Executive Share Option Scheme, HSBC Holdings Group Share Option Plan
  and HSBC Holdings savings-related share option plans. These options are exercisable
  between 2006 and 2014 at prices ranging from &#163;3.3334 to &#163;9.1350.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">226</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p227"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Directors&#146; emoluments</FONT></B></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The emoluments of the Directors of HSBC Holdings for 2005 were as follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Salary
      and</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif"><b></b></font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif"><SUP></SUP></font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">other</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Benefits</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Total</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <font size="2" face="Times New Roman, Times, serif"><B>Fees</B></font></TD>
    <TD align=left><font size="2"><SUP><font face="Times New Roman, Times, serif">1</font></SUP></font></TD>
    <TD align=right><font size="2"><b><font face="Times New Roman, Times, serif">remuneration</font></b></font></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <font size="2"><B>in
      kind</B>&nbsp; </font></font></TD>
    <TD align=left><font size="2"><SUP><FONT face="Times New Roman, Times, serif">2</FONT></SUP></font>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Bonuses</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <B><FONT size=2>&#163;</FONT></B><B><FONT size=2>000</FONT></B></font></TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <B></B> </font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    <TD align=right>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;000</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Executive
      Directors</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">W
      F Aldinger</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;
      </font></TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD width=8% align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif"> <font size="2"><B>2,609</B>&nbsp;
      </font></font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><SUP><FONT size=2 face="Times New Roman, Times, serif">4</FONT></SUP>
    </TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">34</FONT></B></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD width=8% align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif"> <font size="2"><B>716</B>&nbsp;
      </font></font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><SUP><FONT size=2 face="Times New Roman, Times, serif">5</FONT></SUP>
    </TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">3,359</FONT></B></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,822</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      John Bond</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1,286</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">3,191</FONT></B>
    </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif"><SUP>6</SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">4,479</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,649</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      G Eldon</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">286</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">180</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif"> <font size="2"><B>144</B>&nbsp;
      </font></font></TD>
    <TD align=left bgcolor="#eeeeee"><SUP><FONT size=2 face="Times New Roman, Times, serif">6</FONT></SUP>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">610</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,317</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      J Flint</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">679</FONT></B>
    </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif"><SUP>8</SUP>&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">11</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <font size="2"><B>500</B>&nbsp;
      </font></font></TD>
    <TD align=left><B><SUP><FONT size=2 face="Times New Roman, Times, serif">6</FONT></SUP></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1,190</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,166</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M
      F Geoghegan</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">658</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">13</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"><SUP>9</SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">671</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">546</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      K Green</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">778</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <font size="2"><B>1,750</B>&nbsp;
      </font></font></TD>
    <TD align=left><SUP><FONT size=2 face="Times New Roman, Times, serif">6</FONT></SUP>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2,529</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,757</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AW
      Jebson</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">545</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">2</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif"> <font size="2"><B>1,000</B>&nbsp;
      </font></font></TD>
    <TD align=left bgcolor="#eeeeee"><SUP><FONT size=2 face="Times New Roman, Times, serif">6</FONT></SUP>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">1,547</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,026</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-executive
      Directors</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lord
      Butler</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">90</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">90</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">R
      K F Ch&#146;ien</FONT></TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <font size="2"><B>187</B>&nbsp;
      </font></font></TD>
    <TD align=left><SUP><FONT size=2 face="Times New Roman, Times, serif">10</FONT></SUP></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">187</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">186</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">J
      D Coombe</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">11</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">53</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">53</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Baroness
      Dunn</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">70</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">70</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">R
      A Fairhead</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">70</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">70</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">W
      K L Fung</FONT></TD>
    <TD align=right><font face="Times New Roman, Times, serif"> <font size="2"><B>117</B>&nbsp;
      </font></font></TD>
    <TD align=left><SUP><FONT size=2 face="Times New Roman, Times, serif">12</FONT></SUP></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">117</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      Hintze</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">85</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">85</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">J
      W J Hughes-Hallett</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">11</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">46</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">46</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      John Kemp-Welch</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">85</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">85</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      Brian Moffat</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">115</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">115</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      Mark Moody-Stuart</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">85</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">85</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      W Newton</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">55</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">55</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">H
      Sohmen</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="Times New Roman, Times, serif">&nbsp; &nbsp; &nbsp;<B>16</B>&nbsp;
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><SUP><FONT size=2 face="Times New Roman, Times, serif">13</FONT></SUP></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">16</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">C
      S Taylor</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">14</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">12</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">12</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      Brian Williamson</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">70</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">70</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1,156</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">6,841</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">243</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">7,301</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">15,541</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,226</FONT><font size="2"><SUP></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">15</FONT></SUP></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      (US&#36;000)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">2,100</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">12,428</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">441</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">13,264</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">28,233</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,722</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left></TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left></TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left></TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left></TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left></TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="top">
    <TD width="3%" align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">With
      effect from 1 January 2005, Sir John Bond, D J Flint, M F Geoghegan, S K
      Green and A W Jebson waived their rights to receive a Director&#146;s fee
      from HSBC Holdings (2005: &#163;55,000, 2004: &#163;55,000). W F Aldinger
      (2005: &#163;18,333) and D G Eldon (2005: &#163;22,917) had previously elected
      to waive any fees payable by HSBC Holdings (2004: &#163;55,000).</FONT></I>
    </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Benefits
      in kind for executive Directors include provision of company car, medical
      insurance, other insurance cover and travel assistance.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retired
      as a Director on 29 April 2005.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      a payment of US&#36;4.6 million in lieu of salary and bonus under the terms
      of the amendment agreement.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Determined
      under the terms of the amendment agreement.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">These
      discretionary bonuses are in respect of 2005 and were paid in 2006.</FONT></I>
    </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retired
      as a Director on 27 May 2005. The emoluments of D G Eldon include a fee
      from The Hongkong and Shanghai Banking Corporation and housing and other
      expatriate benefits in kind that are normal within the location in which
      he is employed.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      an executive allowance of &#163;154,269 (2004: &#163;137,100) paid to fund
      personal pension arrangements.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT></TD>
    <TD align="left"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In
      return for the prior waiver of bonus, an employer contribution has been
      made into a pension arrangement for M F Geoghegan equal to the amount of
      &#163;1,818,750 which would otherwise have been paid. The bonus waived in
      respect of 2005 when added to the bonus waived in respect of 2004 (&#163;1,200,000)
      equals 250 per cent of salary earned during 2004 and 2005.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align=left><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">10</font></TD>
    <TD align="left"> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      fees as non-executive Chairman of HSBC Private Equity (Asia) Limited and
      as a non-executive Director of The Hongkong and Shanghai Banking Corporation.</font></i>
    </TD>
  </TR>
  <TR valign="top">
    <TD align="left"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">11</font></TD>
    <TD align="left"><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Appointed
      a Director on 1 March 2005</font></i></TD>
  </TR>
  <TR valign="top">
    <TD align="left"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">12</font></TD>
    <TD align="left"> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      fee as a non-executive Director of The Hongkong and Shanghai Banking Corporation.</font></i>
    </TD>
  </TR>
  <TR valign="top">
    <TD align="left"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">13</font></TD>
    <TD align="left"> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Fees
      as a non-executive Director and member of the Audit Committee of The Hongkong
      and Shanghai Banking Corporation. H Sohmen has elected to waive any fees
      payable to him by HSBC Holdings (2005: &#163;55,000; 2004: &#163;55,000).</font></i>
    </TD>
  </TR>
  <TR valign="top">
    <TD align="left"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">14</font></TD>
    <TD align="left"> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retired
      as a Director on 14 March 2005.</font></i> </TD>
  </TR>
  <TR valign="top">
    <TD align="left"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">15</font></TD>
    <TD align="left"> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      the emoluments of Directors who retired in 2004.</font></i> </TD>
  </TR>
</TABLE>
<P align="right">&nbsp; </P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">227</FONT></P>

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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>
<P> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146;
  Remuneration Report </FONT></B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
  <p><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Pensions</FONT></B>
  </p>
  <p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">There are separate
    schemes for UK-based and overseas-based employees: the UK scheme has a normal
    retirement age of 60; retirement ages for overseas schemes vary in accordance
    with local legislation and practice. Save as stated below no other Director
    participated in any HSBC pension schemes, none of the Directors participating
    in HSBC&#146;s UK &#145;approved&#146; pension schemes is subject to the earnings
    cap introduced by the 1989 Finance Act and only basic salary is pensionable.
    With one exception (see paragraphs below on D J Flint), the current executive
    Directors are members of defined benefit pension schemes, having joined HSBC
    at a time when these were the norm.</FONT></p>
<P>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Before commencement of the 2002 employment agreement on 28 March 2003, W F Aldinger participated in HSBC Finance Corporation&#146;s &#145;qualified&#146; and
&#145;non-qualified&#146; defined benefit pension plans. The annual pension benefit under these arrangements was a function of service and a percentage of final average earnings (which included bonus). The &#145;non-qualified plans&#146; were
enhanced before commencement of the 2002 employment agreement. The benefits under the &#145;qualified&#146; and &#145;non-qualified&#146; defined benefit pension plans were then frozen and became payable in a lump sum on Mr Aldinger&#146;s
retirement on 29 April 2005. No further benefits accrued under these arrangements after 28 March 2003.</FONT></font></P>
<P>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Up to his retirement on 29 April 2005, Mr Aldinger participated in the HSBC North America (U.S.) Tax Reduction Investment Plan (TRIP). Employer contributions
of US&#36;10,500 were made to this plan on behalf of Mr Aldinger in 2005 (2004: US&#36;10,250).</FONT></font></P>
<P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr
    Aldinger also participated in the Supplemental
  TRIP (a &#145;non-qualified&#146; plan), which is an unfunded arrangement under
   which additional employer provision of US&#36;606,423 was made during 2005
   (2004:  US&#36;289,749).</FONT></P>
<P>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The pension arrangements for Sir John Bond, S K Green and A W Jebson to contractual retirement age of 60 are provided under the HSBC Bank (UK) Pension
Scheme. The pensions accrue at a rate of one-thirtieth of pensionable salary for each year of pensionable service in the UK.</FONT></font></P>
  <P> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The
    existing pension arrangements for D J Flint to contractual retirement age
    of 60 are provided</FONT></font></P>
  <P>&nbsp;</P>
</div>
<div style="float: left; width: 4%">
</div>
<div style="float: right; width: 48%">
  <P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">through an
    executive allowance set at 30 per cent of basic salary which is paid to fund
    personal pension arrangements. In addition he participates in the HSBC Holdings
    plc Funded Unapproved Retirement Benefits Scheme on a defined contribution
    basis with an employer contribution during 2005 of &#163;92,500 (2004: &#163;86,013).
    The intention of these arrangements is to provide benefits broadly comparable
    to an accrual rate of one-thirtieth of pensionable salary for each year of
    pensionable service. From 5 April 2006, this Funded Unapproved Retirement
    Benefits Scheme will be closed. So as to ensure that pension arrangements
    for Mr Flint remain broadly comparable to the existing arrangements, the executive
    allowance will increase to 55 per cent of annual basic salary.</FONT></P>
<P>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">The pension arrangements for D G Eldon are provided under the HSBC International Staff Retirement Benefits Scheme with a normal accrual rate of one
twenty-seventh of pensionable salary per year of pensionable service. These arrangements are part of a remuneration package which includes a number of expatriate benefits.</FONT></font></P>
<P>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Since his appointment as an executive Director in 2004, M F Geoghegan has remained a member of the HSBC International Staff Retirement Benefits Scheme whilst
no longer in receipt of expatriate benefits. A full review of Mr Geoghegan&#146;s remuneration identified, in particular, that his pensionable pay of &#163;252,000 was not aligned to his actual 2005 gross salary of &#163;632,500. To bring his
pension arrangements to a level more appropriate both to his actual gross salary and his more than 30 years of service, Mr Geoghegan&#146;s pension provision will be adjusted to reflect his actual gross salary. The transfer value will be placed into
a defined contribution arrangement in Mr Geoghegan&#146;s name with no further funding from HSBC after 31 March 2006. Thereafter, he will receive an annual executive allowance of 50 per cent of annual salary to fund personal pension
arrangements.</FONT></font></P>
<P>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">In addition, Mr Geoghegan participates in the HSBC Asia Holdings Pension Plan, on a defined contribution basis, with an employer contribution in respect of
2005 of &#163;1,818,750 (2004: &#163;1,200,000), arising entirely from a bonus sacrifice. There were no other employer contributions made to this plan.</FONT></font></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">228</FONT></P>

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<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Transfer
      value</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">(less
      personal</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">contributions)</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">at</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">31
      December</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005
      relating</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Increase
      in</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Increase
      of</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">to
      increase</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">accrued</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Transfer</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Transfer</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">transfer
      value</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">in
      accrued</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Accrued</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">Increase
      in</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pension
      during</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">value</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">value</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">of
      accrued</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pensions</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">annual</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">accrued</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005,</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">of
      accrued</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">of
      accrued</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pension
      (less</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">during
      2005,</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pension
      at</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pension</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">excluding</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pension
      at</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">pension
      at</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">personal</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">excluding
      any</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">31
      December</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">during</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">any
      increase</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1
      January</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">31
      December</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">contributions</FONT></B></TD>
    <TD align=left><font size="2"><B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></font>
    </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">increase
      for</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">for
      inflation</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">in
      2005</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">inflation</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD width=10% align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    <TD width=2% align=right><font face="Times New Roman, Times, serif"> <B></B> </font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;000</FONT></B></TD>
    <TD width=2% align=right><font face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD width=10% align=right><font face="Times New Roman, Times, serif"> <B><FONT size=2>&#163;</FONT></B><B><FONT size=2>000</FONT></B></font></TD>
    <TD width=2% align=right><font face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD width=10% align=right><font face="Times New Roman, Times, serif"> <font size="2"><B><FONT size=2>&#163;</FONT></B><B>000</B>&nbsp;
      </font></font></TD>
    <TD width=2% align=left><font size="2"><B><FONT face="Times New Roman, Times, serif"><SUP>1</SUP></FONT></B></font>
    </TD>
    <TD width=10% align=right><font face="Times New Roman, Times, serif"> <font size="2"><B><FONT size=2>&#163;</FONT></B><B>000</B>&nbsp;
      </font></font></TD>
    <TD width=2% align=left><font size="2"><B><FONT face="Times New Roman, Times, serif"><SUP>1</SUP></FONT></B></font>
    </TD>
    <TD width=10% align=right><font face="Times New Roman, Times, serif"> <font size="2"><B><FONT size=2>&#163;</FONT></B><B>000</B>&nbsp;
      </font></font></TD>
    <TD width=2% align=left> <B><font size="2"><B><FONT face="Times New Roman, Times, serif"><SUP>1</SUP></FONT></B></font></B>
    </TD>
    <TD width=10% align=right><font face="Times New Roman, Times, serif"> <font size="2"><B><FONT size=2>&#163;</FONT>000</B>&nbsp;
      </font></font></TD>
    <TD width=2% align=left><font size="2"><B><FONT face="Times New Roman, Times, serif"><SUP>1</SUP></FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font face="Times New Roman, Times, serif"> <FONT size=2>Sir
      John Bond</FONT></font><font size="2" face="Times New Roman, Times, serif"><SUP>2</SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">546</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">34</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">20</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">9,230</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">10,667</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">1,438</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">395</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="Times New Roman, Times, serif"> <FONT size=2>D
      G Eldon</FONT></font><font size="2" face="Times New Roman, Times, serif"><SUP>3,4</SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">290</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">12</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">10</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">5,275</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">5,596</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">313</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">179</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font face="Times New Roman, Times, serif"> <FONT size=2>M
      F Geoghegan</FONT></font><font size="2" face="Times New Roman, Times, serif"><SUP>5,6
      </SUP>.</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">557</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">372</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">367</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">4,042</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">12,495</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">8,436</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">8,230</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">S
      K Green</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">335</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">47</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">40</FONT></B></TD>
    <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">4,401</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">5,758</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">1,357</FONT></B></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">682</FONT></B></TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">A
      W Jebson</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">200</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">19</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">14</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">2,612</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">3,231</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">619</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">225</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD align="left" valign=top>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="3%" align="left"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The
      transfer value represents a liability of HSBC&#146;s pension funds and not
      a sum paid or due to the individual; it cannot therefore meaningfully be
      added to annual remuneration</FONT></I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">.</FONT></TD>
  </TR>
  <TR valign="top">
    <TD align="left"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">On
      attaining age 60, Sir John Bond has been able, under the terms of the scheme,
      to retire at any time with an immediate pension equal to his accrued pension
      which, at 31 December 2005, is shown above</FONT></I><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">.</FONT></TD>
  </TR>
  <TR valign="top">
    <TD align="left"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retired
      as a Director on 27 May 2005. On attaining age 53, D G Eldon was able, under
      the terms of the scheme, to retire at any time with an immediate pension
      equal to his accrued pension which, at 31 December 2005, is shown above.</FONT></I>
    </TD>
  </TR>
  <TR valign="top">
    <TD align="left"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">D
      G Eldon retired from the Group with effect from 30 May 2005. He elected
      to commute all of his pension entitlement of &#163;290,000 per annum for
      a lump sum of &#163;3,770,000. The HSBC International Staff Retirement Benefits
      Scheme retains a liability to pay a contingent spouse&#146;s pension equal
      to 50 per cent of the commuted pension. The accrued pensions and transfer
      values stated in the above table do not reflect the commutation of the pension
      entitlement on retirement. As required by the rules of the HSBC International
      Staff Retirement Benefits Scheme, D G Eldon made personal contributions
      towards his pension of &#163;8,119 in respect of 2005.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align="left"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">As
      required by the rules of the HSBC International Staff Retirement Benefits
      Scheme, M F Geoghegan made personal contributions towards his pension of
      &#163;16,797 in respect of 2005.</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD align="left"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">As
      at 31 March 2006, under the revised pension arrangements described above,
      M F Geoghegan&#146;s accrued pension will amount to &#163;571,000 per annum
      and it is estimated that the transfer value of that accrued pension, at
      that date, will amount to &#163;12,919,000.</FONT></I> </TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<div style="float: left; width: 48%">
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following unfunded pension payments, in respect of which provision has been made, were made during 2005 to five former Directors of HSBC
Holdings:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">&#163;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">B
      H Asher</FONT></TD>
    <TD width=15% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">90,465</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=15% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,443</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">C
      F W de Croisset</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">178,344</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">R
      Delbridge</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">130,120</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,891</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      Brian Pearse</FONT></TD>
    <TD align=right> <B><FONT size=2 face="Times New Roman, Times, serif">54,261</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,246</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      William Purves</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">95,767</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,453</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="Times New Roman, Times, serif">548,957</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350,033</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
  </TR>
</TABLE>
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The payments
    in respect of R Delbridge and Sir Brian Pearse were made by HSBC Bank plc
    as former Directors of that bank. The payment in respect of C F W de Croisset
    was made by HSBC France as a former Director of that bank.</FONT></P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Share options</FONT></B><BR>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005, the undernamed Directors held options to acquire the number of HSBC</FONT></P>
</div>
<div style="float: right; width: 48%">
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holdings ordinary shares set against their respective names. The options were awarded for nil consideration at exercise prices equivalent to the market value at the date of award, except
that options awarded under the HSBC Holdings savings-related share option plans before 2001 are exercisable at a 15 per cent discount to the market value at the date of award and those awarded since 2001 at a 20 per cent discount. Under the
Securities and Futures Ordinance of Hong Kong the options are categorised as unlisted physically settled equity derivatives.</FONT></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Except as otherwise
    indicated, no options were exercised or lapsed during the year and there are
    no remaining performance criteria conditional upon which the outstanding options
    are exercisable. The market value of the ordinary shares at 31 December 2005
    was &#163;9.33. The highest and lowest market values during the year were
    &#163;9.49 and &#163;8.25. Market value is the mid-market price derived from
    the London Stock Exchange Daily Official List on the relevant date.</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">229</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p230"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>
<P> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146;
  Remuneration Report </FONT></B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p><BR>
</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td colspan=16 align=left> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC
      Holdings Savings-Related Share Option Plan<br>
    </font><font size="2"><i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">HSBC
    Holdings ordinary shares of US&#36;0.50</font></i>&nbsp;</font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">&nbsp;      </font><font size="2">&nbsp;</font><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td colspan=4 align=left> <font size="2">&nbsp; </font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td width=8% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
      at</font></td>
    <td width=2% align=right><font size="2">&nbsp;</font></td>
    <td width=8% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">awarded</font></td>
    <td width=2% align=right><font size="2">&nbsp;</font></td>
    <td width=8% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercised</font></td>
    <td width=2% align=left><font size="2">&nbsp;</font></td>
    <td width=8% align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
      at 31</font></td>
    <td width=2% align=left><font size="2">&nbsp;</font></td>
    <td width=8% align=left><font size="2">&nbsp;</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font></td>
    <td width=10% align=left><font size="2">&nbsp;</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font></td>
    <td width=8% align=right><font size="2">&nbsp;</font> </td>
    <td width=2% align=left><font size="2">&nbsp;</font></td>
    <td width=8% align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      January</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">December</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date
      of</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">year</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">year</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">price
      (&#163;)</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size="2">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">from</font>
      </font></td>
    <td align=left><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font>&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      John Bond</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,798</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2"><sup><font face="TimesNewRoman,Times New Roman,Times,serif">4</font></sup></font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=right bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,798</font><font size="2">&nbsp;
      </font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2"><sup><font face="TimesNewRoman,Times New Roman,Times,serif">2</font></sup></font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0299</font></td>
    <td align=right bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Apr 2000</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      Aug 2005</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      Jan 2006</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      J Flint</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,617</font></td>
    <td align=left><font size="2"><sup><font face="TimesNewRoman,Times New Roman,Times,serif">4</font></sup></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,617</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.3224</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2
      May 2002</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      Aug 2007</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      Jan 2008</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">M
      F Geoghegan</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">559</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=right bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">559</font><font size="2">&nbsp;
      </font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2"><sup><font face="TimesNewRoman,Times New Roman,Times,serif">3</font></sup></font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0299</font></td>
    <td align=right bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Apr 2000</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      Aug 2005</font></td>
    <td align=left bgcolor="#eeeeeee"><font size="2">&nbsp;</font></td>
    <td align=right bgcolor="#eeeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      Jan 2006</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      K Green</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,070</font></td>
    <td align=left><font size="2"><sup><font face="TimesNewRoman,Times New Roman,Times,serif">4</font></sup></font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,070</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3496</font></td>
    <td align=right><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">23
      Apr 2003</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      Aug 2008</font></td>
    <td align=left><font size="2">&nbsp;</font></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      Jan 2009</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD width="2%"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">May
      be advanced to an earlier date in certain circumstances, e.g. retirement.</FONT></I>
    </TD>
  </TR>
  <TR align="left" valign="top">
    <TD> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">At
      the date of exercise, 2 August 2005, the market value per share was &#163;9.32.</FONT></I>
    </TD>
  </TR>
  <TR align="left" valign="top">
    <TD><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Options
      over 533 shares were exercised on 31 January 2006 and options over 26 shares
      lapsed on that date. At the date of exercise, the market value per share
      was &#163;9.34.</FONT></I> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR> </TR>
</TABLE>
<div style="float: left; width: 48%">
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 29 April 2005, the date he retired as a Director, W F Aldinger held options to acquire HSBC Holdings ordinary shares as set out in the table below. These options arise from options he
held over shares of Household International (now HSBC Finance Corporation) before its acquisition, which were converted into options over HSBC Holdings ordinary shares in the same ratio as the offer for HSBC Finance Corporation (2.675
HSBC</FONT></P>
</div>
<div style="float: right; width: 48%">
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holdings ordinary shares for each HSBC Finance Corporation common share) and the exercise prices per share adjusted accordingly. The HSBC Finance Corporation options were granted at nil
consideration.</FONT></P>
  <P> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No
    options over HSBC Holdings ordinary shares were awarded to or exercised by
    Mr Aldinger during 2005.</FONT></P>
</div><br clear="all">
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan=11 align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan=11 align=left><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC
      Finance 1996 Long-Term Executive Incentive Compensation Plan</FONT> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan=11 align=left> <font size="2"><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">HSBC
      Holdings ordinary shares of US&#36;0.50</FONT></I>&nbsp; </font><font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
      held</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise
      price</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
      held</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date
      of</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercisable</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">at
      1 January 2005</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">per
      share (US&#36;)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">at
      29 April 2005</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">from</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">until</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,203,750</FONT></TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.60</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,203,750</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Nov 1997</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Nov 1998</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Nov 2007</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,337,500</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.71</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,337,500</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9
      Nov 1998</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9
      Nov 1999</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9
      Nov 2008</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,230,500</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.96</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,230,500</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Nov 1999</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Nov 2000</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Nov 2009</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,605,000</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.40</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,605,000</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13
      Nov 2000</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13
      Nov 2001</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13
      Nov 2010</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,140,000</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.37</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,140,000</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Nov 2001</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Nov 2002</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Nov 2011</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,140,000</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,140,000</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20
      Nov 2002</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20
      Nov 2003</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20
      Nov 2012</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD width="3%"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">535,000
      options were exercisable on each of the first, second, third and fourth
      anniversaries of the date of award. These options could be advanced, under
      the terms of the HSBC Finance Corporation stock option plan, to an earlier
      date in certain circumstances, for example retirement. 1,070,000 options
      remaining unvested therefore vested on Mr Aldinger&#146;s retirement as
      a Director on 29 April 2005. Based
      on the market price of HSBC Holdings shares on 29 April 2005 and after
      deduction of the option subscription price these options had a value of
      approximately
      &#163;2,973,000.</FONT></I> </TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">230</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p231"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC Holdings Restricted Share Plan 2000</FONT><br>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">HSBC
Holdings ordinary shares of US&#36;0.50</FONT></I></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Monetary</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value
      of</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">vested</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      in</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">held
      at</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">vested</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
      at</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">which</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      January</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
      year</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      December</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date
      of</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
      year</FONT><font size="2"><SUP></SUP>&nbsp; </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;000</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT><font size="2"><SUP></SUP>&nbsp;
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">may
      vest</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">W
      F Aldinger</FONT></TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">670,821</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">687,435</FONT><font size="2">&nbsp;
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP></font>
    </TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,749</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width="8%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15
      Apr 2003</FONT></TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
      to 2006</FONT><font size="2">&nbsp; </font></TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">379,232</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">388,623</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP>&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,249</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      May 2004</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
      to 2007</FONT><font size="2">&nbsp; </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></SUP></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      John Bond</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93,405</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">94,119</FONT><font size="2">&nbsp;
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP>&nbsp;</font>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">798</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Mar 2000</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,535</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">91,276</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Mar 2001</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131,077</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136,679</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Mar 2002</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">174,929</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">182,406</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5
      Mar 2003</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">252,771</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">263,574</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4
      Mar 2004</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      G Eldon</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,458</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,781</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">363</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Mar 2000</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,021</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,712</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP></font>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">449</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Mar 2001</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,191</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,056</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">495</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Mar 2002</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,220</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,472</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></SUP></font>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15
      May 2002</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,513</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61,651</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">535</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,729</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></SUP></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5
      Mar 2003</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,892</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,486</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></SUP></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      May 2003</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,276</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,886</FONT><font size="2">&nbsp;
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></SUP>&nbsp;</font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">338</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54,913</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></SUP></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4
      Mar 2004</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      J Flint</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,211</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,502</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP></font>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">326</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Mar 2000</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62,525</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,198</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Mar 2001</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82,786</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86,324</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Mar 2002</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119,270</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">124,367</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5
      Mar 2003</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125,182</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">130,532</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4
      Mar 2004</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M
      F Geoghegan</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,965</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,224</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">290</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Mar 2000</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,515</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39,119</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Mar 2001</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,393</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,162</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Mar 2002</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,661</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58,040</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5
      Mar 2003</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93,887</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97,899</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4
      Mar 2004</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      K Green</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,458</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,781</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP></font>
    </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">363</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Mar 2000</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,535</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">91,276</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Mar 2001</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103,482</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">107,905</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Mar 2002</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119,270</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">124,367</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5
      Mar 2003</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172,125</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">179,481</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4
      Mar 2004</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
      W Jebson</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,965</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,224</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">290</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10
      Mar 2000</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,030</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,237</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12
      Mar 2001</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96,584</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100,712</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
      Mar 2002</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119,270</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">124,368</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5
      Mar 2003</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125,182</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">130,532</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4
      Mar 2004</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td colspan="2"> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Unless
      otherwise indicated, these awards are subject to the performance tests set
      out in the section headed &#145;Arrangements from 2000-2004&#146; on pages
      221 to 223. The awards made on 12 March 2001 and 8 March 2002 have passed
      their TSR performance conditions. Under the Securities and Futures Ordinance
      of Hong Kong, interests held through the HSBC Holdings Restricted Share
      Plan 2000 are categorised as the interests of a beneficiary of a Trust.</FONT></I></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1</FONT></I></td>
    <td> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      additional shares arising from scrip dividends.</FONT></I></td>
  </tr>
  <tr valign="top">
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2</FONT></I></td>
    <td> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Under
           the terms of this award the shares vested in three instalments on
          each of
      the first three anniversaries of 31 March 2003 so long as Mr Aldinger remained
           employed on the relevant vesting date, subject to accelerated vesting
          upon
      a termination of cause, or by Mr Aldinger for good reason or due to his
           death or disability. 341,463 shares therefore vested on 31 March 2005
          when
      the market price was &#163;8.37. Pursuant to the amendment agreement referred
       to above, the remaining 345,972 shares vested on Mr Aldinger&#146;s retirement
        as a Director on 29 April 2005 when the market price was &#163;8.355.
        At  the date of the award, 15 April 2003, the market value per share
        was &#163;6.81.</FONT></I></td>
  </tr>
  <tr valign="top">
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">3</FONT></I></td>
    <td> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Under
      the terms of this award the shares vested in three instalments on each of
      31 March 2005, 2006 and 2007 so long as Mr Aldinger remained employed on
      the relevant vesting date, subject to accelerated vesting upon a termination
      of cause, or by Mr Aldinger for good reason or due to his death or disability.
      128,245 shares therefore vested on 31 March 2005 when the market price was
      &#163;8.37. Pursuant to the amendment agreement referred to above, the remaining
      260,378 shares vested on Mr Aldinger&#146;s retirement as a Director on
      <I><I>29</I>
      April
      2005 when the market price was &#163;8.355. At the date of the award, 10
      May 2004, the market value per share was &#163;7.94.</I></FONT></I></td>
  </tr>
  <tr valign="top">
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">4</FONT></I></td>
    <td><font size="2"> <I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">The
            performance tests described in the &#145;Report of the Directors&#146; in
            the </FONT></I><FONT face="TimesNewRoman,Times New Roman,Times,serif">Annual
             Report and Accounts 2000 </FONT><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">and
      set out in the section headed &#145;Arrangements from 2000-2004&#146; on
      pages 221 to 223 of the </FONT></I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">Annual
      Report and Accounts 2005<I> have been met and
      the shares have vested. At the date of
      vesting, <I><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">10</FONT></I>
      <FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">March
      2005, the market value per share was &#163;8.48. The market value per share
       at the date of the award, 10 March 2000, was &#163;7.09.</FONT></I></I></FONT></font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">231</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p232"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT></p>
<P> <B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif">Directors&#146;
  Remuneration Report </FONT></B><FONT size=2 face="Arial,Bold,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="top">
    <TD width="3%"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retired
      as a Director on 27 May 2005. At the date of vesting, 31 May 2005 the market
      value per share was &#163;8.68. The market values per share at the dates
      of the awards, 12 March 2001, 8 March 2002, 5 March 2003 and 4 March 2004
      were &#163;8.62, &#163;8.34, &#163;6.70 and &#163;8.515 respectively.</FONT></I>
    </TD>
  </TR>
  <TR valign="top">
    <TD> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">50
      per cent of D G Eldon&#146;s discretionary bonus in respect of 2001 was
      awarded in Restricted Shares with a three year restricted period. At the
      date of vesting, 29 April 2005, the market value per share was &#163;8.355.
      The market value per share at the date of the award, 15 May 2002, was &#163;8.635.</FONT></I>
    </TD>
  </TR>
  <TR valign="top">
    <TD> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Interests
      at date of retirement as a Director (27 May 2005).</FONT></I> </TD>
  </TR>
  <TR valign="top">
    <TD> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Interests
      at date of retirement as a Director (27 May 2005). 50 per cent of D G Eldon&#146;s
      discretionary bonus in respect of 2002 was awarded in Restricted Shares
      with a three-year restricted period.</FONT></I> </TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b>The HSBC Share
  Plan</b><br>
  </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">HSBC
  Holdings ordinary shares of US&#36;0.50</FONT></I></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Monetary</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value
      of</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awards</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      in</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
      at</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">made</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">made</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
      at</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">which</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1
      January</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">during</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
      December</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Date
      of</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">awards</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">period</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">period</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT><font size="2"><SUP></SUP>
      </font></TD>
    <TD align=left><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">award</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">may
      vest</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;000</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      John Bond</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">458,389</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,000</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">474,353</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27
      May 2005</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D
      J Flint</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171,896</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,500</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177,883</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27
      May 2005</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M
      F Geoghegan</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">229,195</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,000</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">237,177</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27
      May 2005</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
      K Green</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">286,493</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,500</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">296,471</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27
      May 2005</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
      W Jebson</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">162,155</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,415</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">167,803</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27
      May 2005</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD> <P> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Unless
        otherwise indicated, vesting of these shares is subject to the performance
        conditions described on page 220 being satisfied. Under the Securities
        and Futures Ordinance of Hong Kong, interests in The HSBC Share Plan are
        categorised as the interests of a beneficiary of a Trust.</FONT></I></P></TD>
  </TR>
  <TR align="left" valign="top">
    <TD width="2%"> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">At
      the date of the award, 27 May 2005, the market value per share was &#163;8.68.
      The shares acquired by the Trustee of the Plan were purchased at an average
      price of &#163;8.726.</FONT></I> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
      additional shares arising from scrip dividends.</FONT></I> </TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD align=right valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On
      behalf of the Board</FONT></TD>
    <TD width=15% align=right valign="top"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6
      March 2006</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
      Mark Moody-Stuart, </FONT><font size="2"><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">Chairman
      of Remuneration Committee</FONT></I>&nbsp; </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">232</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p233"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Statement
      of Directors&#146; Responsibilities in Respect of the </FONT></B><B><I><FONT face="UniversLT45Light,BoldItalic,Arial,Helvetica,sans-serif">Annual
      Report and Accounts
2005</FONT></I></B><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> and
the Financial Statements</FONT></B></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following statement, which should be read in conjunction with the Auditor&#146;s statement of their responsibilities set out in their report on pages 234 and 235, is made with a view
to distinguishing for shareholders the respective responsibilities of the Directors and of the Auditor in relation to the financial statements.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors are responsible for preparing the Annual Report and Accounts 2005, the consolidated financial statements of HSBC Holdings and its subsidiaries
(the &#145;Group&#146;) and holding company financial statements for HSBC Holdings (the &#145;parent company&#146;) in accordance with applicable law and regulations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Company law requires the Directors to prepare Group and parent company financial statements for each financial year. The Directors are required to prepare
the Group financial statements in accordance with IFRSs as adopted by the EU and have elected to prepare the parent company financial statements on the same basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors are also required to present additional information for US shareholders. Accordingly these financial statements are framed to meet both UK and
US requirements to give a consistent view to all shareholders.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Group and parent company financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position of the Group
and the parent company and the performance of the Group for that period; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In preparing each of the Group and parent company financial statements, the Directors are required to:</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">select
    suitable accounting policies and then apply them consistently;</FONT></td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">make judgements
    and estimates that are reasonable and prudent; and</FONT></td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">state whether
    they have been prepared in accordance with IFRSs as adopted by the EU.</FONT></td>
  </tr>
</table>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors are required to prepare the financial statements on the going concern basis unless it is not appropriate. Since the Directors are satisfied that the Group has the resources to continue in business for the foreseeable future, the financial statements continue to be prepared on the
going concern basis.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors have responsibility for ensuring that sufficient accounting records are kept that disclose with reasonable accuracy at any time the financial
position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 1985.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under applicable law and regulations, the Directors also have responsibility for preparing a Directors&#146; Report, Directors&#146; Remuneration Report and
the Corporate Governance statement on page 206 that comply with that law and those regulations.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors have responsibility for the maintenance and integrity of the Annual Report and Accounts 2005 as they appear on the company&#146;s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td width="50%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On
        behalf of the Board </font> </td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6
    March 2006</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">R G Barber, </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Secretary</font></i> </td>
    <td align="right">&nbsp;</td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">233</FONT>

</p>
<hr noshade align="center" width="100%" size="2">


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<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT> </P>
<P>
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Report of Independent
registered public accounting firm to the Board of Directors and<br>
shareholders of
HSBC Holdings plc</FONT></B></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">We have audited the accompanying consolidated financial statements of HSBC Holdings plc and its subsidiary undertakings (together &#145;HSBC&#146;) on pages 236 to 402 which comprise the
consolidated balance sheets as at 31 December 2005 and 2004, the related consolidated income statements, consolidated cash flow statements and consolidated statements of recognised income and expense, for the years ended 31 December 2005 and 2004.
These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HSBC as at 31
December 2005 and 2004, and the results of its operations and its cash flows for the years ended 31 December 2005 and 2004 in conformity with IFRSs as adopted by the EU.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
as adopted by the EU vary in certain significant respects from accounting principles
generally accepted in the United States. Information relating to  the nature
and effect of such differences is presented in Note 47 to the consolidated financial
statements. As permitted by IFRS 1 and disclosed in Note 1 to the financial statements,
HSBC has applied certain IFRSs from 1 January 2005, in particular IAS 32, IAS
39 and IFRS 4.</FONT></P>
<p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">KPMG Audit Plc</FONT><BR>
    <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">London, England</FONT></I><BR>
    <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">6 March 2006</FONT></I>
</p>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">234</FONT></p>
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<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">This page is intentionally left blank</FONT></P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">235</FONT></P>

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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"><B>Financial
    Statements</B></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Consolidated
      income statement for the year ended 31 December 2005</FONT></B>
</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Notes</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD height="20" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Interest income
        </font></TD>
        <TD width=10% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,094</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,471</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Interest expense
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(28,760</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,372</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net interest income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Fee income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#CCCCCC">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,486</FONT></B>
        </TD>
        <TD align=left bgcolor="#CCCCCC"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#CCCCCC">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,902</FONT>
        </TD>
        <TD align=left bgcolor="#CCCCCC"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Fee expense
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#CCCCCC">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,030</FONT></B>
        </TD>
        <TD align=left bgcolor="#CCCCCC">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#CCCCCC">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,954</FONT>
        </TD>
        <TD align=left bgcolor="#CCCCCC"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net fee income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading income excluding net interest income
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,656</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net interest income on trading activities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net trading income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net income from financial instruments designated at fair value
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">3</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net investment income
on assets backing policyholders&#146; liabilities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Gains less losses from financial investments
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividend income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net earned insurance premiums
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">4</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other operating income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating income</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,704</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net insurance claims incurred
and movement in policyholders&#146; liabilities
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">5</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,067</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> Net
                operating income before loan impairment charges and other credit risk
provisions</FONT></B></div></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,637</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,353</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loan impairment charges and other credit risk provisions
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,801</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net operating income</FONT></B></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">6</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,836</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,162</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Employee compensation and benefits
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">7</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16,145</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14,523</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
General and administrative expenses
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">8</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11,183</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,739</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Depreciation of property, plant and equipment
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">23</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,632</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,731</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Amortisation of intangible assets
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(554</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(494</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total operating expenses</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,514</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating profit</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,322</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of profit in associates and joint ventures
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">20</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">644</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit before tax</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Tax expense
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">10</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,093</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,685</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit for the year</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,873</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,258</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Profit attributable to shareholders of the parent company
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,081</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Profit attributable to minority interests
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">792</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,340</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Basic earnings per ordinary share
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">12</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.36</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.18</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Diluted earnings per ordinary share
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">12</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.35</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.17</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividends per ordinary share
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">11</FONT></I></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.69</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.63</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<div align="center"><BR>
    <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">236</FONT><BR>

</div>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p237"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Consolidated
       balance sheet at 31 December 2005</FONT></B>
</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
2004
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Notes</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
US&#36;m
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cash and balances at central banks
        </font></TD>
        <TD width=10% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,712</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
9,944
        </font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Items in the course of collection from other banks
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,300</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
6,338
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Hong Kong Government certificates of indebtedness
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
11,878
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading assets
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">15</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190,257</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
122,160
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading assets which may be repledged or resold by counterparties
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">15</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,652</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&#150;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial assets designated at fair value
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">16</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&#150;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Derivatives
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">17</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,928</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
32,190
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to banks
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">32</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
143,449
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to customers
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">32</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
672,891
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial investments
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">18</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">176,301</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
185,332
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial investments which may be repledged or resold by counterparties
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">18</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,041</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&#150;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Interests in associates and joint ventures
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">20</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,249</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
3,441
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Goodwill and intangible assets
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">21</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,200</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
34,495
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Property, plant and equipment
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">23</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,206</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
15,624
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other assets
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">25</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,596</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
23,077
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Prepayments and accrued income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,961</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
19,155
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total assets
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,970</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,279,974
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES AND EQUITY</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD height="16" align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Hong Kong currency notes in circulation
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
11,878
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Deposits by banks
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">32</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,727</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
84,055
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Customer accounts
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">32</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
693,072
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Items in the course of transmission to other banks
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,022</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
5,301
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Trading liabilities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174,365</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
46,460
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial liabilities designated at fair value
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">26</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&#150;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Derivatives
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">17</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,036</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
34,988
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Debt securities in issue
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">27</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,072</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
211,721
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Retirement benefit liabilities
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">7</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,869</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
6,475
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other liabilities
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">28</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,515</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
20,581
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Liabilities under insurance contracts issued
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">29</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,144</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&#150;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Liabilities to policyholders under long-term assurance business
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
19,190
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Accruals and deferred income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,689</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
16,499
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Provisions
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">30</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,966</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
4,071
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Subordinated liabilities
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">31</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,537</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
26,486
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total liabilities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,403,744</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,180,777
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Called up share capital
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">37</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
5,587
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share premium account
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">38</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,896</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
4,881
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other reserves
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">38</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,646</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
25,622
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Retained earnings
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">38</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56,223</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
49,432
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total shareholders&#146; equity
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,432</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
85,522
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Minority interests
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">36</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,794</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
13,675
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total equity
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">98,226</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
99,197
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total equity and liabilities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,970</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,279,974
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><img src="b822899-21x2x1.jpg" border=0></td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>
      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir John
      Bond, </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Group
    Chairman</font></i></td>
    <td>&nbsp;</td>
  </tr>
</table>

<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">237</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p238"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
            Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<P>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Consolidated statement of recognised income and expense for the year ended 31 December 2005</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Available-for-sale investments:
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; fair
              value changes taken to equity</FONT>
        </font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(400</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; fair
              value changes transferred to income statement on disposal or impairment</FONT>
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(240</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cash flow hedges:
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; fair
              value changes taken to equity</FONT>
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(92</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; fair
              value changes transferred to income statement</FONT>
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(106</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share of changes in equity of associates and joint ventures
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">161</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Exchange differences
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,257</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,720</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Actuarial losses on post-employment benefits
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(812</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(731</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,746</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,989</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net deferred tax on items taken directly to equity
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">437</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total income and expense taken to equity during the year
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,309</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,308</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Profit for the year
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,873</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,258</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total recognised income and expense for the year
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,564</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,566</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Effect of change in accounting policy
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
IFRSs transition adjustment at 1 January 2005
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; available-for-sale
              fair value reserve</FONT>
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,919</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; cash
              flow hedging reserve</FONT>
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">410</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; foreign
              exchange reserve</FONT>
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">686</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; retained
              earnings</FONT>
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,762</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; minority
              interests</FONT>
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10,077</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,740</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,566</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total recognised income and expense for the year attributable to:
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; shareholders
              of the parent company</FONT>
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,912</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,743</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; minority
              interests</FONT>
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">652</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,823</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,564</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,566</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>

<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">238</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p239"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Consolidated
cash flow statement for the year ended 31 December 2005</FONT></B></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Notes</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flows from operating activities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Profit before tax
        </font></TD>
        <TD width=10% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Adjustments for:
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; non-cash
              items included in net profit</FONT>
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,358</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">719</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; change
              in operating assets</FONT>
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(82,710</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(124,299</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; change
              in operating liabilities</FONT>
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70,933</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">178,014</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; elimination
              of exchange differences<SUP>1</SUP></FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,315</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,015</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; net
              gain from investing activities</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(692</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(540</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; share
              of profits in associates and joint ventures</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(644</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(268</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; dividends
              received from associates</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">114</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">127</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; tax
              paid</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,619</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,784</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net cash from operating activities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,021</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59,897</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flows from investing activities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Purchase of financial investments
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(378,103</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(330,917</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Proceeds from the sale of financial investments
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">368,696</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">315,437</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Purchase of property, plant and equipment
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,887</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,830</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Proceeds from the sale of property, plant and equipment
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">620</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">371</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Purchase of intangible assets
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(849</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(108</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net cash outflow from acquisition of and increase in stake of subsidiaries
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,662</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,431</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net cash inflow from disposal of subsidiaries
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">705</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net cash outflow from acquisition of and increase in stake of associates
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,569</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,122</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Proceeds from disposal of associates
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">422</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">212</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net cash used in investing activities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(15,627</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22,361</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flows from financing activities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Issue of ordinary share capital
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">690</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">581</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Issue of preference shares
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,298</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net purchases and sales of own shares for market-making purposes
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(55</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Purchases of own shares to meet share awards and share option awards
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(766</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(345</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Own shares released on vesting of share awards and exercise of options
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Increase in non-equity minority interests
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,480</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Subordinated loan capital issued
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,093</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,021</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Subordinated loan capital repaid
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,121</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,740</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividends paid to shareholders of the parent company
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,935</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,425</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Dividends paid to minority interests:
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; equity</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(508</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(664</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; non-equity</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(548</FONT>
        </TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Net cash used in financing activities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,027</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">617</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net (decrease)/increase in cash and cash equivalents</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12,633</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,153</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cash and cash equivalents at 1 January
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">160,956</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117,558</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Exchange differences in respect of cash and cash equivalents
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,016</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,245</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cash and cash equivalents at 31 December
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141,307</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160,956</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without
unreasonable expense.</FONT></I>        </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">239</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p240"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
            Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>
<p> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">HSBC
Holdings balance sheet at 31 December 2005</font></b></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
2004
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Notes</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
US&#36;m
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Cash at bank and in hand:
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; balances with HSBC
undertakings</FONT>
        </font></TD>
        <TD width=10% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
246
        </font></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Derivatives
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">17</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,643
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Loans and advances to HSBC undertakings
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">32</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
16,636
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial investments
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">18</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,885
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Investments in subsidiaries
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">24</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58,038</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
55,668
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Property, plant and equipment
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">23</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
2
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other assets
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
632
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Prepayments and accrued income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
5
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total assets
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,562</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
76,717
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES AND EQUITY</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Amounts owed to HSBC undertakings
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">32</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,075</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
7,352
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Financial liabilities designated at fair value
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">26</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
&#150;
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Derivatives
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">17</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
10
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other liabilities
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">28</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,203</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,198
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Accruals and deferred income
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
172
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Deferred tax
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">30</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
64
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Subordinated liabilities
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">31</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
17,812
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total liabilities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,335</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
26,608
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Called up share capital
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">37</FONT></I></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
5,587
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Share premium account
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,896</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
4,881
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Merger reserve and other reserves
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,942</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
28,942
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Other reserves
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,221</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
1,740
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Retained earnings
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,501</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
8,959
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total equity
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53,227</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
50,109
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Total equity and liabilities
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,562</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
76,717
        </font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><img src="b822899-21x2x1.jpg" border=0></td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr>
    <td><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir John
        Bond, </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Group
        Chairman</font></i></td>
    <td>&nbsp;</td>
  </tr>
</table>

<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">240</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p241"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">HSBC
      Holdings statement of changes in total equity for the year ended 31 December
2005</font></b> </p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Called up share capital</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; &nbsp; At
              1 January</FONT>&nbsp;
        </font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,587</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Shares issued in connection with the early conversion of HSBC Finance Corporation</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">8.875 per cent Adjustable Conversion-Rate Equity Security Units</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Shares issued under employee share plans</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Shares issued in lieu of dividends</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Share premium account</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,881</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,406</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Shares issued under employee share plans</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">662</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">555</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Shares issued in lieu of dividends and amounts thereon</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(52</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">New share capital subscribed, net of costs</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,405</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,896</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,881</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Merger reserve and other reserves</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 1 January and 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,942</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,942</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other reserves</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale fair value reserve</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">IFRSs transition adjustments at 1 January 2005<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">464</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Fair value losses taken to equity<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(184</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Net deferred tax on items taken directly to equity<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">337</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Share-based payment reserve</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,329</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,395</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Exercise of HSBC share options</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(328</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(227</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Charge to the income statement in respect of equity settled share-based</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">payment transactions</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Shares/options granted to employees of subsidiaries under employee share awards</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">219</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Other movements</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,234</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,329</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other paid-in capital</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">411</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">270</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Exercise of HSBC share options</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">239</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">141</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">650</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">411</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Total other reserves at 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,221</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,740</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Retained earnings</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,959</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,970</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">IFRSs transition adjustments at 1 January 2005<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(317</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Profit for the year attributable to shareholders</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,816</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,612</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Dividends to shareholders of the parent company</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,750</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,932</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Amounts arising on shares in lieu of dividends</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,811</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,627</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Own shares adjustments</FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">87</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(110</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(105</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(208</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,501</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,959</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">See Note 46 for an explanation of the IFRSs transition adjustment at 1 January 2005.</FONT></I> </TD>
</TR><TR>
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The total net expense taken directly to equity during the year was US&#36;232 million (2004: US&#36;208 million).</FONT></I>    </TD>
</TR>
<TR>
        <TD>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retained earnings include 130,812,676 (US&#36;701 million) of own shares, held to fund employee share plans (2004:123,108,967, US&#36;749 million).</FONT></I>  </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">241</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p242"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif3"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
            Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></font></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<p> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">HSBC
Holdings cash flow statement for the year ended 31 December 2005</FONT></B></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Notes</FONT></I></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flows from operating activities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Profit before tax</FONT>&nbsp;
        </font></TD>
        <TD width=10% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,541</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,495</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Adjustments for:</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; non-cash
              items included in net profit</FONT>&nbsp;
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">167</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; change
              in operating assets</FONT>&nbsp;
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,511</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,883</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; change
              in operating liabilities</FONT>&nbsp;
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,349</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,156</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; elimination
              of exchange differences<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(109</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(240</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; tax
              received</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">158</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net cash from operating activities</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,752</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,820</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flows from investing activities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Purchase of financial investments</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,119</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Proceeds from the sale of financial investments</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">303</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">365</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Purchase of property, plant and equipment</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net cash outflow from acquisition of and increase in stake of subsidiaries</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,093</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,696</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net cash inflow from disposal of subsidiaries</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,063</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net cash used in investing activities</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,727</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,451</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flows from financing activities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Issue of ordinary share capital</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">690</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">581</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Issue of preference shares</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,405</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Purchases of own shares to meet share awards and share option awards</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(39</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(261</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Own shares released on vesting of share awards and exercise of options</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Subordinated loan capital issued</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,647</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,997</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Subordinated loan capital repaid</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(350</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Dividends paid</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,935</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,425</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Net cash (used in)/from financing activities</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,515</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">976</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net increase/(decrease) in cash and cash equivalents</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">510</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(655</FONT>
        </TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">)</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Cash and cash equivalents at 1 January</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">246</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">901</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Cash and cash equivalents at 31 December</FONT>&nbsp;
        </font></TD>
        <TD align=center>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">39</FONT></I></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%">
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without
unreasonable expense.</FONT></I>        </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">242</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p243"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements</FONT></B></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan=3>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>
<B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></B></TD>
        <TD colspan=3>
<B><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basis of preparation</FONT></B>        </TD>
</TR>
<TR><TD colspan=4><hr noshade align="center" width="100%" size="1"></TD></TR><TR>
<TD>&nbsp;</TD> <TD width="3%" valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(a)</FONT></TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For all reporting
periods up to and including the year ended 31 December 2004, HSBC prepared its
consolidated financial statements in accordance with UK Generally Accepted Accounting

Principles (&#145;UK GAAP&#146;). From </FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">January
2005, HSBC has prepared its consolidated financial statements in accordance with
International</font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Financial
Reporting
Standards (&#145;IFRSs&#146;) as endorsed by the EU and effective for HSBC&#146;s
reporting for the year ended 31 December 2005. IFRSs comprise accounting standards
issued by the International Accounting Standards Board (&#145;IASB&#146;) and
its predecessor body as well as interpretations issued by the International Financial
Reporting Interpretations Committee (&#145;IFRIC&#146;) and its predecessor
body.</FONT> </TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2" valign=top>&nbsp;</TD>
        </TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In preparing these consolidated financial statements, HSBC has elected to take advantage of certain transitional provisions within IFRS 1 &#145;First-time Adoption of International
Financial Reporting Standards&#146; (&#145;IFRS 1&#146;) which offer exemption from presenting comparative information or applying IFRSs retrospectively. The most significant of these provisions is the exemption from presenting comparative
information in accordance with IFRSs in the following areas:</FONT>     </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD width="3%">&#8226;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS
    32 &#145;Financial Instruments: Presentation&#146; (&#145;IAS 32&#146;);</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>&#8226;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS
    39 &#145;Financial Instruments: Recognition and Measurement&#146; (&#145;IAS
    39&#146;); and</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>&#8226;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRS
    4 &#145;Insurance Contracts&#146; (&#145;IFRS 4&#146;).</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition, HSBC has elected not to present comparative information for disclosures required under IFRS 7 &#145;Financial Instruments: Disclosure&#146; (&#145;IFRS 7&#146;) as permitted
for entities applying the standard for annual periods beginning before 1 January 2006.</FONT>   </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The notes affected by the transition provisions within IFRS 1 that do not contain comparative information are: net income from financial instruments designated at fair value; net earned
insurance premiums; net insurance claims incurred and movement in policyholders&#146; liabilities; net operating income; analysis of financial assets and liabilities by measurement basis; financial assets designated at fair value; hedging
instruments within the derivatives note; securitisation and other structured transactions; financial liabilities designated at fair value and liabilities under insurance contracts issued.</FONT>      </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Where comparative information for financial instruments and insurance contracts has been prepared on the basis of HSBC&#146;s previous accounting policies, the accounting policies applied
to 2004 are disclosed separately in Note 46g.</FONT>    </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition to
the Notes on the Financial Statements, disclosures under IFRS 7 relating to the
nature and extent of risks may be found under &#145;Risk Management&#146; in
the audited
information of the Financial Review on pages </FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to
177 Unless stated otherwise, this information is unaudited.</font> </TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2" valign=top>&nbsp;</TD>
        </TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has adopted the &#145;Amendment to IAS 39: The Fair Value Option&#146; (Note 2h), the &#145;Amendment to IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and
Disclosures&#146; (Note 2s), the &#145;Amendment to IAS 1 Presentation of Financial Statements: Capital Disclosures&#146;, IFRIC 4 &#145;Determining whether an Arrangement contains a Lease&#146; (Note 2q) and IFRS 7 with effect from 1 January 2005,
ahead of their effective dates. IFRSs as endorsed by the EU are identical in all respects to the current IFRSs except for the EU&#146;s amendment to IAS 39, under which certain conditions required for the application of hedge accounting were
deleted. HSBC has not taken advantage of the EU amendment to IAS 39, and applies the more restrictive requirements of IAS 39.</FONT>    </TD>
        </TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The balance sheets and income statements in this document are presented in accordance with IAS 1 &#145;Presentation of Financial Statements&#146;.</FONT>       </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On publishing the parent company financial statements here together with Group financial statements HSBC Holdings is taking advantage of the exception in s230 of the Companies Act 1985
not to present its individual income statement and related notes that form a part of these financial statements.</FONT> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has taken advantage of the exemption under Regulation 7 of the Partnerships and Unlimited Companies (Accounts) Regulations 1993 from certain partnerships that are consolidated by
HSBC presenting their own individual financial statements under IFRSs.</FONT>   </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(b)</FONT></TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The consolidated financial statements of HSBC comprise the financial statements of HSBC Holdings and its subsidiaries made up to 31 December, with the exception of the banking and
insurance subsidiaries of HSBC</FONT>   </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">243</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p244"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
    on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank Argentina,
        whose financial statements are made up to 30 June annually to comply
        with local regulations. Accordingly, HSBC uses their audited interim
        financial statements, drawn up to 31 December annually. Entities that
        are controlled by HSBC are consolidated until the date that control ceases.
        Newly acquired subsidiaries are consolidated from the date that control
    is transferred to HSBC.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The purchase
        method of accounting is used to account for the acquisition of subsidiaries
        by HSBC. The cost of an acquisition is measured at the fair value of
        the consideration given at the date of exchange, together with costs
        directly attributable to that acquisition. The acquired identifiable
        assets, liabilities and contingent liabilities are measured at their
        fair values at the date of acquisition. Any excess of the cost of acquisition
        over the fair value of HSBC&#146;s share of the identifiable assets,
        liabilities and contingent liabilities acquired is recorded as goodwill.
        If the cost of acquisition is less than the fair value of HSBC&#146;s
        share of the identifiable assets, liabilities and contingent liabilities
        of the business acquired, the difference is recognised immediately in
    the income statement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> In accordance
        with IFRS 1, HSBC has chosen not to restate business combinations that
    took place prior to 1 January 2004, the date of transition to IFRSs.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The premium
        recorded on shares issued in respect of acquisitions that qualified for
        merger relief under section 131 of the Companies Act 1985 prior to the
        transition to IFRS is included
in the merger reserve.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All intra-HSBC
    transactions are eliminated on consolidation.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The consolidated
        financial statements of HSBC also include the attributable share of the
        results and reserves of joint ventures and associates. These are based
        on financial statements made up to 31 December, with the exception of
        the Bank of Communications Limited and Ping An Insurance Company of China
        Limited, which are included on the basis of financial statements made
        up to 30 September. Accordingly, HSBC has taken into account changes
        in the period from 1 October to 31 December that would have materially
        affected its results. These are equity accounted three months in arrears
    in order to meet the requirements of the Group&#146;s reporting timetable.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(c)</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The preparation
        of financial information requires the use of estimates and assumptions
        about future conditions. Use of available information and application
        of judgement are inherent in the formation of estimates. Actual results
        in the future may differ from those reported. In this regard, management
        believes that the critical accounting policies where judgement is necessarily
        applied are those which relate to loan impairment, goodwill impairment
        and the valuation of financial instruments (see Critical Accounting Policies
    on pages 99 to 102).</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further
        information about key assumptions concerning the future, and other key
        sources of estimation uncertainty, are set out in the notes on these
    financial statements.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(d)</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A discussion
        of the significant differences between IFRSs and US GAAP and a reconciliation
        to US GAAP of certain amounts is contained in Note 47. As stated in Note
        45, there are no material differences between IFRSs and Hong Kong Generally
        Accepted Accounting Principles (&#145;Hong Kong GAAP&#146;). The Notes
        on the Financial Statements, taken together with the Financial Review,
        include the aggregate of all disclosures necessary to satisfy IFRSs,
    Hong Kong and US reporting requirements.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</font></b></td>
    <td colspan="2" valign="top"> <b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Summary
    of significant accounting policies</font></b> </td>
  </tr>
  <tr>
    <td colspan="3"><hr noshade align="center" width="100%" size="1"></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(a)</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Interest
    income and expense</b></font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
        income and expense for all interest-bearing financial instruments except
        for those classified as held for trading or designated at fair value
        (other than debt issued by HSBC and related derivatives) are recognised
        in &#145;Interest income&#146; and &#145;Interest expense&#146; in the
        income statement using the effective interest rates of the financial
    assets or financial liabilities to which they relate.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effective
        interest rate is the rate that exactly discounts estimated future cash
        receipts or payments earned or paid on a financial asset or financial
        liability through its expected life or, where appropriate, a shorter
        period, to the net carrying amount of the financial asset or financial
        liability. When calculating the effective interest rate, HSBC estimates
        cash flows considering all contractual terms of the financial instrument
        but not future credit losses. The calculation includes all amounts paid
        or received by HSBC that are an integral part of the effective interest
    rate, including transaction costs and all other premiums or discounts.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
        on impaired financial assets is calculated by applying the original effective
    interest rate of the financial</font> </td>
  </tr>
</table>



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<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD width="3%">&nbsp;</TD>
        <TD width=3%>&nbsp;</TD>
        <TD colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">asset to the
    carrying amount as reduced by any allowance for impairment.</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(b)</font></TD>
        <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Non
    interest income</b></font><b> </b></TD>
    </TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC earns
    fee income from a diverse range of services provided to its customers. Fee
    income is accounted for as follows:</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD valign=top>&nbsp;</TD>
<TD width="3%" valign=top>&#8211;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income earned on the execution of a significant act is recognised as revenue when the act is completed (for example, fees arising from negotiating, or participating in the negotiation of,
a transaction for a third party, such as the arrangement for the acquisition of shares or other securities);</FONT>     </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD valign=top>&nbsp;</TD>
<TD valign=top>&#8211;
</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income earned from the provision of services is recognised as revenue as the services are provided (for example, asset management, portfolio and other management advisory and service
fees); and</FONT>       </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD valign=top>&nbsp;</TD>
<TD valign=top>&#8211;
</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income which forms an integral part of the effective interest rate of a financial instrument is recognised as an adjustment to the effective interest rate (for example, loan commitment
fees) and recorded in &#145;Interest income&#146; (Note 2(a)).</FONT>   </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
    income</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
    income is recognised when the right to receive payment is established. This
    is the ex-dividend date for equity securities.</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    income from financial instruments designated at fair value</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#145;Net
    income from financial instruments designated at fair value&#146; includes
    all gains and losses from changes in the fair value of financial assets and
    financial liabilities designated at fair value through profit or loss. Interest
    income and expense and dividend income arising on these financial instruments
    are also included, except for debt securities in issue and derivatives managed
    in conjunction with debt securities in issue. Interest on these instruments
    is shown in &#145;Interest expense&#146;.</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    trading income</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
    trading income comprises all gains and losses from changes in the fair value
    of financial assets and financial liabilities held for trading, together
    with related interest income,
expense and dividends.</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(c)</font></TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Segment
    reporting</b></font><b> </b></TD>
    </TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    is organised into five geographical regions, Europe, Hong Kong, Rest of Asia-Pacific,
    North America and South America, and manages its business through four customer
    groups: Personal Financial Services; Commercial Banking; Corporate Investment
    Banking and Markets; and Private Banking. The main items reported in the &#145;Other&#146; segment
    are the income and expenses of wholesale insurance operations, certain property
    activities, unallocated investment activities including hsbc.com, centrally
    held investment companies and HSBC&#146;s holding company and financing operations.
    Segment income and expenses include transfers between geographical regions
    and transfers
between customer groups. These transfers are conducted at arm&#146;s length.</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(d)</font></TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Determination
    of fair value</b></font><b> </b></TD>
    </TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All
    financial instruments are recognised initially at fair value. The fair value
    of a financial instrument on initial recognition is normally the transaction
    price, i.e. the fair value of the consideration given or received. In certain
    circumstances, however, the initial fair value may be based on other observable
    current market transactions in the same instrument, without modification
    or repackaging, or on a valuation technique whose variables include only
    data from observable markets.</font> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subsequent
    to initial recognition, the fair values of financial instruments measured
    at fair value that are quoted in active markets are based on bid prices for
    assets held and offer prices for liabilities. When independent prices are
    not available, fair values are determined by using valuation techniques which
    refer to observable market data. These include comparison with similar instruments
    where market observable prices exist, discounted cash flow analysis, option
    pricing models and other valuation techniques commonly used by market participants.</font> </TD>
</TR></TABLE>
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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
        certain derivatives, fair values may be determined in whole or in part
        using valuation techniques based on assumptions that are not supported
        by prices from current market transactions or observable market data.
    </font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A
        number of factors such as bid-offer spread, credit profile, servicing
        costs of portfolios and model uncertainty are taken into account, as
    appropriate, when values are calculated using valuation techniques.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">If
        the fair value of a financial asset measured at fair value becomes negative,
        it is recorded as a financial liability until its fair value becomes
        positive, at which time it is recorded as a financial asset, or it is
    extinguished.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(e)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to banks and customers</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        and advances to banks and customers include loans and advances originated
        by HSBC which are not intended to be sold in the short term and have
        not been classified either as held for trading or designated at fair
        value. Loans and advances are recognised when cash is advanced to borrowers
        and are derecognised when either borrowers repay their obligations, or
        the loans are sold or written off. They are initially recorded at fair
        value plus any directly attributable transaction costs and are subsequently
        measured at amortised cost using the effective interest method, less
    impairment losses.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(f)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
    impairment</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Losses
        for impaired loans are recognised promptly when there is objective evidence
        that impairment of a loan or portfolio of loans has occurred. Impairment
        losses are calculated on individual loans and on loans assessed collectively.
    Losses expected from future events, no matter how likely, are not recognised.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Individually
    assessed loans</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        each balance sheet date, HSBC assesses on a case-by-case basis whether
        there is any objective evidence that a loan is impaired. This procedure
        is applied to all accounts that are considered individually significant.
        In determining impairment losses on these loans, the following factors
    are considered:</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    aggregate exposure to the customer;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the viability
        of the customer&#146;s business model and its capability to trade successfully
        out of financial difficulties and generate sufficient cash flow to service
        its debt
obligations;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the amount
    and timing of expected receipts and recoveries;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the likely
    dividend available on liquidation or bankruptcy;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the extent
        of other creditors&#146; commitments ranking ahead of, or </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">pari
        passu </font></i><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">with, HSBC and the likelihood
    of other creditors continuing to support the company;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the complexity
        of determining the aggregate amount and ranking of all creditor claims
    and the extent to which legal and insurance uncertainties are evident;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the realisable
        value of security (or other credit mitigants) and likelihood of successful
    repossession;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the likely
    deduction of any costs involved in recovery of amounts outstanding;</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the ability
        of the borrower to obtain, and make payments in, the currency of the
    loan if not local currency; and</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">when available,
    the secondary market price of the debt.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
        losses are calculated by discounting the expected future cash flows of
        a loan at its original effective interest rate, and comparing the resultant
        present value with the
loan&#146;s current carrying amount. Any loss is charged in the income statement.
The carrying amount of impaired loans on the balance sheet is reduced through
the use of an allowance account.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Collectively
    assessed loans</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
    is assessed on a collective basis in two different scenarios:</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for loans
        subject to individual assessment, to cover losses which have been incurred
    but have not yet been identified; and</font> </td>
  </tr>
</table>

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<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for homogeneous
    groups of loans that are not considered individually significant.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Incurred
    but not yet identified impairment</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Individually
        assessed loans for which no evidence of loss has been identified are
        grouped together according to their credit risk characteristics for the
        purpose of calculating an estimated collective loss. This arises from
        impairment at the balance sheet date which will only be individually
    identified in the future.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    collective impairment allowance is determined after taking into account:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">historical
        loss experience in portfolios of similar credit risk characteristics
        (for example, by industry sector,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">loan
    grade or product);</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the estimated
        period between impairment occurring and the loss being identified and
        evidenced by the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">establishment
        of
an appropriate allowance against the individual loan; and</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">management&#146;s
          experienced judgement as to whether current economic and credit conditions
          are such that</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
          actual level of inherent losses is likely to be greater or less than
    that suggested by historical experience.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        period between a loss occurring and its identification is estimated by
    local management for each identified portfolio.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Homogeneous
    groups of loans</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
        homogeneous groups of loans that are not considered individually significant,
        two alternative methods are used to calculate allowances on a portfolio
    basis:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When appropriate
        empirical information is available, HSBC utilises roll rate methodology.
        This</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">methodology
        employs a statistical analysis of historical trends of the probability
        of default and the amount</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        consequential loss, assessed at each time period for which the customer&#146;s
        contractual
payments are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">overdue.
The estimated loss is the difference between the present value of expected future
cash flows,</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">discounted at the original effective interest rate of the
portfolio, and the carrying amount of the portfolio.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
historical data and current economic conditions are also evaluated when calculating
the
appropriate</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">level
of allowance required to cover inherent loss. In certain highly developed markets,
sophisticated models</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">also
take into account behavioural and account management trends as revealed in, for
example, bankruptcy</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
rescheduling statistics.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In other
        cases, when the portfolio size is small or when information is insufficient
        or not reliable enough to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">adopt
        a roll rate methodology, HSBC adopts a formulaic approach which allocates
        progressively higher</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">percentage
        loss rates in line with the period of time for which a customer&#146;s
        loan
is overdue. Loss rates are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">calculated
from the discounted expected future cash flows from a portfolio.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Roll
        rates, loss rates and the expected timing of future recoveries are regularly
    benchmarked against actual outcomes to ensure they remain appropriate.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
    write-offs</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        (and the related impairment allowance accounts) are normally written
        off, either partially or in full, when there is no realistic prospect
        of recovery of these amounts and, for collateralised loans, when the
    proceeds from realising the security have been received.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reversals
    of impairment</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">If
        the amount of an impairment loss decreases in a subsequent period, and
        the decrease can be related objectively to an event occurring after the
        impairment was recognised, the excess is written back by reducing the
        loan impairment allowance account accordingly. The reversal is recognised
    in the income statement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assets
    acquired in exchange for loans</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-financial
        assets acquired in exchange for loans in order to achieve an orderly
        realisation are recorded as assets held for sale and reported in &#145;Other
        assets&#146;. The asset acquired is recorded at the lower of its fair
        value (less costs to sell) and the carrying amount of the loan (net of
        impairment allowance) at the date of exchange. No depreciation is provided
        in respect of assets held for sale. Any subsequent write-down of the
    acquired asset to</font></td>
  </tr>
</table>





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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">fair
        value less costs to sell is recorded as an impairment loss and included
        in the income statement. Any subsequent increase in the fair value less
        costs to sell, to the extent this does not exceed the cumulative impairment
    loss, is recognised in the income statement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Renegotiated
    loans</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retail
        loans, which are generally subject to collective impairment assessment,
        whose terms have been renegotiated, are no longer considered to be past
        due but are treated as new loans only after the minimum required number
    of payments under the new arrangements have been received.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        subject to individual impairment assessment, whose terms have been renegotiated,
        are subject to ongoing review to determine whether they remain impaired
        or are considered to be past
due.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(g)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    assets and trading liabilities</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
        bills, debt securities, equity shares and short positions in securities
        are classified as held for trading if they have been acquired principally
        for the purpose of selling or repurchasing in the near term, or they
        form part of a portfolio of identified financial instruments that are
        managed together and for which there is evidence of a recent pattern
        of short-term profit-taking. These financial assets or financial liabilities
        are recognised on trade date, when HSBC enters into contractual arrangements
        with counterparties to purchase or sell securities, and are normally
        derecognised when either sold (assets) or extinguished (liabilities).
        Measurement is initially at fair value, with transaction costs taken
        to the income statement. Subsequently, their fair values are remeasured,
        and all gains and losses from changes therein are recognised in the income
        statement in &#145;Net trading income&#146; as
they arise.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(h)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    instruments designated at fair value</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        instruments, other than those held for trading, are classified in this
        category if they meet one or more of the criteria set out below, and
        are so designated by management. HSBC may designate financial instruments
    at fair value when the designation:</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">eliminates
        or significantly reduces valuation or recognition inconsistencies that
        would otherwise arise from measuring financial assets or financial liabilities,
        or recognising gains and losses on them, on different bases. Under this
        criterion, the main classes of financial instruments designated by HSBC
    are:</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Long-term
          debt issues </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; The
          interest payable on certain fixed rate long-term debt securities in
          issue and subordinated liabilities has been matched with the interest
          on &#145;receive fixed/pay variable&#146; interest rate swaps as part
          of a documented interest rate risk management strategy. An accounting
          mismatch would arise if the debt securities in issue were accounted
          for at amortised cost, because the related derivatives are measured
          at fair value with changes in the fair value taken through the income
          statement. By designating the long-term debt at fair value, the movement
          in the fair value of the long-term debt will be recorded in the income
    statement.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Financial
          assets and financial liabilities under investment contracts </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; These
          are managed on a fair value basis and management information is also
          prepared on this basis. Liabilities to customers under linked contracts
          are determined based on the fair value of the assets held in the linked
          funds, with changes shown in the income statement. Liabilities to customers
          under other types of investment contracts would be shown at amortised
          cost. If no designation was made for the assets relating to the customer
          liabilities they would be classified as available-for-sale and the
          changes in
fair value would be recorded directly in equity.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Designation
          at fair value of the financial assets and liabilities under investment
          contracts allows the changes in fair values to be recorded in the income
          statement and presented in the
same line.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">applies
        to groups of financial assets, financial liabilities or combinations
        thereof that are managed, and their performance evaluated, on a fair
        value basis in accordance with a documented risk management or investment
        strategy, and where information about the groups of financial instruments
        is reported to management on that basis. Under this criterion, certain
        financial assets held to meet liabilities under insurance contracts are
        the main class of financial instrument so designated. HSBC has documented
        risk management and investment strategies designed to manage such assets
        at fair value, taking into consideration the relationship of assets to
        liabilities in a
way that mitigates market risks. Reports are</font> </td>
  </tr>
</table>


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<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%">&nbsp;</TD>
  <TD width="3%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>      <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">provided to management on the fair value of the assets. Fair value measurement is also consistent with the regulatory reporting requirements under the appropriate regulations for these
insurance operations.</FONT>    </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD valign="top">&#8211;</TD>   <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those financial instruments, including certain
debt issues and debt securities held.</FONT>    </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="3">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fair value designation, once made, is irrevocable. Designated financial assets and financial liabilities are recognised on trade date, when HSBC enters into contractual arrangements
with counterparties to purchase or sell securities, and are normally derecognised when sold (assets) or extinguished (liabilities). Measurement is initially at fair value, with transaction costs taken directly to the income statement. Subsequently,
the fair values are remeasured, and gains and losses from changes therein are recognised in &#145;Net income from financial instruments designated at fair value&#146;.</FONT>  </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="3">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains and losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are also included in
&#145;Net income from financial instruments designated at fair value&#146;. Interest on these derivatives is also included in this line, except for interest on derivatives managed with debt securities in issue designated at fair value, which is
included in net interest income. The amount of change during the period, and cumulatively, in the fair value of designated financial liabilities and loans and receivables that is attributable to changes in their credit risk is determined as the
amount of change in fair value that is not attributable to changes in market conditions.</FONT> </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> (i)</font></TD>
        <TD colspan="3" valign=top>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Financial investments</b></FONT>        </TD>
        </TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="3">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury bills, debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value (Note 2(h)), are classified as
&#145;available-for-sale&#146; or &#145;held-to-maturity&#146;. Financial investments are recognised on trade date, when HSBC enters into contractual arrangements with counterparties to purchase securities, and are normally derecognised when either
the securities are sold or the borrowers repay their obligations.</FONT>        </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(i)</font></TD>
<TD colspan="2" valign=top>
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale securities are initially measured at fair value plus direct and incremental transaction costs. They are subsequently remeasured at fair value, and changes therein are
recognised in equity in the &#145;Available-for-sale reserve&#146; (Note 38) until the securities are either sold or impaired. When available-for- sale securities are sold, cumulative gains or losses previously recognised in equity are recognised in
the income statement as &#145;Gains less losses from financial investments&#146;.</FONT>        </TD>
        </TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest income is recognised on available-for-sale securities using the effective interest rate method, calculated over the asset&#146;s expected life. Premiums and/or discounts arising
on the purchase of dated investment securities are included in the calculation of their effective interest rates. Dividends are recognised in the income statement when the right to receive payment has been established. Financial investments are
recognised using trade date accounting.</FONT>  </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan="2">
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At each balance sheet date an assessment is made of whether there is any objective evidence of impairment in the value of a financial asset or group of assets. This usually arises when
circumstances are such that an adverse effect on future cash flows from the asset or group of assets can be reliably estimated. If an available-for-sale security is impaired, the cumulative loss (measured as the difference between the asset&#146;s
acquisition cost and its current fair value, less any impairment loss on that asset previously recognised in the income statement) is removed from equity and recognised in the income statement. Reversals of impairment losses are subject to
contrasting treatments depending on the nature of the instrument concerned:</FONT>      </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD width="3%" valign="top">&#8211;</TD>
<TD valign=top>
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">if the fair value of a debt instrument classified as available-for-sale increases in a subsequent period, and the increase can be objectively related to an event occurring after the
impairment loss was recognised in the income statement, the impairment loss is reversed through the income statement;</FONT>    </TD>
        </TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&#8211;</TD>
<TD valign=top>
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.</FONT>        </TD>
        </TR>
<TR><TD colspan=5>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</font></TD>
<TD colspan="2" valign=top>
  <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that HSBC positively intends, and is able, to hold until
maturity. Held-to-maturity investments are initially recorded at fair value plus any directly attributable transaction costs, and are subsequently measured at amortised cost using the effective interest rate method, less any impairment
losses.</FONT>  </TD>
</TR></TABLE>
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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2">&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>&nbsp;</TD>
        <TD width=3%> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">(j)</font></TD>
    <TD><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sale and repurchase agreements
    (including stock lending and borrowing)</font> </b></TD>
  </TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When securities
    are sold subject to a commitment to repurchase them at a predetermined price
    (&#145;repos&#146;), they remain on the balance sheet and a liability is
    recorded in respect of the consideration received. Securities purchased under
    commitments to sell (&#145;reverse repos&#146;) are not recognised on the
    balance sheet and the consideration paid is recorded in &#145;Loans and advances
    to banks&#146; or &#145;Loans and
advances to customers&#146; as appropriate. The difference between the sale and
repurchase price is treated as interest and recognised over the life of the agreement.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities
    lending and borrowing transactions are generally secured, with collateral
    taking the form of securities or cash advanced or received. The transfer
    of securities to counterparties is not normally reflected on the balance
    sheet. Cash collateral advanced or received is recorded as an asset or a
    liability respectively.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities
    borrowed are not recognised on the balance sheet, unless they are sold to
    third parties, in which case the obligation to return the securities is recorded
    as a trading liability and measured at fair value, and any gains or losses
    are included in &#145;Net trading income&#146;.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For repos
    and security lending, if the counterparty has the right to sell or repledge
    the securities transferred, the securities are presented separately on the
    balance sheet from assets
that may not be repledged or resold by a counterparty.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(k)</font></TD>
    <TD><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
    and hedge accounting</font> </b></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
    are recognised initially, and are subsequently remeasured, at fair value.
    Fair values of exchange- traded derivatives are obtained from quoted market
    prices. Fair values of OTC derivatives are obtained using valuation techniques,
    including discounted cash flow models and option pricing models.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the normal
    course of business, the fair value of a derivative on initial recognition
    is the transaction price (that is the fair value of the consideration given
    or received). In certain circumstances, however, the fair value will be based
    on other observable current market transactions in the same instrument, without
    modification or repackaging, or on a valuation technique whose variables
    include only data from observable markets, such as interest rate yield curves,
    option volatilities and currency rates. When such evidence exists, HSBC recognises
    a trading gain or loss on inception of the derivative. When unobservable
    market data have a significant impact on the valuation of derivatives, the
    entire initial change in fair value indicated by the valuation model is not
    recognised immediately in the income statement but is recognised over the
    life of the transaction on an appropriate basis or is recognised in the income
    statement when the inputs become observable, or when the transaction matures
    or is closed out.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
    may be embedded in other financial instruments, for example, a convertible
    bond with an embedded conversion option. Embedded derivatives are treated
    as separate derivatives when their economic characteristics and risks are
    not clearly and closely related to those of the host contract; the terms
    of the embedded derivative are the same as those of a stand-alone derivative;
    and the combined contract is not held for trading or designated at fair value.
    These embedded derivatives are measured at fair value with changes therein
    recognised in the income statement.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
    are classified as assets when their fair value is positive, or as liabilities
    when their fair value is negative. Derivative assets and liabilities arising
    from different transactions are only offset if the transactions are with
    the same counterparty, a legal right of offset exists, and the parties intend
    to settle the cash flows on a net basis.</font> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The method
    of recognising fair value gains and losses depends on whether derivatives
    are held for trading or are designated as hedging instruments, and if the
    latter, the nature of the risks being hedged. All gains and losses from changes
    in the fair value of derivatives held for trading are recognised in the income
    statement. When derivatives are designated as hedges, HSBC classifies them
    as either: (i) hedges of the change in fair value of recognised assets or
    liabilities or firm commitments (&#145;fair value hedges&#146;); (ii) hedges
    of the variability in highly probable future cash flows attributable to a
    recognised asset or liability, or a forecast transaction
(&#145;cash flow hedges&#146;); or (iii) hedges of net investments in a foreign
operation (&#145;net investment hedges&#146;). Hedge accounting is applied to
derivatives designated as hedging instruments in a fair value, cash flow or net
investment
hedge provided certain criteria are met.</font> </TD>
</TR></TABLE>
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<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hedge accounting</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;    </font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        the inception of a hedging relationship, HSBC documents the relationship
        between the hedging instruments and hedged items, its risk management
        objective and its strategy for undertaking the hedge. HSBC also requires
        a documented assessment, both at hedge inception and on an ongoing basis,
        of whether or not the derivatives that are used in hedging transactions
        are highly effective in offsetting the changes attributable to the hedged
        risks in the fair values or cash flows of the hedged items. Interest
    on designated qualifying hedges is included in &#145;Net interest income&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
    value hedge</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Changes
        in the fair value of derivatives that are designated and qualify as fair
        value hedging instruments are recorded in the income statement, along
        with changes in the fair value of the assets, liabilities or group thereof,
    that are attributable to the hedged risk.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">If
        a hedging relationship no longer meets the criteria for hedge accounting,
        the cumulative adjustment to the carrying amount of the hedged item is
        amortised to the income statement based on a recalculated effective interest
        rate over the residual period to maturity, unless the hedged item has
    been derecognised whereby it is released to the income statement immediately.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash
    flow hedge</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        effective portion of changes in the fair value of derivatives that are
        designated and qualify as cash flow hedges is recognised in equity within
        the cash flow hedging reserve. Any gain or loss in fair value relating
    to an ineffective portion is recognised immediately in the income statement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts
        accumulated in equity are recycled to the income statement in the periods
        in which the hedged item will affect profit or loss. However, when the
        forecast transaction that is hedged results in the recognition of a non-financial
        asset or a non-financial liability, the gains and losses previously deferred
        in equity are transferred from equity and included in the initial measurement
        of the cost of the asset or
liability.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When
        a hedging instrument expires or is sold, or when a hedge no longer meets
        the criteria for hedge accounting, any cumulative gain or loss existing
        in equity at that time remains in equity until the forecast transaction
        is eventually recognised in the income statement. When a forecast transaction
        is no longer expected to occur, the cumulative gain or loss that was
        reported in equity is immediately transferred to the income
statement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
    investment hedge</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hedges
        of net investments in foreign operations are accounted for similarly
        to cash flow hedges. Any gain or loss on the hedging instrument relating
        to the effective portion of the hedge is recognised in equity; the gain
        or loss relating to the ineffective portion is recognised immediately
        in the income statement. Gains and losses accumulated in equity are included
        in the income statement on the disposal of the foreign
operation.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hedge effectiveness
    testing</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;    </font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">To
        qualify for hedge accounting, HSBC requires that at the inception of
        the hedge and throughout its life, each hedge must be expected to be
        highly effective (prospective effectiveness). Actual effectiveness (retrospective
    effectiveness) must also be demonstrated on an ongoing basis.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        documentation of each hedging relationship sets out how the effectiveness
        of the hedge is assessed. The method an HSBC entity adopts for assessing
        hedge effectiveness will depend on its risk management strategy. For
        prospective effectiveness, the hedging instrument must be expected to
        be highly effective in achieving offsetting changes in fair value or
        cash flows attributable to the hedged risk during the period for which
        the hedge is designated. For actual effectiveness, the changes in fair
        value or cash flows must offset each other in the range of 80 per cent
    to 125 per cent for the hedge to be deemed effective.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hedge
        ineffectiveness is recognised in the income statement in &#145;Net trading
    income&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>



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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
    that do not qualify for hedge accounting</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All
        gains and losses from changes in the fair values of any derivatives that
        do not qualify for hedge accounting are recognised immediately in the
        income statement. These gains and losses
are reported in &#145;Net trading income&#146;, except where derivatives are
managed in conjunction with financial instruments designated at fair value, (other
than derivatives managed in conjunction with debt securities issued by the Group)
in
which case gains and losses are reported in &#145;Net income from financial instruments
designated at fair value&#146;. The interest on derivatives managed in conjunction
with debt securities issued by the Group which are designated at fair value is
recognised in &#145;Interest expense&#146;. All other gains and losses on these
derivatives are reported in &#145;Net income from financial instruments designated
at fair value&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(l)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derecognition of financial
    assets and liabilities</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        assets are derecognised when the right to receive cash flows from the
        assets has expired; or when HSBC has transferred its contractual right
        to receive the cash flows of the financial assets, and substantially
        all the risks and rewards of ownership; or where control is not retained.
        Financial liabilities are derecognised when they are extinguished, that
        is when the obligation is discharged, cancelled or
expires.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(m)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Offsetting financial
    assets and financial liabilities</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        assets and financial liabilities are offset and the net amount reported
        in the balance
sheet when there is</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">legally
enforceable right to offset the recognised amounts and there is an intention
to settle on a net basis, or</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> realise
the asset
and settle the liability simultaneously.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(n)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subsidiaries, associates
    and joint ventures</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        Holdings&#146; investments in subsidiaries are stated at cost less impairment
        losses. Reversals of impairment losses are recognised in the income statement
        if there has been a change in the estimates used to determine the recoverable
    amount of the investment.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investments
        in associates and interests in joint ventures are recognised using the
        equity method, initially stated at cost, including attributable goodwill,
        and are adjusted thereafter
for the post-acquisition change in HSBC&#146;s share of net assets.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrealised
        gains on transactions between HSBC and its associates and joint ventures
        are eliminated to the extent of HSBC&#146;s interest in the respective
        associates or joint ventures. Unrealised losses are also eliminated to
        the extent of HSBC&#146;s interest in the associates or joint ventures
        unless the transaction provides evidence of an impairment of the asset
    transferred.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(o)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill and intangible
    assets</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(i)</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Goodwill
        arises on business combinations, including the acquisition of subsidiaries,
        joint ventures
or</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">associates,
      when the cost of acquisition exceeds the fair value of HSBC&#146;s share
      of the identifiable assets, liabilities and contingent liabilities acquired.
      By contrast, if
HSBC&#146;s interest in the fair value of the identifiable assets, liabilities
and contingent liabilities of an acquired business is greater than the cost to
acquire, the excess is recognised immediately in the income statement.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
        assets are recognised separately from goodwill when they are separable
        or arise from contractual or other legal rights, and their fair value
        can be measured
reliably.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
        is allocated to cash-generating units for the purpose of impairment testing,
        which is undertaken at the lowest level at which goodwill is monitored
        for internal management purposes. Impairment testing is performed annually
        by comparing the present value of the expected future cash flows from
        a business with the carrying amount of its net assets, including attributable
        goodwill. Goodwill is stated at cost less accumulated impairment losses
    which are charged to the income statement.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
        on acquisitions of joint ventures or associates is included in &#145;Interests
    in associates and joint ventures&#146;.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At the
        date of disposal of a business, attributable goodwill is included in
        HSBC&#146;s share of net assets in the calculation of the gain or loss
    on disposal.</font> </td>
  </tr>
</table>

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<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>&nbsp;</TD>
        <TD width=3%>&nbsp;</TD>
    <TD width=3% valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</font></TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
        assets include the value of in-force long-term assurance business, computer
        software, trade names, mortgage servicing rights, customer lists, core
        deposit relationships, credit card customer relationships and merchant
        or other loan relationships. Intangible assets are subject to impairment
        review if there are events or changes in circumstances that indicate
    that the carrying amount may not be recoverable.</font> </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD> <TD valign=top>
</TD>
        <TD valign=top></TD>
        <TD width="3%" valign="top">&#8211;</TD>
    <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
        assets that have an indefinite useful life, or are not yet ready for
        use, are tested for impairment annually. This impairment test may be
        performed at any time during the year, provided it is performed at the
        same time every year. An intangible asset recognised during the current
    period is tested before the end of the current year.</font> </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD valign=top>
</TD>
        <TD valign=top></TD>
        <TD valign="top">&#8211;</TD>
    <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
        assets that have a finite useful life, except for the value of in-force
        long-term assurance business, are stated at cost less amortisation and
        accumulated impairment losses and are amortised over their estimated
        useful lives. Estimated useful life is the lower of legal duration and
        expected economic life. The amortisation of mortgage servicing rights
    is included within &#145;Net fee income&#146;.</font> </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD> <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
    the accounting policy followed in respect of the value of the in-force long-term
    insurance business see Note 2(w).</font> </TD>
</TR>
<TR><TD colspan=5>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD>&nbsp;</TD>
    <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iii)</font></TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
    assets are amortised over their finite useful lives as follows:</font> </TD>
</TR></TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=9% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Trade names</FONT>&nbsp;
        </font></TD>
        <TD width=18% align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">10 years</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Mortgage servicing rights</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">between 5 and 30 years</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Purchased software</FONT>&nbsp;
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5 years</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Internally generated software</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5 years</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Customer/merchant relationships</FONT>&nbsp;
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">between 3 and 10 years</FONT>&nbsp;
        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">10 years</FONT>&nbsp;
        </font></TD>
</TR>
</TABLE>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(p)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property, plant
    and equipment</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Land
        and buildings are stated at historical cost, or fair value at the date
        of transition to IFRSs (&#145;deemed cost&#146;), less any impairment
        losses and depreciation calculated to write off the assets over their
    estimated useful lives as follows:</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">freehold
    land is not depreciated; and</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&#8211;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">buildings
        are depreciated on cost at the greater of two per cent per annum on a
        straight-line basis or, if leasehold, over the unexpired terms of the
        leases, or over their remaining
useful lives.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equipment,
        fixtures and fittings (including equipment on operating leases where
        HSBC is the lessor) are stated at cost less any impairment losses and
        depreciation calculated on a straight-line basis to write off the assets
        over their accumulated useful lives, which run to a maximum of 35 years
    but are generally between five years and 20 years.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        holds certain properties as investments to earn rentals or for capital
        appreciation, or both. Investment properties are included in the balance
        sheet at fair value with changes therein recognised in the income statement
        in the period of change. Fair values are determined by independent professional
    valuers who apply recognised valuation techniques.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property,
        plant and equipment is subject to an impairment review if there are events
        or changes
in circumstance </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">which
indicate
that the carrying amount may not be recoverable.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times Font">(q)</font></td>
    <td colspan="2"><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Finance and operating
    leases</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Agreements
        which transfer to counterparties substantially all the risks and rewards
        incidental to the ownership of assets, but not necessarily legal title,
        are classified as finance leases. When HSBC is a lessor under finance
        leases the amounts due under the leases, after deduction of unearned
        charges, are included in &#145;Loans and advances to banks&#146; or &#145;Loans
        and advances to customers&#146; as appropriate. Finance income receivable
        is recognised over the periods of the leases so as to give a constant
    rate of return on the net investment in the leases.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When
        HSBC is a lessee under finance leases the leased assets are capitalised
        and included in &#145;Property, plant and equipment&#146; and the corresponding
        liability to the lessor is
included in &#145;Other liabilities&#146;. A finance lease and its corresponding
liability are recognised initially at the fair value of the asset or, if lower,
the present value of the minimum lease payments. Finance charges payable are
recognised over the period of the lease based on the interest rate implicit in
the lease so as to give a constant rate of interest on the remaining balance
of the liability.</font> </td>
  </tr>
</table>

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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All other
        leases are classified as operating leases. When acting as lessor, HSBC
        includes the assets subject to operating leases in &#145;Property, plant
        and equipment&#146; and accounts for them accordingly. Impairment losses
        are recognised to the extent that residual values are not fully recoverable
        and the carrying value of the equipment is thereby impaired. When HSBC
        is the lessee, leased assets are not recognised on the balance sheet.
        Rentals payable and receivable under operating leases are accounted for
        on a straight-line basis over the periods of the leases and are included
        in &#145;General and administrative expenses&#146; and &#145;Other operating
    income&#146; respectively.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(r)</font></td>
    <td><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income tax</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income
        tax on the profit or loss for the year comprises current tax and deferred
        tax. Income tax is recognised in the income statement except to the extent
        that it relates to items
recognised directly in shareholders&#146; equity, in which case it is recognised
in shareholders&#146; equity.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current
        tax is the tax expected to be payable on the taxable profit for the year,
        calculated using tax rates enacted or substantially enacted by the balance
        sheet date, and any adjustment to tax payable in respect of previous
        years. Current tax assets and liabilities are offset when HSBC intends
    to settle on a net basis and the legal right to offset exists.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred
        tax is recognised on temporary differences between the carrying amounts
        of assets and liabilities in the balance sheet and the amounts attributed
        to such assets and liabilities for tax purposes. Deferred tax liabilities
        are generally recognised for all taxable temporary differences and deferred
        tax assets are recognised to the extent it is probable that future taxable
        profits will be available against which deductible temporary differences
    can be utilised.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred
        tax is calculated using the tax rates expected to apply in the periods
        in which the assets will be realised or the liabilities settled. Deferred
        tax assets and liabilities are offset when they arise in the same tax
        reporting group and relate to income taxes levied by the same taxation
    authority, and when a legal right to offset exists in the entity.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred
        tax relating to actuarial gains and losses on post-employment benefits
        is recognised directly in equity. From 1 January 2005, deferred tax relating
        to fair value remeasurement of available-for-sale investments and cash
        flow hedges which are charged or credited directly to equity, is also
        credited or charged directly to equity and is subsequently recognised
        in the income statement when the deferred fair value gain or loss is
    recognised in the income statement.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(s)</font></td>
    <td><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pension and other post-employment
    benefits</font> </b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC operates
        a number of pension and other post-employment benefit plans throughout
        the world. These plans include both defined benefit and defined contribution
        plans and various other post-employment benefits such as post-employment
    health-care.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Payments
        to defined contribution plans and state-managed retirement benefit plans,
        when HSBC&#146;s obligations under the plans are equivalent to a defined
        contribution plan, are charged
as an expense as they fall due.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The costs
        recognised for funding defined benefit plans are determined using the
        Projected Unit Credit Method, with annual actuarial valuations performed
        on each plan. Actuarial
differences that arise are recognised in shareholders&#146; equity and presented
in the Statement of Recognised Income and Expense in the period in which they
arise. All cumulative actuarial gains and losses on defined benefit plans as
at 1 January 2004 were recognised in equity at the date of transition to IFRSs.
Past service costs are recognised immediately to the extent that the benefits
have vested, and are otherwise recognised on a straight-line basis over the average
period until the benefits vest. Current service costs and any past service costs,
together with the unwinding of the discount on plan liabilities less the expected
return on plan assets, are charged to operating expenses.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The defined
        benefit liability recognised in the balance sheet represents the present
        value of defined benefit obligations adjusted for unrecognised past service
        costs and reduced by the fair value of plan assets. Any net defined benefit
        surplus is limited to unrecognised past service costs plus the present
        value of available refunds and reductions in future contributions to
    the plan.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The costs
        of providing other post-employment benefits such as post-employment health-care
    are accounted for on the same basis as defined benefit pension plans.</font> </td>
  </tr>
</table>

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<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(t)</font></TD>
        <TD><b>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity compensation plans</FONT>    </b></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares awarded to an employee on joining HSBC that are made available immediately, with no vesting period attached to the award, are expensed immediately. When an inducement is awarded to
an employee on commencement of employment with HSBC, and the employee must complete a specified period of service before the inducement vests, the expense is spread over the period to vesting.</FONT> </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The compensation expense of share options is recognised over the vesting period. Compensation expense is determined by reference to the fair value of the options on grant date, and the
effect of any non-market vesting conditions such as option lapses. An option may lapse if, for example, an employee ceases to be employed by HSBC before the end of the vesting period. Estimates of future such employee departures are taken into
account when accruing the cost during the service period.</FONT>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The cost of bonuses awarded in respect of past service, by which an employee is required to complete a specified period of future service to be entitled to the award, is spread over the
period of service rendered to the vesting date.</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The compensation expense charged to the income statement is credited to the share-based payment reserve over the vesting period of the shares and options. If awards of shares and options
lapse during the vesting period due to an employee leaving employment with HSBC, the charge to date is reversed to the income statement. If an award lapses due to an employee leaving a plan but not employment with HSBC or due to HSBC cancelling or
modifying a plan, this is accounted for as an acceleration of vesting with full immediate recognition of the outstanding charge in the income statement. If awards of shares or options lapse after they have fully vested, the amount in respect of the
award charged to the share-based payment reserve is transferred to retained earnings.</FONT>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(u)</font></TD>
        <TD><b>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign currencies</FONT>   </b></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items included in the financial statements of each of HSBC&#146;s entities are measured using the currency of the primary economic environment in which the entity operates (&#145;the
functional currency&#146;). The consolidated financial statements of HSBC are presented in US dollars, which is the Group&#146;s presentation currency.</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Transactions in foreign currencies are recorded in the functional currency at the rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated into the functional currency at the rate of exchange ruling at the balance sheet date. Any resulting exchange differences are included in the income statement. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are translated into the functional currency using the rate of exchange at the date of the initial transaction, except for goodwill arising on consolidation, which is translated into the
functional currency using the rate of exchange ruling at the balance sheet date. Non-monetary assets and liabilities measured at fair value in a foreign currency are translated into the functional currency using the rate of exchange at the date the
fair value was determined.</FONT>       </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The results of branches, subsidiaries, joint ventures and associates not reporting in US dollars are translated into US dollars at the average rates of exchange for the reporting period.
Exchange differences arising from the retranslation of opening foreign currency net investments, and exchange differences arising from retranslation of the result for the reporting period from the average rate to the exchange rate prevailing at the
period end, are accounted for in a separate foreign exchange reserve. Exchange differences on a monetary item that is part of a net investment in a foreign operation are recognised in the income statement of the separate subsidiary financial
statements. In consolidated financial statements these exchange differences are recognised in the foreign exchange reserve in shareholders&#146; equity. In accordance with IFRS 1, HSBC has set the cumulative exchange differences for all foreign
operations to zero at the date of transition to IFRSs. On disposal of a foreign operation, exchange differences relating thereto and previously recognised in reserves are recognised in the income statement.</FONT>   </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(v)</font></TD>
        <TD>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Provisions</b></FONT>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a current legal or constructive obligation as a result of past events, and a
reliable estimate can be made of the amount of the obligation.</FONT>   </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">255</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p256"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
        S B C&nbsp;&nbsp;&nbsp;H O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the Financial Statements </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></td>
  </tr>
  <tr>
    <td><font size="3"> &nbsp;</font></td>
    <td><font size="3"> &nbsp;</font></td>
  </tr>
  <tr>
    <td width="10%" bgcolor="#999999"><font size="3"> &nbsp;</font></td>
    <td bgcolor="#CCCCCC"><font size="3"> &nbsp;</font></td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(w)</FONT></TD>
        <TD><b>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance contracts</FONT></b></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Through its insurance subsidiaries, HSBC issues contracts to customers that contain insurance risk, financial risk or a combination thereof. A contract under which HSBC accepts
significant insurance risk from another party by agreeing to compensate that party on the occurrence of a specified uncertain future event, is classified as an insurance contract. An insurance contract may also transfer financial risk, but is
accounted for as an insurance contract if the insurance risk is significant.</FONT>     </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance contracts are accounted for as follows:</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif">Premiums</FONT>   </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross insurance premiums for non-life insurance business are reported as income over the term of the insurance contract attributable to the risks borne during the accounting period. The
unearned premium or the proportion of the business underwritten in the accounting year relating to the period of risk after the balance sheet date is calculated on a daily or monthly pro rata basis.</FONT>   </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Premiums for life insurance contracts are accounted for when receivable, except in unit-linked insurance contracts where premiums are accounted for when liabilities are
established.</FONT>     </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurance premiums are accounted for in the same accounting period as the premiums for the direct insurance to which they relate.</FONT>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif">Claims and reinsurance recoveries</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross insurance claims for non-life insurance contracts include paid claims and movements in outstanding claims reserves. The outstanding claims reserves are based on the estimated
ultimate cost of all claims incurred but not settled at the balance sheet date, whether reported or not, together with related claim-handling costs and a reduction for the expected value of salvage and other recoveries. Reserves for claims incurred
but not reported are made on an estimated basis, using appropriate statistical techniques.</FONT>       </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross insurance claims for life insurance contracts reflect the total cost of claims arising during the year, including claim handling costs and any policyholder bonuses allocated in
anticipation of a bonus declaration. The liabilities under non-linked life insurance contracts (long-term business provision) are calculated by each life insurance operation based on local actuarial principles. The liabilities under unit-linked life
insurance contracts are at least equivalent to the surrender or transfer value which is calculated by reference to the value of the relevant underlying funds or indices.</FONT>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurance recoveries are accounted for in the same period as the related claim.</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=3 face="TimesNewRoman,Times New Roman,Times,serif">Present value of in-force long-term insurance business</FONT>     </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A value is placed on insurance contracts that are classified as long-term insurance business and are in force at the balance sheet date.</FONT>   </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The present value of in-force long-term insurance business is determined by discounting future earnings expected to emerge from business currently in force using appropriate assumptions
in assessing factors such as recent experience and general economic conditions. Movements in the present value of in-force long-term insurance business are included in &#145;Other operating income&#146; on a gross of tax basis.</FONT>      </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(x)</FONT></TD>
        <TD>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Investment contracts</b></FONT></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer liabilities under non-linked and unit-linked investment contracts and the linked financial assets are measured at fair value, and the movements in fair value are recognised in
the income statement in &#145;Net income from financial investments designated at fair value&#146;. Premiums receivable and amounts withdrawn are accounted for as increases or decreases in the liability recorded in respect of investment
contracts.</FONT>       </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment management fees receivable are recognised in the income statement over the period of the provision of the investment management services.</FONT>       </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The incremental costs directly related to the acquisition of new investment contracts or renewing existing investment contracts are capitalised and amortised over the period during which
the investment management services are provided.</FONT> </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">256</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div>
<page><a name="p257"></a>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents">Back
  to Contents</a></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>(y)</b></font></TD>
    <TD colspan=2><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Debt
      securities in issue and subordinated liabilities</b> </font></TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=2> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities in issue are initially measured at fair value, which is normally
      the consideration received net of directly attributable transaction costs
      incurred. Subsequent measurement is at amortised cost, using the effective
      interest rate method to amortise the difference between proceeds net of
      directly attributable transaction costs and the redemption amount over the
      expected life of the debt, unless the securities are designated at fair
      value (Note 2h).</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>(z)</b></font></TD>
    <TD colspan=2> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B> Share
      capital</B> </font></TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=2> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
      are classified as equity when there is no contractual obligation to transfer
      cash or other financial assets. Incremental costs directly attributable
      to the issue of equity instruments are shown in equity as a deduction from
      the proceeds, net of tax.</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=2> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Holdings plc shares held by HSBC are recognised in Total shareholders&#146;
      equity as a deduction from retained earnings until they are cancelled. When
      such shares are subsequently sold, reissued or otherwise disposed of, any
      consideration received is included in Total shareholders&#146; equity, net
      of any directly attributable incremental transaction costs and related income
      tax effects.</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>(aa)</b></font></TD>
    <TD colspan=2> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Cash
      and cash equivalents</B> </font></TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=2> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
      the purpose of the cash flow statement, cash and cash equivalents include
      highly liquid investments that are readily convertible to known amounts
      of cash and which are subject to an insignificant risk of change in value.
      Such investments are normally those with less than three months&#146; maturity
      from the date of acquisition, and include cash and balances at central banks,
      treasury bills and other eligible bills, loans and advances to banks, and
      certificates of deposit.</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD ><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>3</b></font></TD>
    <TD colspan="3" > <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Net
      income from financial instruments designated at fair value</B> </font></TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4><HR noshade size=1></TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD colspan="3"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income from financial instruments designated at fair value includes:</FONT>
    </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></TD>
    <TD colspan="2" > <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">all
      gains and losses from changes in the fair value of financial assets and
      liabilities designated at fair value, including liabilities under investment
      contracts;</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></TD>
    <TD colspan="2" > <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">all
      gains and losses from changes in the fair value of derivatives that are
      managed in conjunction with financial assets and liabilities designated
      at fair value; and</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></TD>
    <TD colspan="2" > <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interest
      income, interest expense and dividend income in respect of:</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
    <TD > <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial
      assets and liabilities designated at fair value;</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
    <TD > <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">derivatives
      managed in conjunction with the above,</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR align="left" valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">except
      for interest expense arising on HSBC&#146;s debt securities in issue and
      subordinated liabilities, together with the interest element of derivatives
      managed in conjunction with them, which are recognised in &#145;Interest
      expense&#146;.</FONT> </TD>
  </TR>
  <TR align="left" valign="top">
    <TD colspan=4>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">257</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p258"></a>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp;
  H O L D I N G S &nbsp; P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income/(expense) arising on:</FONT></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      financial assets held to meet liabilities under insurance and investment
      contracts</FONT></TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,760</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      other financial assets designated at fair value</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>90</B>
      </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      derivatives managed in conjunction with financial assets designated at fair
      value</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,867</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      liabilities to customers under investment contracts</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,126</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      HSBC&#146;s debt securities in issue and subordinated liabilities<SUP>1</SUP>&nbsp;
      </FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,795</B>
      </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      derivatives managed in conjunction with HSBC&#146;s debt securities in issue
      and subordinated liabilities</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,392</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      other financial liabilities designated at fair value</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(112</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      derivatives managed in conjunction with other financial liabilities designated
      at fair value</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(833</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income from financial instruments designated at fair value</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,034</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="top">
    <TD width="3%" >&nbsp;</TD>
    <TD width="3%" ><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>Gains
          and losses from changes in the fair value of HSBC&#146;s debt securities
          in issue and subordinated liabilities may arise from changes in HSBC&#146;s
          own credit risk. In 2005, HSBC recognised a US&#36;70 million loss
          on changes in the fair value of these instruments arising from changes
      in HSBC&#146;s own credit risk.</I> </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4</B></font></TD>
    <TD colspan=2 align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Net
      earned insurance premiums</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="9" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Investment</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>contracts
      with</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Life</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Life</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>discretionary</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Non-life</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>insurance</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>insurance</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>participation</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>insurance</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(non-linked)</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(linked)</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>features</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Total</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross
      written premiums</FONT></TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,364</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3,441</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>768</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD width=12% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,585</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Movement
      in unearned premiums</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(225</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(210</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(433</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross
      earned premiums</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,139</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3,443</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>558</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,152</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE">
      <div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Gross
        written premiums ceded&nbsp;to reinsurers</font></div></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(479</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(277</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(20</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(776</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
        Reinsurers&#146; share of movement in unearned premiums</font></div></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>60</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>60</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurers&#146;
      share of gross earned premiums</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(419</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(277</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(20</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(716</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,720</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3,166</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>538</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,436</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">258</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p259"></a>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5</B></font></TD>
    <TD colspan=8 align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Net
      insurance claims incurred and movement in policyholders&#146; liabilities</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="15" align=left><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="13" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="13" align=left><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Investment</B></font></TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>contracts
      with</B></font></TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Life</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Life</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>discretionary</B></font></TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Non-life</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>insurance</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>insurance</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>participation</B></font></TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>insurance</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(non-linked)</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(linked)</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>features</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Total</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims,
      benefits and surrenders paid</font></TD>
    <TD width=8% align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>966</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>621</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>357</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD width=2% align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,944</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#CCCCCC">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Movement
      in liabilities</FONT></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>72</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,683</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>445</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>9</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,209</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Gross claims incurred and movement in liabilities</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,038</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,304</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>802</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>9</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4,153</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
        Reinsurers&#146; share of claims, benefits and surrenders paid</font></div></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(146</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(111</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(11</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(268</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurers&#146;
      share of movement in liabilities</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>191</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(11</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>182</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Reinsurers&#146;
        share of claims incurred and movement in liabilities</font></div></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(144</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>80</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(22</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(86</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=1> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left><hr noshade size=1> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left><hr noshade size=1> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=1> </TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left><hr noshade size=1> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <div style="margin-left:3%; text-indent:-3%">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance
        claims incurred and movement in policyholders&#146; liabilities</font></div></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>894</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,384</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>780</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>9</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4,067</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6</B></font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Net
      operating income</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="15" align=left><hr noshade size=1></TD>
    <TD align=left><hr noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="15" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income for the year ended 31 December 2005 is stated after the
      following items of income, expense, gains and losses:</font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Income</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      recognised on impaired financial assets</FONT></TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>120</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees
      earned on financial assets or liabilities not held for trading nor designated
      at fair value, other than</FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;fees included in effective interest rate calculations on these types
      of assets and liabilities</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>9,077</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees
      earned on trust and other fiduciary activities where HSBC holds or invests
      assets on behalf</FONT></TD>
    <TD align=left bgcolor="#EEEEEE"> </TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;of its customers</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,912</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income
      from listed investments<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,819</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Expense</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      on financial instruments, excluding interest on financial liabilities held
      for trading or designated</FONT></TD>
    <TD align=left bgcolor="#EEEEEE"> </TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;at fair value</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(26,627</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees
      payable on financial assets or liabilities not held for trading nor designated
      at fair value, other than</FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;fees included in effective interest rate calculations on these types
      of assets and liabilities</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,357</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees
      payable relating to trust and other fiduciary activities where HSBC holds
      or invests assets on behalf</FONT></TD>
    <TD align=left bgcolor="#EEEEEE"> </TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;of its customers</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(238</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Gains/(losses)</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loss
      on disposal or settlement of loans and advances</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(12</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gain
      on disposal or settlement of financial liabilities, other than those held
      for trading, designated at</FONT></TD>
    <TD align=left bgcolor="#EEEEEE"> </TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;fair value or derivatives</font></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>22</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      impairment loss on loans and advances</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(7,860</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      reversal of impairment allowances in respect of available-for-sale financial
      investments</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>42</B>
      </font></TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      on disposal of property, plant and equipment and non-financial investments</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>703</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><i>Income
      from listed investments at 31 December 2004 was US&#36;5,166 million</i>.</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">259</FONT></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p260"></a>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp;
  H O L D I N G S &nbsp; P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7</B></font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Employee
      compensation and benefits</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><HR noshade size=1></TD>
    <TD align=left><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Wages
      and salaries</FONT></TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>14,008</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,374</FONT></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Social
      security costs</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,072</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">973</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-employment
      benefits</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,065</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,176</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>16,145</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,523</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      average number of persons employed by HSBC during the year was as follows:</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>82,638</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,930</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>25,699</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,070</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
      of Asia-Pacific</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>50,605</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,211</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
      America</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>73,816</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,041</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
      America</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>32,527</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,475</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>265,285</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">244,727</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <p><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-employment
        benefit plans</FONT></p></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>HSBC
      pension plans</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      operates some 163 pension plans throughout the world, covering 80 per cent
      of HSBC&#146;s employees, with a total pension cost of US&#36;1,007 million
      (2004: US&#36;1,111 million), of which US&#36;546 million (2004: US&#36;485
      million) relates to overseas plans.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Progressively,
      HSBC has been moving to defined contribution plans for all new employees.
      The pension cost for defined contribution plans, which cover 35 per cent
      of HSBC&#146;s employees, was US&#36;389 million (2004: US&#36;351 million).</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Both
      HSBC and, where relevant and appropriate, the Trustees&#146; long-term investment
      objectives for defined benefit plans are:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">to limit
      the risk of the assets failing to meet the liability of the plans over the
      long-term; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8226;</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">t<FONT size=2>o
      maximise returns consistent with an acceptable level of risk so as to control
      the long-term costs of the defined</FONT></font> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">benefit
      plans.</FONT> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Both
      HSBC and, where relevant and appropriate, the Trustees, consider that the
      investment policy should be consistent with meeting their mutual overall
      long-term investment objectives. In pursuit of these long-term objectives,
      an overall benchmark is established for the allocation of the defined benefit
      plan assets between asset classes. In addition, each permitted asset class
      has its own benchmarks, such as stock market or property valuation indices
      and desired levels of out performance where relevant. This is intended to
      be reviewed at least triennially within 18 months of the date at which the
      actual valuation is made, or more frequently if circumstances or local legislation
      so require. The process generally involves an extensive asset and liability
      review.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      Group&#146;s defined benefit plans, which cover 45 per cent of HSBC&#146;s
      employees, are predominantly funded plans with assets, in the case of most
      of the larger plans, held in trust or similar funds separate from HSBC.
      The plans are reviewed at least annually or in accordance with local practice
      and regulations by qualified actuaries. The actuarial assumptions used to
      calculate the defined benefit obligation and related current service cost
      vary according to the economic conditions of the countries in which they
      are situated.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      largest plan exists in the United Kingdom, where the HSBC Bank (UK) Pension
      Scheme covers employees of HSBC Bank plc and certain other employees of
      HSBC. This plan comprises a funded defined benefit plan (&#145;the principal
      plan&#146;) which is closed and a defined contribution plan which was established
      on 1 July 1996 for new employees. The latest valuation of the principal
      plan was made at 31 December 2002 by C G Singer, Fellow of the Institute
      of Actuaries, of Watson Wyatt LLP. At that date, the market value of the
      principal plan&#146;s assets was US&#36;9,302 million. The actuarial value
      of the plan assets represented 88 per cent of the benefits accrued to members,
      after allowing for expected future increases in earnings, and the resulting
      deficit amounted to US&#36;1,270 million. The method adopted for this valuation
      was the projected unit method and the main assumptions used were a long-term
      investment return of 6.85 per cent per annum, salary increases of 3.0 per
      cent per annum, and post-retirement pension</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">260</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p261"></a>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">increases
      of 2.5 per cent per annum.</font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In anticipation
      of the above valuation result, HSBC made a payment into the principal plan
      in February 2003 amounting to US&#36;817 million. In addition, following
      receipt of the valuation results, a further payment of US&#36;137 million
      was made into the principal plan. HSBC decided to continue ongoing contributions
      to the principal plan at the rate of 20 per cent of pensionable salaries
      until completion of the next actuarial valuation, due as at 31 December
      2005. However, in anticipation of the valuation results disclosing a continuing
      deficit, on 22 December 2005 HSBC Bank plc made an additional contribution
      of US&#36;1,746 million to the principal plan in order to reduce the deficit
      of the plan.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In Hong
      Kong, the HSBC Group Hong Kong Local Staff Retirement Benefit Scheme covers
      employees of The Hongkong and Shanghai Banking Corporation and certain other
      employees of HSBC. The plan comprises a funded defined benefit plan (which
      provides a lump sum on retirement but which is now closed to new members)
      and a defined contribution plan. The latter was established on 1 January
      1999 for new employees. The latest valuation of the defined benefit plan
      was made at 31 December 2004 and was performed by E Chiu, Fellow of the
      Society of Actuaries of the United States of America, of HSBC Life (International)
      Limited, a subsidiary of HSBC Holdings. At that date, the market value of
      the defined benefit plan&#146;s assets was US&#36;942 million. On an ongoing
      basis, the actuarial value of the plan&#146;s assets represented 115 per
      cent of the benefits accrued to members, after allowing for expected future
      increases in salaries, and the resulting surplus amounted to US&#36;121
      million. On a wind-up basis, the actuarial value of the plan&#146;s assets
      represents 128 per cent of the members&#146; vested benefits, based on current
      salaries, and the resulting surplus amounted to US&#36;206 million. The
      actuarial method used was the projected unit credit method and the main
      assumptions used in this valuation were a discount rate of 4.0 per cent
      per annum and long-term salary increases of 3.0 per cent per annum (with
      short-term deviation from 2005 to 2008).</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC
      North America (U.S.) Retirement Income Plan was formed with effect from
      the close of business on 31 December 2004 by the merger of the HSBC Bank
      USA Pension Plan and the HSBC Finance Corporation Retirement Income Plan.
      This plan covers employees of HSBC Bank USA, HSBC Finance Corporation, and
      certain other employees of HSBC. It comprises a funded defined benefit plan
      (now closed) and a cash balance plan. All new employees participate in the
      cash balance plan. The first full actuarial valuation of the merged plan
      was made at 1 January 2005 by Pedro Nebres, Fellow of the Society of Actuaries
      and Dan Kutliroff, Enrolled Actuary, of Mercer Human Resource Consulting.
      Both are members of the American Academy of Actuaries. At that date, the
      market value of the merged plan&#146;s assets was US&#36;2,305 million.
      The actuarial value of the assets represents 137 per cent of the benefits
      accrued to members, after allowing for expected future increases in earnings.
      The resulting surplus amounted to US&#36;622 million. The method employed
      for this valuation was the projected unit credit method and the main assumptions
      used were a discount rate of 8.0 per cent per annum and average salary increases
      of 3.75 per cent per annum. These results are preliminary until the Inland
      Revenue Service grants formal approval for the merger of pension plans which
      is expected by the end of the second quarter of 2006.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC
      Bank (UK) Pension Scheme, The HSBC Group Hong Kong Local Staff Retirement
      Benefit Scheme, and the HSBC North America (U.S.) Retirement Income Plan
      cover 38 per cent of HSBC&#146;s employees<i>.</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>HSBC
      healthcare benefits plans</b></font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC also
      provides post-employment healthcare benefits under plans in the United Kingdom,
      the United States, Canada, Mexico, France and Brazil, the majority of which
      are unfunded. Post-employment healthcare benefits plans are accounted for
      in the same manner as defined benefit pension plans. The plans are reviewed
      at least annually or in accordance with local practice and regulations by
      qualified actuaries. The actuarial assumptions used to calculate the defined
      benefit obligation and related current service cost vary according to the
      economic conditions of the countries in which they are situated. Total healthcare
      cost was US&#36;58 million (2004: US&#36;65 million).</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">261</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p262"></a>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp;
  H O L D I N G S &nbsp; P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-employment
      defined benefit plans&#146; principal actuarial financial assumptions</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The principal
      actuarial financial assumptions used to calculate the Group&#146;s obligations
      under its defined benefit pension and post-employment healthcare plans at
      31 December 2005, were as follows. These assumptions also formed the basis
      for measuring periodic costs under the plans in 2006:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Rate
      of</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>increase
      for</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>pensions
      in</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>payment</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>and</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Rate</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Healthcare</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Discount</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Inflation</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>deferred</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>of
      pay</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>cost
      trend</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>rate</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>rate</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>pension</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>increase</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>rates</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.75</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.7</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.7</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.2</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.7</B></font></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.2</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.7</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.5</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.75</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10.4</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jersey</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.75</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.7</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.7</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.45</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.90</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.75</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.75</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.5</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7.3</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11.75</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.1</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.0</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.0</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.0</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.0</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.25</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7.3</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.25</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1.5</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.25</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="middle">
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC calculates
      that a 25 basis point change in the discount rate used for the HSBC Bank
      (UK) Pension Scheme as at 31 December 2005 would result in a change in the
      plan&#146;s defined benefit obligation of approximately 5 per cent or US&#36;1,030
      million.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC determines
      the discount rates to be applied to its obligations in consultation with
      the plans&#146; local actuaries, on the basis of current average yields
      of high quality (AA rated or equivalent) debt instruments, with maturities
      consistent with that of the defined benefit obligations. The expected rate
      of return on plan assets is based on historical market returns adjusted
      for additional factors such as the current rate of inflation and interest
      rates.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> The principal
      actuarial financial assumptions used to calculate the Group&#146;s obligations
      under its defined benefit pension and post-employment healthcare plans at
      31 December 2004, which formed the basis for measuring the 2005 periodic
      costs, were as follows:</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rate
      of</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">increase
      for</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pensions
      in</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">payment</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rate</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Healthcare</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Discount</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inflation</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      deferred</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      pay</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost
      trend</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pension</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">increase</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rates</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3</FONT></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.2</FONT></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.7</FONT></TD>
    <TD width=2% align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.75</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jersey</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.45</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.75</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.50</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.68</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.75</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.5</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.5</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.25</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.25</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#EEEEEE"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="11" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      principal actuarial financial assumptions used to calculate the Group&#146;s
      obligations under its defined benefit pension and post-employment healthcare
      plans at 31 December 2003, which formed the basis for measuring the 2004
      periodic costs, were as follows:</font></TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">262</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p263"></a></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rate
      of</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">increase
      for</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pensions
      in</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">payment</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rate</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Healthcare</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Discount</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Inflation</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      deferred</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      pay</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost
      trend</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rate</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pension</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">increase</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rates</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.0</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.5</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.25</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.75</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jersey</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.25</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.75</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.68</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.11</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.15</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.25</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.25</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.0</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.25</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="11" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mortality
      assumptions are increasingly significant in measuring the Group&#146;s obligations
      under its defined benefit pension and post-employment healthcare plans,
      particularly given the maturity of the plans. HSBC calculates that each
      additional year of longevity assumed in calculating its defined benefit
      obligation for the HSBC Bank (UK) Pension Scheme increases its obligation
      by approximately US&#36;600 million. The mortality tables and average life
      expectancy at 65 used at 31 December 2005 were as follows:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=4 align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Life
      expectancy at</B></font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=3 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Life
      expectancy at</b></font></TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=4 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>age
      65 for a male</B></font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=3 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>age
      65 for a female</b></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mortality
      table</FONT></TD>
    <TD colspan=4 align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>member
      currently:</B></font></TD>
    <TD align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=3 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>member
      currently:</b></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Aged
      65</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Aged
      45</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Aged
      65</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Aged
      45</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
    <TD width=18% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PA92U2005</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>19.53</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20.89</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>22.57</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>23.86</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>n/a</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">RP
      2000 imp 2005</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17.90</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17.90</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20.25</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20.25</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jersey</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PA92C2036</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20.83</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20.83</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>23.75</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>23.75</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAM83M</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>16.56</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>16.56</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>16.56</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>16.56</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AT83</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.51</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.51</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.89</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.89</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TPG93</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>23.02</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>25.32</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>23.02</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>25.32</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada
      pension plans</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UP94
      C2012 and</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.65</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.65</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.37</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.37</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UP94
      C2027</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>and
      19.84</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>and
      19.84</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>and
      22.00</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>and
      22.00</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada
      healthcare plan</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAM94M/F</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17.88</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17.88</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.32</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.32</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">EVK2000
      (3% loading)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.30</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.30</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.21</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>21.21</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Heubeck
      2005 G</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18.06</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20.84</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>22.20</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>24.85</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="11" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      mortality tables and average life expectancy at 65 used at 31 December 2004
      were as follows:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=4 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Life
      expectancy at</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan=3 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Life
      expectancy at</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=4 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">age
      65 for a male</font></TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan=3 align=center><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">age
      65 for a female</font></TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mortality
      table</FONT></TD>
    <TD colspan=4 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">member
      currently:</font></TD>
    <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      </font></TD>
    <TD colspan=3 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;member
      currently:</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Aged
      65</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Aged
      45</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Aged
      65</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Aged
      45</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
    <TD width=18% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PA92U2002</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.26</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.72</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22.31</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.71</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">n/a</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAM83M/F</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.56</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.56</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.21</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.21</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jersey</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PA92C2036</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.83</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20.83</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.75</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.75</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UP84</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AT83</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.51</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.51</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.89</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.89</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TPG93</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.02</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.32</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23.02</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.32</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada
      pension plans</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UP94
      C2012 and</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.65</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.65</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.37</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.37</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UP94
      C2027</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      19.84</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      19.84</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      22.00</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
      22.00</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada
      healthcare plan</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAM94M/F</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.88</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.88</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.32</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.32</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">EVK2000
      (3% loading)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.30</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18.30</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.21</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.21</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Heubeck
      Richttafeln</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.67</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.67</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.19</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21.19</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">263</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p264"></a>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp;
  H O L D I N G S &nbsp; P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=4 align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=4 align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=4 align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Defined
      benefit pension plans</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      calculation of the net liability under the Group&#146;s defined benefit
      pension plans is set out below together with the expected rates of return
      and plan assets used to measure the net defined benefit pension costs in
      each subsequent year:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=4 align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="7" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>At
      31 December 2005</B></font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=7 align=center><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=3 align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC
      Bank (UK) Pension</B> <b>Scheme</b></font></TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Other
      plans</b></font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=left> <hr noshade size=1></TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=right><hr noshade size=1> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Expected</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Expected</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>rates
      of</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>rates
      of</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>return</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Value</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>return</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Value</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD width=15% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.0</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8,181</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.6</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,749</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bonds</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.3</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,234</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.2</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,539</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.5</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,540</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.5</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>97</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.6</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,441</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.6</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>971</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value of plan assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17,396</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,356</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present
      value of funded obligations</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(20,587</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(6,687</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present
      value of unfunded obligations</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(415</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defined
      benefit obligation</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(20,587</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(7,102</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of limit on plan surpluses</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(7</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised
      past service cost</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      liability</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(3,191</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(750</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="7" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2004</FONT> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=7 align=center><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank (UK) Pension</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Scheme</font></TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      plans</font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center><hr noshade size=1> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected<br>
      rates</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      rates</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      return</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      return</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD width=15% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.1</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">
      <h5>&nbsp;</h5></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,718</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">
      <h5>&nbsp;</h5></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.5</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">
      <h5>&nbsp;</h5></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,649</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">
      <h5>&nbsp;</h5></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bonds</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.7</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,100</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,044</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,536</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">751</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,062</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value of plan assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,105</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,823</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present
      value of funded obligations</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,988</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,739</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present
      value of unfunded obligations</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(762</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defined
      benefit obligation</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,988</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,501</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of limit on plan surpluses</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised
      past service cost</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      liability</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,883</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(689</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Plan
      assets included US&#36;80 million (2004: US&#36;76 million) of equities
      and US&#36;53 million (2004: US&#36;nil) of other assets issued by HSBC.</font></TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">264</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p265"></a></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=4 align=right> <div align="left"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Changes
        in the present value of defined benefit obligations</b> </font></div></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC
      Bank</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(UK)
      Pension</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Other</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(UK)
      Pension</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Scheme</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>plans</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Scheme</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">plans</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>19,988</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,501</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,619</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,651</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current
      service cost</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>383</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>283</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">348</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      cost</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>981</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>333</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">921</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">326</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contributions
      by employees</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>14</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Actuarial
      losses</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,968</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>506</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">956</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">285</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benefits
      paid</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(540</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(338</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(586</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(276</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Past
      service cost &#150; vested immediately</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(3</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Past
      service cost &#150; unvested benefits</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acquisitions</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>84</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(Gains)/losses
      on curtailments</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(4</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">242</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
      extinguished on settlements</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(6</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
      differences</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(2,277</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(187</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,488</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">231</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20,587</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7,102</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,988</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,501</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Changes
      in the fair value of plan assets</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="4" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="5" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="4" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="5" align=center><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC
      Bank</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(UK)
      Pension</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Other</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(UK)
      Pension</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Scheme</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>plans</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Scheme</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">plans</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>15,105</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,823</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,837</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,275</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      return on plan assets</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>954</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>401</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">927</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">382</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contributions
      by HSBC</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,986</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>448</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">289</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;
        normal</FONT></div></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>240</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>156</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">289</FONT>
    </TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
    </TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee"> <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;
        special</FONT></div></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,746</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>292</B>
      </font></TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
    <TD align=right bgcolor="#EEEEEE">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#CCCCCC">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contributions
      by employees</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>14</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Experience
      gains</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,623</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>78</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">506</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benefits
      paid</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(540</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(287</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(586</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(224</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acquisitions</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>58</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assets
      distributed on settlements</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(3</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
      differences</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,790</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(118</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,132</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">168</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17,396</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,356</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,105</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,823</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="12" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
         actual return on plan assets for the year ended 31 December 2005 was
        US&#36;3,056
      million (2004: US&#36;1,818 million). Following the US&#36;1,746 million
      special contribution to the HSBC Bank (UK) Pension Scheme in 2005, HSBC
      expects to make US&#36;390 million of contributions to defined benefit
      pension plans during 2006. Benefits expected to be paid from the plans
      to retirees over each of the next five years, and in aggregate for the
      five years thereafter, are:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="12" align=left>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2010</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2011-2016</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank (UK) Pension Scheme</FONT></TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">577</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">592</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">608</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">625</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">642</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,231</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      significant plans</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">285</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">295</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">313</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">322</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">361</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,256</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">265</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p266"></a>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp;
  H O L D I N G S &nbsp; P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="9" align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Total
          expense recognised in the income statement in &#145;Employee compensation
      and benefits&#146;</b></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC
      Bank</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(UK)
      Pension</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Other</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(UK)
      Pension</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Scheme</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>plans</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Scheme</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">plans</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current
      service cost</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>383</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>283</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">348</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      cost</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>981</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>333</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">921</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">326</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      return on plan assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(954</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(401</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(927</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(382</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Past
      service cost</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(3</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(Gains)/losses
      on curtailments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(4</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">242</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      expense</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>410</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>208</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">584</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">176</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Summary</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=center>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <hr noshade size=1></TD>
    <TD align=left><hr noshade size=1></TD>
    <TD align=left><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC
      Bank</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(UK)
      Pension</B> </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Other</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(UK)
      Pension</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Scheme</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>plans</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Scheme</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">plans</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defined
      benefit obligation</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(20,587</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(7,102</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,988</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,501</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value of plan assets</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17,396</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,356</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,105</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,823</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      deficit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(3,191</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(746</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,883</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(678</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Experience
      gains/(losses) on plan liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>70</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(113</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">401</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(42</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Experience
      gains on plan assets</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,623</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>78</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">506</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Losses
      from changes in actuarial assumptions</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(2,038</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(393</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,357</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(243</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      net actuarial losses</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(345</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(428</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(450</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(282</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Actuarial
      gains and losses represent experience adjustments on plan assets and liabilities
      as well as adjustments arising from changes in actuarial assumptions. Total
      net actuarial losses recognised in equity at 31 December 2005 were US&#36;1,505
      million.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      total effect of the limit on plan surpluses recognised in equity together
      with net actuarial losses in 2005 was a US&#36;4 million gain (2004: US&#36;4
      million loss).</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-employment
      healthcare benefits plans</font></TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan=3 align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font>
    </TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Expected
      rates</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      rates</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>of
      return</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Value</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
      return</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12.0</B></font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>32</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.5</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bonds</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.5</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>75</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.25</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value of plan assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>107</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present
      value of funded obligations</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(178</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(143</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present
      value of unfunded obligations</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(826</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(839</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defined
      benefit obligation</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,004</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(982</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised
      past service cost</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(31</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      liability</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(928</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(903</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">266</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p267"></a></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Changes
      in the present value of defined benefit obligations</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>982</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">886</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current
      service cost</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      cost</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>63</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contributions
      by employees</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Actuarial
      losses/(gains)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>44</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benefits
      paid</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(50</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(43</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Past
      service cost:</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;&#150; vested immediately</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(13</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;&#150; unvested benefits</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(29</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acquisitions</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
      differences</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(17</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,004</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">982</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Changes
      in the fair value of plan assets</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>79</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">
      <h5>&nbsp;</h5></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">
      <h5>&nbsp;</h5></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      return on plan assets</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contributions
      by HSBC</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>19</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Experience
      gains</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benefits
      paid</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(7</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
      differences</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>107</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      actual return on plan assets for the year ended 31 December 2005 was US&#36;11
      million (2004: US&#36;8 million). HSBC expects to make US&#36;19 million
      of contributions to post-employment healthcare benefit plans during 2006.
      Benefits expected to be paid from the plans to retirees over each of the
      next five years, and in aggregate for the five years thereafter, are:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2010</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2011-2016</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Significant
      plans</FONT></TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=4 align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=4 align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Total
      expense recognised in the income statement in &#145;Employee compensation
      and benefits&#146;</b> </font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current
      service cost</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>18</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      cost</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>63</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      return on plan assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(10</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Past
      service cost</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(13</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      expense</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>58</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">267</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p268"></a>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp;
  H O L D I N G S &nbsp; P L C</FONT></p>
<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Summary</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defined
      benefit obligation</FONT></TD>
    <TD width=105 align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,004</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD width=105 align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(982</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value of plan assets</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>107</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      deficit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(897</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(903</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Experience
      gains/(losses) on plan liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>19</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Experience
      gains on plan assets</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(Losses)/gains
      from changes in actuarial assumptions</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(63</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      net actuarial (losses)/gains</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(43</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Actuarial
      gains and losses represent experience adjustments on plan assets and liabilities
      as well as adjustments arising from changes in actuarial assumptions. Total
      net actuarial losses recognised in equity at 31 December 2005 were US&#36;38
      million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The actuarial
      assumptions of the healthcare cost trend rates have a significant effect
      on the amounts recognised. A one percentage point change in assumed healthcare
      cost trend rates would have the following effects on amounts recognised
      in 2005:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1%
      increase</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1%
      decrease</B> </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increase/(decrease)
      on the aggregate of the current service cost and interest cost</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(6</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increase/(decrease)
      on defined benefit obligation</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>108</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(86</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=3 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings</font>
    </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employee
      compensation and benefit expense in respect of HSBC Holdings&#146; employees
      in 2005 amounted to US&#36;166 million (2004: US&#36;106 million). The average
      number of persons employed by HSBC Holdings during 2005 was 433 (2004: 421).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employees
      of HSBC Holdings who are members of defined benefit pension plans are principally
      members of either the HSBC Bank (UK) Pension Scheme or the HSBC International
      Staff Retirement Benefit Scheme. There is no contractual or stated policy
      for charging the net defined benefit cost to HSBC Holdings, which is recognised
      in the consolidated accounts of HSBC in the note above. HSBC Holdings pays
      contributions to plans in accordance with schedules determined by the Trustees
      following consultation with qualified actuaries.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=3 face="TimesNewRoman,Times New Roman,Times,serif">Directors&#146;
      emoluments</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The aggregate
      emoluments of the Directors of HSBC Holdings, computed in accordance with
      Part I of Schedule 6 of the Companies Act, were:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;000</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;000</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2,100</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,713</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Salaries
      and other emoluments</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12,869</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,721</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bonuses</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>13,264</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,288</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>28,233</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,722</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      on the exercise of share options</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,078</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Vesting
      of Restricted Share Plan awards</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>24,221</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,598</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition,
      there were payments under retirement benefit agreements with former Directors
      of US&#36;996,098 (2004: US&#36;906,000). The provision at 31 December 2005
      in respect of unfunded pension obligations to former Directors amounted
      to US&#36;16,458,975 (2004: US&#36;17,016,000).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
      the year, aggregate contributions to pension schemes in respect of Directors
      were US&#36;4,819,759 (2004: US&#36;4,423,122), including US&#36;3,304,081
      (2004: US&#36;2,198,072) arising from a Director&#146;s waiver of bonus.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Discretionary
        bonuses for Directors are based on a combination of individual and corporate
        performance and are determined by the Remuneration Committee. The cost
        of the conditional awards under the Restricted Share Plan is recognised
        through an annual charge based on the original cost and the likely level
    of vesting of shares, apportioned</font></td>
  </tr>
</table>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">268</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p269"></a>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">over the
      period of service to which the award relates. Details of Directors&#146;
      remuneration, share options and conditional awards under the Restricted
      Share Plan are included in the &#145;Directors&#146; Remuneration Report&#146;
      on pages 215 to 232.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>8</b></font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b> General
      and administrative expenses</b></font></td>
  </tr>
  <tr>
    <td><HR noshade size=1></td>
    <td><HR noshade size=1></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Auditors&#146;
      remuneration</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Auditors&#146;
        remuneration in relation to statutory audit amounted to US&#36;47.0 million
        (2004: US&#36;41.7 million). </font></p>
      <p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
          fees were paid by HSBC companies to the Group&#146;s principal auditor, KPMG Audit Plc and its affiliated
      firms (together &#145;KPMG&#146;):</font></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Audit
      services:</font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&#150;</font></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">statutory
      audit</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>45.5</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39.6</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">      &nbsp;&nbsp;&#150;</font></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">audit-related
      regulatory reporting</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      audit services</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>63.0</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48.9</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further
      assurance services</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>15.3</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax
      services</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.6</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.2</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      services</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1.7</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.4</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      fees paid to KPMG</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>82.6</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=2 align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of fees
      paid to auditors for non-audit work, US&#36;0.1 million were capitalised
      (2004: US&#36;0.4 million).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
      in &#145;Further assurance services&#146; above are fees paid to KPMG in
      respect of work relating to preparation for reporting under section 404
      of the Sarbanes-Oxley Act of US&#36;11.7 million (2004: US&#36;4.1 million).
      Other accounting firms have been paid a total of US&#36;16.7 million (2004:
      US&#36;6.6 million) for work on this project.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
        is a description of the type of services included within the categories
      listed above:</font></td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td width="3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Audit-related
      regulatory reporting services include services for assurance and other services
      that are reasonably</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">related
      to the performance of the audit or review of financial statements, including
      comfort letters and interim</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">reviews.</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      </font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further
      assurance services include services for advice on accounting matters, reporting
      on internal controls not</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">connected
      with the financial statements, due diligence work and environmental audits.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax services
      include tax compliance services and tax advice.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other services
      include other assurance and advisory services such as translation services,
      review of financial</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">models
      and advice on IT security.</font></td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition
      to the above, KPMG estimate they have been paid fees of US&#36;4.5 million
      (2004: US&#36;4.0 million) by parties other than HSBC but where HSBC is
      connected with the contracting party and therefore may be involved in appointing
      KPMG. These fees arise from services such as auditing mutual funds managed
      by HSBC and reviewing the financial position of corporate concerns which
      borrow from HSBC.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>9</b></font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b> Share-based
      payments</b></font> </td>
  </tr>
  <tr>
    <td><HR noshade size=1></td>
    <td><HR noshade size=1></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
      2005, US&#36;540 million was charged to the income statement in respect
      of equity-settled share-based payment transactions (2004: US&#36;450 million).
      This expense was based on the fair value of the share-based payment transactions
      when contracted. All of the expense arose under employee share awards made
      within HSBC&#146;s reward structures.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Calculation
      of fair values</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair values
      of share options/awards, measured at the date of grant of the option/award,
      are calculated using a binomial lattice model methodology that is based
      on the underlying assumptions of the Black-Scholes model. When modelling
      options/awards with vesting dependent on HSBC&#146;s Total Shareholder Return
      over a period, these performance targets are incorporated into the model
      using Monte Carlo simulation. The expected life of options depends on the
      behaviour of option holders, which is incorporated into the option model
      consistent with historic</font></td>
  </tr>
</table>

<P align="center"><FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">269</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p270"></a>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <p><a href="#contents">Back to Contents</a></p>
    </font></font> <p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H
      S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></p>
    <P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
      on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
    <table width="100%" border="0" cellspacing="0" cellpadding="0">
      <tr>
        <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
        <td bgcolor="#DDDDDD">&nbsp;</td>
      </tr>
    </table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">observable
      data. The fair values calculated are inherently subjective and uncertain
      due to the assumptions made and the limitations of the model used.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      significant weighted average assumptions used to estimate the fair value
      of the options granted in 2005 were as follows:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3-year</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5-year</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Savings-</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Savings-</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Holdings</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Related</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Related
      Share</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>The</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Group
      Share</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Share
      Option</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Option</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>HSBC</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Option
      Plan</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Plans</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Plans</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Share
      Plan</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk-free
      interest rate<SUP>1 </SUP>(%)</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.6</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.3</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.3</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.3</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      life<SUP>2 </SUP>(years)</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7.8</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      volatility<SUP>3 </SUP>(%)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>20</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1&nbsp;
      </FONT></TD>
    <TD valign="top"> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>The
      risk-free rate was determined from the UK gilts yield curve for the HSBC
      Holdings Group Share Option Plan awards and UK Savings-Related Share Option
      Plans. A similar yield curve was used for the International Savings-Related
      Share Option Plans</I>.</font> </TD>
  </TR>
  <TR>
    <TD  valign=top>&nbsp;</TD>
    <TD  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2&nbsp;
      &nbsp; &nbsp; </FONT></TD>
    <TD valign="top"> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>Expected
      life is not a single input parameter but a function of various behavioural
      assumptions.</I> </font></TD>
  </TR>
  <TR>
    <TD  valign=top>&nbsp;</TD>
    <TD  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3&nbsp;
      &nbsp; &nbsp; </FONT></TD>
    <TD valign="top"> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>Expected
      volatility is estimated by considering both historic average share price
      volatility and implied volatility derived from traded options over HSBC
      shares of similar maturity to those of the employee options.</I> </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      dividend yield was determined, denominated in US dollars, to be 12 per cent
      for the first year and 8 per cent thereafter, consistent with consensus
      analyst forecasts.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=3 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC
      Share Plan</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC
      Share Plan was adopted by HSBC in 2005. Under this Plan Performance Share
      awards, Restricted Share awards and Share Option awards may be made. The
      aim of The HSBC Share Plan is to align the interests of executives to the
      creation of shareholder value and recognise individual performance and potential.
      Awards are also made under this plan for recruitment and retention purposes.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Performance
      Share awards</b></font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Performance
      Share awards are made to Senior Executives taking into account individual
      performance in the prior year. Performance Share awards are divided into
      two equal parts for testing attainment against pre-determined benchmarking.
      One half is subject to a Total Shareholder Return measure, based on HSBC&#146;s
      ranking against a comparator group of 28 major banks. The other half of
      the award is subject to an Earnings Per Share target. For each element of
      the award, shares would be released to the employee according to a sliding
      scale from 30 to 100 per cent of the award, dependent upon the scale of
      achievement against the benchmarks and provided that a threshold has been
      passed. If the threshold is not passed, 0 per cent will vest for that part
      of the award. Shares will be released after three years to the extent that
      the performance conditions are satisfied. These awards are forfeited in
      total if HSBC performance fails to meet the minimum criteria.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <div align="right"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B>
        <b>&#146;s)</b> </font></div></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions
      during the year<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,077</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,077</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1&nbsp;&nbsp;&nbsp;<I>Additions
      during the year include 3,453,884 shares awarded to employees of HSBC Holdings.</I>&nbsp;
      </FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      weighted average fair value of shares awarded by HSBC for Performance Share
      awards in 2005 was US&#36;9.02.</font></TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">270</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p271"></a>
    </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">

<p><a href="#contents">Back to Contents</a></p>
</font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="3" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Restricted
      Share awards</b></font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Restricted
      Share awards are made to eligible employees for recruitment and retention
      purposes or as part of deferral of annual bonus. The awards vest between
      one and three years from date of award.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions
      during the year<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,285</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Released
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(179</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,106</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1">&nbsp;</font></TD>
    <TD align=left> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1&nbsp;&nbsp;&nbsp;<I>Additions
      during the year include 823 shares awarded to employees of HSBC Holdings.</I>&nbsp;
      </FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      weighted average fair value of shares awarded by HSBC for Restricted Share
      Awards in 2005 was US&#36;16.66.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="3" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Share
      options</b></font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      options were granted under the Rules of The HSBC Share Plan to employees
      in France based on their performance in the previous year. The share options
      are subject to the corporate performance condition, which consists of an
      absolute Earnings Per Share measure and a Total Shareholder Return measure,
      based on HSBC&#146;s ranking against a comparator group of 28 major banks.
      The options vest after three years and are exercisable up to the fourth
      anniversary of the date of grant, after which they will lapse.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Weighted</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>average</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>exercise</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>price</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000&#146;s)</B> </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#163;</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Granted
      in the year</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>628</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.84</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>628</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.84</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fair
      value of options granted in the year as at the date of grant was US&#36;2.29.
      The remaining contractual life of options outstanding at the balance sheet
      date is 4 years. None of these options are exercisable at the balance sheet
      date.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Savings-related
      share option plans</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The savings-related
      share option plans invite eligible employees to enter into savings contracts
      to save up to &#163;250 per month, with the option to use the savings to
      acquire shares. The aim of the plan is to align the interests of all employees
      to the creation of shareholder value. The options are exercisable within
      six months following either the third or the fifth anniversary of the commencement
      of the savings contract depending on conditions set at grant. The exercise
      price is set at a 20 per cent (2004: 20 per cent) discount to the market
      value at the date of grant.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center> <hr noshade size=1></TD>
    <TD align=center></TD>
    <TD colspan="3" align=center> <hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Weighted</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>average</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">average</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>exercise</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercise</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>price</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000&#146;s) </B></font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#163;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000&#146;s) </FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>109,722</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.92</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">123,316</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.75</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Granted
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>26,995</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.68</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,040</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.47</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercised
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(29,693</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.06</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(30,068</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.76</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(8,608</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.06</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8,566</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.67</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>98,416</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.07</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109,722</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.92</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>The
      above includes HSBC Holdings employee options of 599,322 outstanding at
      1 January 2005 (2004: 669,647), 136,100 options granted in the year (2004:
      125,442) and 606,205 options outstanding at 31 December 2005 (2004: 599,322).</I>
      </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
    <P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">271</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p272"></a>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <p><a href="#contents">Back to Contents</a></p>
    </font></font> <p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H
      S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></p>
    <P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
      on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
    <table width="100%" border="0" cellspacing="0" cellpadding="0">
      <tr>
        <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
        <td bgcolor="#DDDDDD">&nbsp;</td>
      </tr>
    </table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="7" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      weighted average fair value of options granted in the year as at the date
      of grant was US&#36;3.76 (2004: US&#36;3.75) . The exercise price range
      and weighted average remaining contractual life for options outstanding
      at the balance sheet date, were as follows:</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise
      price range (&#163;)</FONT></TD>
    <TD width=1% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      </font></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#163;5.35
      - &#163;6.75</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;    </TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;5.35
      - &#163;6.75</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
      average remaining contractual life (years)</FONT></TD>
    <TD align=left> </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1.89</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.82</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of
      which exercisable:</FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;Number (000&#146;s)</font></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>772</B></font></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,341</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;Weighted average exercise price (&#163;)</font></TD>
    <TD align=left> </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.09</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.20</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Holdings Restricted Share Plan 2000</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="5" align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Performance
      Share awards made under the HSBC Holdings Restricted Share Plan 2000</b></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Performance
      Share awards under the Restricted Share Plan were granted to Senior Executives
      from 1996 to 2004. The aim of the plan was to align the interests of executives
      to the creation of shareholder value. This was achieved by setting certain
      Total Shareholder Return targets against a peer group of major banks which
      must normally be attained in order for the awards to vest. No further awards
      will be made under this Plan following adoption of the HSBC Share Plan in
      2005 other than from reinvested scrip dividends.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=right>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s)</font>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>17,044</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,669</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions
      during the year<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>710</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,727</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Released
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(2,455</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,352</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(329</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>14,970</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,044</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1&nbsp;
      &nbsp; &nbsp; </FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>Additions
      during the year include reinvested scrip dividends. Additions during the
      year also include 321,279 shares awarded to employees of HSBC Holdings.</I>
      </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The weighted
      average remaining vesting period as at 31 December 2005 was 2.14 years (2004:
      2.52 years).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Restricted
      share awards made under the HSBC Holdings Restricted Share Plan 2000 (&#145;Achievement
      Shares&#146;)</b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Achievement
      shares are utilised to promote widespread interest in HSBC shares among
      employees and to help foster employee engagement. They are awarded to eligible
      employees after taking into account the employee&#146;s performance in the
      prior year. Shares are awarded without corporate performance conditions
      and are released to employees after three years providing the employees
      have remained continuously employed by HSBC for this period. During 2005,
      10,245 employees each received an average award of 1,146 shares under this
      scheme.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number
      of</B> </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>shares</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>000</B><b>&#146;s</b> </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions
      during the year<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11,741</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11,741</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>Additions
      during the year include reinvested scrip dividends. Additions during the
      year also include 384,797 shares awarded to employees of HSBC Holdings.</I>
      </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The weighted
      average fair value of shares awarded by HSBC for Achievement Share Awards
      in 2005 was US&#36;15.88.</font></td>
  </tr>
</table>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">272</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p273"></a></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">

<p><a href="#contents">Back to Contents</a></p>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Other
      awards made under the HSBC Holdings Restricted Share Plan 2000</b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other awards
      were made under the HSBC Holdings Restricted Share Plan 2000 as part deferral
      of annual bonus. Awards were also made for recruitment and retention purposes.
      The awards generally vest from one to three years from the date of award.
      Awards made under this plan ceased in May 2005. Awards of restricted shares
      on or after 27 May 2005 were made under the Rules of the HSBC Share Plan.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s)</font>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>46,021</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,153</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions
      during the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>22,698</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Released
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(21,007</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,813</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1,026</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15,945</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>46,686</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,021</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The above
      includes HSBC Holdings employee awards of 864,327 options outstanding at
      1 January 2005 (2004: 1,152,055) and 712,922 options outstanding at 31 December
      2005 (2004: 864,327).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The weighted
      average remaining vesting period as at 31 December 2005 was 1.09 years (2004:
      1.47 years).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
      Group Share Option Plan</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC
      Holdings Group Share Option Plan was a long-term incentive plan under which
      certain HSBC employees between 2000 and 2005 were awarded share options.
      The aim of the plan was to align the interests of those higher performing
      employees to the creation of shareholder value. This was achieved by setting
      certain Total Shareholder Return targets which must normally be attained
      in order for the awards to vest. Options were granted at market value and
      are normally exercisable between the third and tenth anniversaries of the
      date of grant, subject to vesting conditions. Any options granted after
      May 2005 will be made under the Rules of the HSBC Share Plan.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center></TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Weighted</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>average</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">average</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>exercise</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercise</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>price</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#163;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s)</font>
    </TD>
    <TD align=right>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>220,670</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.07</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">163,997</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.00</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Granted
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7,470</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.36</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63,682</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.28</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercised
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(11,764</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.49</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,460</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.59</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(6,394</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.00</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,549</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.00</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>209,982</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.06</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">220,670</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.07</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1&nbsp;
      &nbsp; &nbsp; </FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>The
      above includes HSBC Holdings employee awards of 2,624,133 options outstanding
      at 1 January 2005 (2004: 2,672,400), 3,775 options granted in the year (2004:37,280)
      and 2,537,647 options outstanding at 31 December 2005 (2004: 2,624,133).</I>
      </font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      weighted average fair value of options granted in the year as at the date
      of grant was US&#36;3.09 (2004: US&#36;2.96) . The number of options, weighted
      average exercise price, and the weighted average remaining contractual life
      for options outstanding at the balance sheet date, analysed by exercise
      price range, were as follows:</font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise
      price range (&#163;)</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.00
      - 8.00</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.01
      - 10.00</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.00
      - 8.00</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.01
      - 10.00</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number
      (000&#146;s)</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>53,242</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>156,741</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,246</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">165,424</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
      average exercise price (&#163;)</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.91</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.45</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.91</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.46</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
      average remaining contractual life (years)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5.63</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7.05</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.46</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.86</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of
      which exercisable:</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;Number (000&#146;s)</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>411</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>84,145</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,463</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;Weighted average exercise price (&#163;)</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7.46</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8.55</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.72</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
    <P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">273</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p274"></a>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <p><a href="#contents">Back to Contents</a></p>
    </font></font> <p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H
      S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></p>
    <P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
      on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
    <table width="100%" border="0" cellspacing="0" cellpadding="0">
      <tr>
        <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
        <td bgcolor="#DDDDDD">&nbsp;</td>
      </tr>
    </table>

<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
      Executive Share Option Scheme</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The HSBC
      Holdings Executive Share Option Scheme was a long-term incentive scheme
      under which certain senior HSBC employees were awarded share options before
      the adoption of the HSBC Holdings Group Share Option Plan in 2000. The aim
      of the plan was to align the interests of those higher performing senior
      employees to the creation of shareholder value. This was achieved by setting
      certain Total Shareholder Return targets to be attained in order for the
      awards to vest. Options were granted at market value and were exercisable
      between the third and tenth anniversaries of the date of grant, subject
      to vesting conditions. No awards have been made under this plan since 2000
      and the remaining unexercised options are summarised below:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center></TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Weighted</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>average</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">average</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>exercise</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">exercise</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>price</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#163;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s)</font>
    </TD>
    <TD align=right>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>43,977</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.76</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59,613</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.73</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercised
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(11,206</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.67</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14,823</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.62</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(516</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7.31</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(813</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.90</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>32,255</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.78</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43,977</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.76</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1
      </FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>The
      above includes HSBC Holdings employee awards of 864,327 options outstanding
      at 1 January 2005 (2004: 1,152,055) and 712,922 options outstanding at 31
      December 2005 (2004: 864,327).</I> </font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      weighted average fair value of options as at the last date of grant during
      2000 was US&#36;5.26.</font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      number of options, weighted average exercise price and the weighted average
      remaining contractual life for options outstanding at the balance sheet
      date, analysed by exercise price range, were as follows:</font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise
      price range (&#163;)</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2.17
      - 6.00</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.01
      - 7.87</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.17
      - 6.00</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.01
      - 7.87</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number
      (000&#146;s)</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>781</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>31,474</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,233</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,744</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
      average exercise price (&#163;)</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.57</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.83</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.31</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.83</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
      average remaining contractual life (years)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>0.97</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3.64</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.78</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.63</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of
      which exercisable:</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;Number (000&#146;s)</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>781</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>31,474</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,233</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,744</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
      &nbsp;Weighted average exercise price (&#163;)</font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4.57</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6.83</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.31</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.83</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France
      and subsidiary company plans</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Before
      its acquisition by HSBC in 2000, HSBC France and certain of its subsidiaries
      operated employee share plans under which share options were granted over
      their respective shares.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
      over HSBC France shares granted between 1994 and 1999 vested upon announcement
      of HSBC&#146;s intent to acquire HSBC France and were therefore included
      in the valuation of HSBC France.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France
      granted 909,000 options in 2000 after the public announcement of the acquisition
      and these options did not vest as a result of the change in control. The
      options were subject to continued employment and vested on 1 January 2002.
      The HSBC France shares obtained on exercise of the options are exchangeable
      for HSBC&#146;s ordinary shares of US&#36;0.50 each in the same ratio as
      the Exchange Offer for Cr&eacute;dit Commercial de France shares (13 ordinary
      shares of US&#36;0.50 for each HSBC France share). Options were granted
      at market value and are exercisable within 10 years of the date of grant.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center></TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Exercise</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>price</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#128;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s)</font>
    </TD>
    <TD align=right>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>860</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>142.5</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">862</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142.5</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercised
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(94</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>142.5</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>766</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>142.5</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">860</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The remaining
      contractual life for options outstanding at the balance sheet date was 6
      years.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At the
      date of its acquisition in 2000, certain of HSBC France&#146;s subsidiary
      companies also operated employee share</font></td>
  </tr>
</table>
<P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">274</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p275"></a></font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">

<p><a href="#contents">Back to Contents</a></p>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">option plans
      under which options could be granted over their respective shares. On exercise
      of certain of these options, the subsidiary shares are exchanged for HSBC
      ordinary shares. The total number of HSBC ordinary shares exchangeable under
      such arrangements was 821,466 shares during the year.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance
      Corporation</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Upon acquisition,
      HSBC Finance Corporation share options previously granted were converted
      to share options over HSBC ordinary shares of US&#36;0.50 each at a rate
      of 2.675 HSBC share options (the same ratio as the Exchange Offer for HSBC
      Finance Corporation) for each HSBC Finance Corporation share option. Options
      granted under HSBC Finance&#146;s own share option schemes prior to the
      announcement of the acquisition by HSBC in November 2002 vested as options
      over HSBC shares upon acquisition by HSBC. Options granted after the announcement
      of the acquisition in November 2002 but prior to its completion on 28 March
      2003, generally vest equally over 4 years and expire 10 years from the date
      of grant.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Information
      with respect to share options granted under the HSBC Finance Corporation&#146;s
      pre-acquisition scheme was as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=left><hr noshade size=1></TD>
    <TD align=left></TD>
    <TD colspan="3" align=left><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Exercise</B></font></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Number</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>price</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">price</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(000</B><b>&#146;s)</b> </font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(000</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#146;s)</font>
    </TD>
    <TD align=right>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Finance Corporation share options outstanding at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7,112</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10.66</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,316</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercised
      in the year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(754</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10.66</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(174</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Forfeited
      in the year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(30</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outstanding
      at 31 December</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,358</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10.66</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,112</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of
      which exercisable</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,520</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10.66</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,238</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.66</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10</B></font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Tax
      expense</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><HR noshade size=1> </TD>
    <TD colspan="5" align=left><hr noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Current
      tax</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United
      Kingdom corporation tax charge &#150; on current year profit</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>663</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">848</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United
      Kingdom corporation tax charge &#150; adjustments in respect of prior years</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>29</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(132</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Overseas
      tax &#150; on current year profit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4,103</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,877</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Overseas
      tax &#150; adjustments in respect of prior years</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(110</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(21</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>4,685</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,572</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Deferred
      tax</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Origination
      and reversal of temporary differences</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>506</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,204</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of changes in tax rates</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>8</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustments
      in respect of prior years</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(106</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(76</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>408</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,113</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax
      expense</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,093</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,685</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Holdings and its subsidiary undertakings in the United Kingdom provided
      for UK corporation tax at 30 per cent (2004: 30 per cent). Overseas tax
      included Hong Kong profits tax of US&#36;639 million (2004: US&#36;539 million).
      Subsidiaries in Hong Kong provided for Hong Kong profits tax at the rate
      of 17.5 per cent (2004: 17.5 per cent) on the profits for the year assessable
      in Hong Kong. Other overseas subsidiaries and overseas branches provided
      for taxation at the appropriate rates in the countries in which they operate.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following table reconciles the overall tax expense which would apply if
      all profits had been taxed at the UK corporation tax rate:</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">275</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p276"></a>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <p><a href="#contents">Back to Contents</a></p>
    </font></font> <p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H
      S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></p>

<P><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT> </B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
        <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
        <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font> </TD>
    <TD align=center>&nbsp; </TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Analysis
      of overall tax expense</B></font></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Taxation
      at UK corporation tax rate of 30 per cent (2004: 30 per cent)</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6,290</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>30.0</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,683</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30.0</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Impact
      of overseas profits in principal locations taxed at different rates</font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(342</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1.6</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(347</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1.8</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax-free
      gains</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(220</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(1.0</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(64</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.3</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustments
      in respect of prior period liabilities</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(187</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(0.9</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(229</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1.2</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low
      income housing tax credits<SUP>1</SUP>&nbsp; </FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(110</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(0.5</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(95</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.5</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      items</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(145</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(0.8</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.1</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Deductible
        innovative tier 1 capital expense presented below profit before
        tax</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(192</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1.0</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impact
      of profit in associates and joint ventures</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(193</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(0.9</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(0.4</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Overall
      tax expense</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>5,093</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>24.3</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,685</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.7</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="4%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD> <font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><I>Low
      income housing tax credits arise in the United States and are designed to
      encourage the provision of rental housing for low income households.</I>
      </font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
      addition to the amount charged to the income statement, the aggregate amount
      of current and deferred tax, relating to items that are taken directly to
      equity, was US&#36;437 million (2004: US&#36;319 million).</font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colspan=2>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11</B></font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Dividends</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><HR noshade size=1></TD>
    <TD colspan=13 align=left><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD colspan=13 align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends
         to shareholders of the parent company amounted to US&#36;7,750 million
         in  2005 (2004: US&#36;6,932 million). Of
      this, US&#36;7,729 million was dividends paid on ordinary share capital
      (2004: US&#36;6,932 million) and US&#36;21 million was
      paid on preference shares classified as equity.</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan="5" align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font>
    </TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="5" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="5" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Settled
      in</B></font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Settled
      in</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;
      per</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Total</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>scrip</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;
      per</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">scrip</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>share</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">share</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fourth
      interim dividend previous year</FONT></TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>0.270</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>3,007</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>431</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">First
      interim dividend for current year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>0.140</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,563</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>677</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,425</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">747</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Second
      interim dividend for current year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>0.140</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,574</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>311</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,436</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">746</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Third
      interim dividend for current year</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>0.140</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,585</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>392</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,444</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">255</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Third
      interim dividend for previous year</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>&#150;</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.240</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,627</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">346</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>0.690</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>7,729</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,811</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.630</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,932</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,094</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors
      have declared a fourth interim dividend in respect of the financial year
      ended 31 December 2005 of US&#36;0.31 per ordinary share, a distribution
      of US&#36;3,513 million. The fourth interim dividend will be payable on
      11 May 2006 to shareholders on the Register at the close of business on
      24 March 2006.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>12</b></font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Earnings
      per share</b></font></td>
  </tr>
  <tr>
    <td><HR noshade size=1></td>
    <td><HR noshade size=1></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basic
        earnings  per ordinary share was calculated by dividing the earnings
        of US&#36;15,060
      million (2004:
      US&#36;12,918 million) by the weighted average number of ordinary shares,
      excluding own shares held, outstanding in 2005 of 11,038 million (2004:
      10,907 million).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B>
      </font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      attributable to shareholders of the parent company</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>15,081</B>
      </font></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      payable on preference shares classified as equity</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>(21</B>
      </font></TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>)</B></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      attributable to the ordinary shareholders of the parent company</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>15,060</B>
      </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Diluted
      earnings per ordinary share was calculated by dividing the basic earnings,
      which require no adjustment for the effects of dilutive potential ordinary
      shares (including share options outstanding not yet exercised), by the weighted
      average number of ordinary shares outstanding, excluding own shares held,
      plus the weighted average number of ordinary shares that would be issued
      on ordinary conversion of dilutive potential ordinary shares in 2005 of
      11,171 million (2004: 11,054 million). The effect of dilutive share options
      and share awards on the weighted average number of ordinary shares in issue
      was as follows:</font></TD>
  </TR>
</TABLE>
    <P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">276</FONT></P>
    <hr noshade align="center" width="100%" size="2">               <div style="page-break-before:always"></div>
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p277"></a>
    </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <p><a href="#contents">Back to Contents</a></p>
    </font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=4 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number
      of shares (millions)</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="4" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>2005</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
      number of shares in issue</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11,038</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,907</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dilutive
      share options and share awards</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>133</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">147</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      &nbsp;&nbsp;&#150; &nbsp;Savings-related Share Option Plan</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>22</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      &nbsp;&nbsp;&#150;&nbsp; Executive Share Option Scheme</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      &nbsp;&nbsp;&#150;&nbsp; Group Share Option Plan</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>14</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      &nbsp;&nbsp;&#150; &nbsp;Restricted Share Plan</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>70</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63</FONT></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      &nbsp;&nbsp;&#150; &nbsp;HSBC France share options</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>10</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      &nbsp;&nbsp;&#150; &nbsp;HSBC Finance share options</font></TD>
    <TD align=right bgcolor="#CCCCCC"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>6</B></font></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#CCCCCC"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
    <TD align=right bgcolor="#CCCCCC">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average
      number of shares in issue assuming dilution</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>11,171</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,054</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of the total
      number of employee share options and share awards existing at 31 December
      2005, 121 million were anti-dilutive (2004: 70 million).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>13</b></font></td>
    <td><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Segment
      analysis</b></font></td>
  </tr>
  <tr>
    <td><HR noshade size=1></td>
    <td><HR noshade size=1></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="serif">In the following segmental analysis, the benefit
        of shareholders&#146; funds impacts the analysis only to the extent that
        these funds are actually allocated to businesses in the segment by way
    of intra-HSBC capital and funding structures.</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">By geographical
      region</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="serif">Geographical information is classified by
        the location of the principal operations of the subsidiary undertaking,
        or, for The Hongkong and Shanghai Banking Corporation, HSBC Bank, HSBC
        Bank Middle East, HSBC Finance and HSBC Bank USA, by the location of
        the branch responsible for reporting the results or advancing the funds.
        Due to the nature of HSBC&#146;s structure, the analysis of profits shown
        below includes intra-HSBC items between geographical regions with the
        elimination shown in a separate column. The Rest of Asia-Pacific geographical
        segment includes the Middle East, India and Australasia. Shared costs
        are
included in segments on the basis of the actual recharges made.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Total
      assets</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=3 align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>At
      31 December 2005</B></font></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan=3 align=center> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2004</font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>636,703</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>42.7</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">545,557</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">43.0</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>222,822</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>15.0</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">213,458</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
      of Asia-Pacific</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>142,014</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>9.5</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120,530</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
      America</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>463,143</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>31.1</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">371,183</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
      America</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>24,734</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1.7</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,368</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.4</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,489,416</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>100.0</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,268,096</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government certificates of indebtedness</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12,554</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,501,970</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Total
      liabilities</B></font></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colspan=3 align=center> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>At
      31 December 2005</B></font></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan=3 align=center> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2004</font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=center>&nbsp;</TD>
    <TD colspan="3" align=center><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>US&#36;m</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>%</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD height="21" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>594,953</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>42.8</B></font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">499,579</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42.8</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>210,539</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>15.1</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">194,436</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
      of Asia-Pacific</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>136,892</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>9.8</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117,208</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
      America</FONT></TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>426,467</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>30.7</B></font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">342,008</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
      America</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>22,339</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1.6</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,668</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.3</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,391,190</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>100.0</B></font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,168,899</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong currency notes in circulation</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>12,554</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee"> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>1,403,744</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,180,777</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
    <P align="center"> <FONT size=2 face="Univers55,Arial,Helvetica,sans-serif">277</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p278?"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
    O L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P
L C</FONT></p>



<P> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">
  </FONT></B><FONT size=2
face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="text-indent:3%"><P> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
  before tax</FONT></B></P></div>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD colspan="19" align=center> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
      ended 31 December 2005</FONT> </strong></TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="19" align=left><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="3" align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT>
      </strong></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left></TD>
    <TD rowspan="2" align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong</FONT>
      </strong></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest
      of</FONT> </strong></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left></TD>
    <TD rowspan="2" align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT>
      </strong></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left></TD>
    <TD rowspan="2" align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT>
      </strong></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Intra-</FONT>
      </strong></TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left></TD>
    <TD rowspan="2" align=left></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Asia-</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT>
      </strong></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Kong</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">items</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT>
      </strong></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
    <TD align=right> <strong><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT>
      </strong></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      income</FONT></TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,023</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,419</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,673</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,374</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,927</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,322</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,094</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      expense</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12,802</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,355</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,261</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9,487</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,177</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,322</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(28,760</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,221</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,064</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,412</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,887</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,750</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee
      income</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,081</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,967</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,619</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,346</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(267</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,486</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee
      expense</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,782</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(293</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(279</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(740</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(203</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">267</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,030</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,299</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,674</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,340</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,606</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
        income excluding net</font> <font face="TimesNewRoman,Times New Roman,Times,serif">interest
        income</font></font></div></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,660</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">773</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">753</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">371</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">99</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,656</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest
        income/(expense)</font> <font face="TimesNewRoman,Times New Roman,Times,serif">on
        trading activities</font></font></div></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,376</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(227</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">642</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">310</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      trading income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,036</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">546</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">860</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,013</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">409</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
            income/(expense) from</font> <font face="TimesNewRoman,Times New Roman,Times,serif">financial
            instruments</font> <font face="TimesNewRoman,Times New Roman,Times,serif">designated
        at fair value</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">362</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">434</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">186</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">439</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,599</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,334</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">602</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">746</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,603</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">805</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">335</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(938</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,622</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,566</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,183</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,412</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,859</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(938</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,704</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance
        claims incurred</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> and
        movement in policy</font><font face="TimesNewRoman,Times New Roman,Times,serif">holders&#146;
        liabilities</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(818</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,059</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(166</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(333</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(691</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,067</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size="2"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
        operating income before</font> <font face="TimesNewRoman,Bold,Times New Roman,Times,serif">loan
        impairment charges</font></b> <b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
        other credit risk</font></b></font> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><b>provisions</b></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,804</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,507</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,017</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,079</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,168</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(938</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,637</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment
        charges and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">other
        credit risk provisions</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,929</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(146</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(134</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5,038</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(554</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,801</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,875</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,361</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,883</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,041</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,614</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(938</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,836</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total operating
        expenses</font> <font face="TimesNewRoman,Times New Roman,Times,serif">(excluding
        depreciation and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">amortisation)</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11,493</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,586</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,648</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(9,670</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,869</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">938</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(27,328</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation
        of property, plant</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
        </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">and
        equipment</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(912</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(168</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(107</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(372</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(73</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,632</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of intangible</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">assets</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(234</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(113</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(175</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(25</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(554</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating expenses</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12,639</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,867</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,762</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10,217</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,967</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">938</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,514</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,236</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,494</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,121</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,824</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,322</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">453</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">48</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">644</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,356</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,517</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,574</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,872</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other
      disclosures:</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
      expenditure incurred</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,892</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">249</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">191</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,028</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">113</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,473</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
      in associates and</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">joint
      ventures</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,733</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,362</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,249</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 1&nbsp;<I>Net
      operating income</I>&nbsp; </font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>External</I>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">18,300</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">7,001</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">4,636</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">17,273</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2,626</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">49,836</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>Inter-segment</I>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">575</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">360</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">247</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(232</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></B></i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(12</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></B></i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(938</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></B></i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <B><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT></B>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=11 align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 2
      <i>Expenditure
      incurred on property, plant and equipment and intangible assets</i>. &nbsp; &nbsp; </font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
</TABLE>
<p align="center"><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">278</FONT></p>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p279"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=8 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December 2004</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD rowspan="6" align=left><p>&nbsp;</p>
      <p>&nbsp;</p></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="19" align=left><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="2" align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong</FONT>
    </TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
      of</FONT> </TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="2" align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT>
    </TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="2" align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT>
    </TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intra-</FONT>
    </TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asia-</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Kong</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">items</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      income</FONT></TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,360</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,133</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,149</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,281</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,376</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD width="1%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(828</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD width="1%" align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width="7%" align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,471</FONT>
    </TD>
    <TD width="2%" align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      expense</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,262</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,495</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,089</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,288</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,066</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">828</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,372</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,098</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,638</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,060</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,993</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,310</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee
      income</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,546</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,964</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,287</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,751</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">590</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(236</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,902</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee
      expense</FONT></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,566</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(261</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(246</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(986</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(131</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">236</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,954</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,980</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,703</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,041</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,765</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">459</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">997</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">659</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">494</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">582</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">54</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
            investment income on</font> <font face="TimesNewRoman,Times New Roman,Times,serif">assets
    backing</font> <font face="TimesNewRoman,Times New Roman,Times,serif">policyholders&#146; liabilities</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">571</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">314</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
    less losses from financial</font> <font face="TimesNewRoman,Times New Roman,Times,serif">investments</font></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">558</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,875</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,247</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">553</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">596</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,175</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">536</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">146</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">359</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(631</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,408</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,299</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,890</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,444</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,578</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(631</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
            insurance claims incurred</font> <font face="TimesNewRoman,Times New Roman,Times,serif">and
    movement in</font> <font face="TimesNewRoman,Times New Roman,Times,serif">policyholders&#146; liabilities</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,628</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,154</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(82</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(312</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(459</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
            operating income before</font> <font face="TimesNewRoman,Times New Roman,Times,serif">loan
            impairment charges and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">other
    credit risk provisions</font></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,780</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,145</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,808</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,132</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,119</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(631</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,353</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
            impairment charges and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">other
    credit risk provisions</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,033</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">220</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(89</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,022</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(267</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,747</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,365</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,719</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,110</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,852</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(631</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,162</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
            operating expenses</font> <font face="TimesNewRoman,Times New Roman,Times,serif">(excluding
    depreciation and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">amortisation)</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10,783</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,256</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,984</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8,520</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,350</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">631</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(24,262</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation
            of property, plant</font> <font face="TimesNewRoman,Times New Roman,Times,serif">and
    equipment</font></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,095</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(168</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(99</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(311</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(58</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,731</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of intangible</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">assets</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(150</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(134</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(201</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(494</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating expenses</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12,028</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,558</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,087</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,032</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,413</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">631</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      profit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,719</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,807</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,632</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,078</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">439</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
            of profit in associates and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">joint
    ventures</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      before tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,756</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,830</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,847</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,070</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">440</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      disclosures:</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
      expenditure incurred</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,001</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">114</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,046</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">233</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,628</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
            in associates and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">joint
    ventures</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">896</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,392</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,440</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 1&nbsp;<I>Net
      operating income:</I>&nbsp; </font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>External</I>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">17,463</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">7,052</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">3,569</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">15,182</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1,896</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">45,162</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>Inter-segment</I>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">284</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">313</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">150</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(72</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(44</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(631</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=20 align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 2&nbsp;<i>Expenditure
    incurred on property, plant and equipment and intangible assets</i>. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">279</FONT></P>

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<div style="page-break-before:always"></div><page><a name="p280"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
    O L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P
L C</FONT></p>



<P> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT><FONT size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
  </FONT></B><FONT size=2
face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">By customer
      group</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      operations include a number of shared support services and head office functions.
      The costs of these functions are allocated to customer groups, where appropriate,
      on a systematic and consistent basis. In addition, a number of income and
      expense items include the effect of financial transactions entered into
      in the ordinary course of business between customer groups co-operating
      within the integrated HSBC Group. The following analysis includes inter-segment
      amounts within each customer group with the elimination shown in a separate
      column.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      assets</font></b></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD colspan=3 align=center> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At
      31 December 2005</FONT></B></TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
    <TD colspan=3 align=center> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2004</font></TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=right><hr size="1" noshade></TD>
    <TD colspan="3" align=right><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD width=10% align=right>&nbsp;</TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right>&nbsp;</TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right>&nbsp;</TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right>&nbsp;</TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
      Financial Services</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">471,760</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31.7</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">441,114</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34.8</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
      Banking</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">175,120</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.7</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159,251</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,
      Investment Banking and Markets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">755,056</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50.7</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">584,779</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.1</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private
      Banking</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">59,827</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.0</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">56,751</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.5</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,653</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.9</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,201</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,489,416</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100.0</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,268,096</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="8" align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> <i>1&nbsp;&nbsp;Excluding
      Hong Kong Government certificates of indebtedness.</i> </font></TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</font></b></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="7" align=left>&nbsp;</TD>
    <TD rowspan="7" align=left>&nbsp;</TD>
    <TD colspan="19" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Year
      ended 31 December 2005</FONT></B></TD>
    <TD rowspan="7" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="19" align=left><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="2" align=left></TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Corporate,</FONT></B>
    </TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="3" align=left> </TD>
    <TD rowspan="5" align=left>&nbsp; </TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="2" align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Intra-</FONT></B>
    </TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Personal</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Commercial</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Services</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&amp;
      Markets</FONT></B> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Banking</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">items</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,351</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,310</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,001</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">848</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(472</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,704</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31,334</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,313</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,876</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,967</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,080</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">220</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,456</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income excluding net</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">interest
      income</FONT></font></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">360</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,919</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(90</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,656</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income/(expense)</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">on
      trading activities</FONT></font></TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">214</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">306</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,704</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right bgcolor="#cccccc"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,208</FONT></B>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      trading income/(expense)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">574</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">147</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,225</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(103</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,704</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,864</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income/(expense)
        from</font> <font face="TimesNewRoman,Times New Roman,Times,serif">financial
        instruments</font> <font face="TimesNewRoman,Times New Roman,Times,serif">designated
        at fair value</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">574</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">67</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">406</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">475</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">692</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,864</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">260</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,436</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">729</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,621</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,634</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,733</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37,440</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,902</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,511</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,366</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,131</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,704</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net insurance
        claims incurred</font> <font face="TimesNewRoman,Times New Roman,Times,serif">and
        movement in policy</font><font face="TimesNewRoman,Times New Roman,Times,serif">holders&#146;
        liabilities</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,716</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(118</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(54</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(179</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,067</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size="2"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
        operating income before</font> <font face="TimesNewRoman,Bold,Times New Roman,Times,serif">loan
        impairment charges and</font></b> <b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">other
        credit risk provisions</font></b></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,724</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,784</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,457</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,366</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,952</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,637</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment
        charges and</font> <font face="TimesNewRoman,Times New Roman,Times,serif">other
        credit risk provisions</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,537</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(547</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">272</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,801</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,187</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,237</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,729</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,378</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,951</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,646</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,836</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      expenses</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16,427</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,453</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6,838</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,466</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,976</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,646</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(29,514</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,760</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,784</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,891</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(25</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,322</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates and</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">joint
      ventures</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">177</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">272</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">644</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,904</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,961</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,163</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">912</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,966</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
      expenditure incurred</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>2</SUP></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,583</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">411</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,783</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">102</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">594</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,473</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 1&nbsp;<I>Net
           operating income:</I></font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>External</I></font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">25,000</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">8,258</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">13,998</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1,668</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">912</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">49,836</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>Inter-segment</I></font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1,187</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">979</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(2,269</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> <I>)</I>&nbsp; </font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">710</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2,039</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(2,646</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> <I>)</I>&nbsp; </font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right bgcolor="#cccccc"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT></I>
    </TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan=14 align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 2
      <I>Expenditure
      incurred on property, plant and equipment and intangible assets</I>. &nbsp;
      &nbsp; &nbsp; &nbsp;
      </font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">280</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p281"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% rowspan="7" align=left>&nbsp;</TD>
    <TD rowspan="7" align=left>&nbsp;</TD>
    <TD colspan="19" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December 2004</FONT></TD>
    <TD rowspan="7" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="19" align=left><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="2" align=left></TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,</FONT>
    </TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="2" align=left></TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="3" align=left></TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="2" align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intra-</FONT></TD>
    <TD rowspan="5" align=left>&nbsp;</TD>
    <TD rowspan="5" align=left></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Services</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&amp;
      Markets</FONT> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banking</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">items</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,422</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,875</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,994</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">718</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,406</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,645</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,764</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">962</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">320</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,935</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net investment
        income on assets</font> <font face="TimesNewRoman,Times New Roman,Times,serif">backing
        policyholders&#146;</font> <font face="TimesNewRoman,Times New Roman,Times,serif">liabilities</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">635</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">324</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">219</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">548</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,652</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,072</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">558</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">360</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">513</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,029</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,050</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      operating income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,890</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,706</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,562</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,188</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        insurance claims incurred</font> <font face="TimesNewRoman,Times New Roman,Times,serif">and
        movement in</font> <font face="TimesNewRoman,Times New Roman,Times,serif">policyholders&#146;
        liabilities</font></font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,953</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,264</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(359</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">
      <div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        operating income before loan</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> impairment
        charges and other </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">credit
        risk provisions</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,937</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,442</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,503</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,005</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,829</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,353</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
        impairment charges and</font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">other
        credit risk provisions</font></div></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,500</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(200</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">499</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      operating income</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,437</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,242</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,002</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,016</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,828</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,363</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,162</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      expenses</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15,009</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,220</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,809</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,319</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,493</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,363</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
      profit</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,428</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,022</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,193</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">335</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">and
      joint ventures</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      before tax</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,497</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,057</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,288</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">404</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
      expenditure incurred</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,415</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">614</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,919</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">538</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,628</FONT>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 1
      <I>Net
      operating income:</I>&nbsp; </font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>External</I>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">22,760</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">7,419</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">12,239</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1,704</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1,040</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">45,162</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp; &nbsp;<I>Inter-segment</I>&nbsp;
      </font></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">677</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">823</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(1,237</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">312</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1,788</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(2,363</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</FONT></i></TD>
    <TD align=right bgcolor="#eeeeee"><i><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></i></TD>
    <TD align=right bgcolor="#cccccc"><i> <FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">&#150;</FONT>
    </i></TD>
    <TD align=left bgcolor="#cccccc"><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD colspan="17" align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 2
      <I>Expenditure
      incurred on property, plant and equipment and intangible assets.</I></font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=right><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=left><font size="1" face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="17" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">14</font></b></td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">
      Analysis of financial assets and liabilities by measurement basis</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
         assets and financial liabilities are measured on an ongoing basis either

      at fair value or at amortised cost. The summary of significant accounting
         policies in Note 2 describes how the classes of financial instruments
        are
      measured, and how income and expenses, including fair value gains and losses,
         are recognised. The following table analyses the financial assets and
        liabilities
      in the balance sheet by the class of financial instrument to which they
         are assigned, and therefore by the measurement basis:</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">281</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p282"></a>
<p align="left"><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H
    O L D I N G S</FONT><FONT size=1 face="Arial,Arial,Helvetica,sans-serif"> &nbsp; </FONT><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">P
L C</FONT></p>
<P> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
  on the Financial Statements</FONT><FONT size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
  </FONT></B><FONT size=2
face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</font></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan=6 align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD rowspan="9" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% rowspan="8" align=left>&nbsp;</TD>
    <TD rowspan="8" align=left>&nbsp; </TD>
    <TD colspan="17" align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"><B>At
      31 December 2005</B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="17" align=left><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="6" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B></TD>
    <TD rowspan="6" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Derivatives</FONT></B></TD>
    <TD rowspan="6" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Derivatives</FONT></B></TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets
      and</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">designated</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">designated</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Held-to-</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Available-</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">liabilities
      at</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">as
      fair value</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">as
      cash flow</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Held
      for</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Designated</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">maturity</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans
      and</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for-sale</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amortised</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedging</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedging</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">trading</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">at
      fair value</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">receivables</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">cost</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">instruments</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">instruments</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      and balances at central banks</FONT></TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,712</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,712</FONT></B></TD>
    <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
        in the course of collection from other banks</font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,300</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,300</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong
        Government certificates of indebtedness</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190,257</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><div align="right"><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></div></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190,257</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
        assets which may be repledged or resold by counterparties</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,652</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><div align="right"><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></div></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,652</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        assets designated at fair value</font></div></TD>
    <TD align=left><div align="right"><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></div></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70,251</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">149</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,528</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,928</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      investments</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,515</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">167,786</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">176,301</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Financial
        investments which may be repledged or resold by counterparties</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,041</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,041</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      assets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,596</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,596</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments
      and accrued income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,961</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,961</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      financial assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">303,160</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,515</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">878,521</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">167,786</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,610</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">149</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,528</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,446,315</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      non-financial assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55,655</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,501,970</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <div style="margin-left:3%; text-indent:-3%">
        <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong
        currency notes in circulation</font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,727</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,727</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
        in the course of transmission to other banks</font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,022</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,022</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174,365</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174,365</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        liabilities designated at fair value</font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">72,389</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">471</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,176</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,036</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities in issue</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,072</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,072</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,515</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,515</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      liabilities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,537</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,537</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      financial liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">246,754</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,047,292</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">471</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,176</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,370,076</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      non-financial liabilities</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">33,668</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      liabilities</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,403,744</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">.</FONT></I>&nbsp;
      </font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">282</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p283"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC
      Holdings</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD rowspan="9" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% rowspan="8" align=left>&nbsp;</TD>
    <TD rowspan="8" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD colspan="11" align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At
      31 December 2005</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="11" align=center> <hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="3" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> </TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="3" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> </TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="3" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> </TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
    </TD>
    <TD rowspan="6" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT></B></TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets
      and</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Available-</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">liabilities
      at</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Held
      for</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Designated</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loans
      and</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for-sale</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amortised</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">trading</FONT></B></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">at
      fair value </font></b></TD>
    <TD align=right><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">receivables</font></b></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">cost</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      at bank and in hand</FONT></TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=8% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to HSBC undertakings</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      investments</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      financial assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">781</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,358</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      non-financial assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58,204</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,562</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts
      owed to HSBC undertakings</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,075</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,075</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      liabilities designated at fair value</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      liabilities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals
      and deferred income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right> <hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      financial liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,409</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,065</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD height="21" align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      non-financial liabilities</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,270</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      liabilities</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,335</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">283</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p284"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT> </p>
<P> <font face="Arial,Arial,Helvetica,sans-serif"><B><FONT size="3">Notes on the
  Financial Statements<font size="2"> </font></FONT></B><FONT size=2>(continued)</FONT></font>
</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">15</font></b></td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Trading
      assets</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets:</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      which may be repledged or resold by counterparties</FONT></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,652</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      not subject to repledge or resale by counterparties</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">190,257</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">232,909</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
      and other eligible bills</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,746</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,816</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">117,659</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95,308</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity
      securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,203</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,036</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,806</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52,495</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">232,909</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="8" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following table provides an analysis of trading securities which are valued
      at fair value and the net unrealised holding gains/(losses) included in
      this value:</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=center>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="3" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT><font size="2">&nbsp;</font>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gains/</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains/</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(losses)</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(losses)</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
      Treasury and US Government agencies</FONT></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,094</FONT></B></TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(21</FONT></B>
    </TD>
    <TD width=2% align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,252</FONT></TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109</FONT>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK
      Government</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,225</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,170</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,529</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,190</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      government</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49,852</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">280</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29,541</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset-backed
      securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,361</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(24</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,161</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate
      debt and other securities</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55,344</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">324</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,810</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(204</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,203</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(117</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,036</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150,608</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">428</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD  valign=top>&nbsp;</TD>
    <TD align="left"  valign=top>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
  </TR>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%" align="left"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT> </TD>
    <TD align="left" valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Included
      within corporate debt and other securities are debt securities issued by
      banks and other financial institutions of US&#36;16,888 million (2004: US&#36;19,516
      million).</FONT></I></TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Treasury</font></b>
    </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD rowspan="2" align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD rowspan="2" align=right><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD rowspan="3" align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
      other</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">eligible
      bills</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
      value at 31 December 2005</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Listed
      on a recognised exchange</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95,994</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,728</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">113,722</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unlisted</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,746</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,665</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,475</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,886</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,746</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">117,659</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,203</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150,608</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value at 31 December 2004</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Listed
      on a recognised exchange</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,725</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,122</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,847</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unlisted</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,816</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,583</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,914</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,313</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,816</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95,308</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,036</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%" align="left" valign="top"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td align="left" valign="top"> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Included
      within listed investments are US&#36;2,049 million (2004: US&#36;2,861 million)
      of investments listed in Hong Kong.</font></i></td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">16</font></b></td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
      assets designated at fair value</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
    and other eligible bills</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
    securities</FONT></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,705</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity
    securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,533</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to customers</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">631</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
    loans and advances and unquoted debt securities designated at fair value:</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD width="3%" align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;maximum
      exposure to credit risk at 31 December 2005</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">958</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;the
      cumulative change in fair value arising from changes in credit risk</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
</TABLE>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">284</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p285"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Treasury</font></b>
    </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD rowspan="2" align=right><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD rowspan="3" align=right><font size="2">&nbsp;</font><font size="2">&nbsp;</font> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
      other</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">eligible
      bills</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
      value at 31 December 2005</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Listed
      on a recognised exchange</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,012</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,192</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,204</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unlisted</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,693</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,341</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,087</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,705</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,533</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,291</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%" align="left" valign="top"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td align="left" valign="top"><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Included
      within listed investments are US&#36;932 million of investments listed in
      Hong Kong.</font></i></td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following table provides an analysis of securities designated at fair value:</font></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Market</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Valuation</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
      Treasury and US Government agencies</FONT></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">86</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK
      Government</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,164</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      government</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,358</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset-backed
      securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">193</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate
      debt and other securities</FONT><font size="2"><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP>&nbsp;
      </font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,786</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,533</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,291</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%" align="left"  valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>&nbsp;
      &nbsp; &nbsp; </TD>
    <TD align="left" valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Included
      within corporate debt and other securities are debt securities issued by
      banks and other financial institutions of US&#36;1,703 million.</FONT></I>
    </TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">17</font></b></td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Derivatives</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD colspan=6 align=left> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Fair
      values of derivatives by product contract type held by HSBC</FONT> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="11" align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At
      31 December 2005</FONT></B> <font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="11" align=left><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="5" align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B><font size="2">&nbsp;</font><font size="2">&nbsp;</font>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="5" align=center><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B>
      <font size="2">&nbsp;</font> <font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trading</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hedging</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trading</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hedging</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD width=3% align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
      exchange</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,082</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">263</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,345</FONT></B>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(20,794</FONT></B>
    </TD>
    <TD width=2% align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(81</FONT></B>
    </TD>
    <TD width=2% align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(20,875</FONT></B>
    </TD>
    <TD width=2% align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      rate</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,323</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,414</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47,737</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(46,580</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,566</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(48,146</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,833</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,833</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,713</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,713</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
      derivatives</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,585</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,585</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,509</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,509</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commodity
      and other</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,077</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,077</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,442</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,442</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross
      total fair values</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">74,900</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,677</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78,577</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(77,038</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,647</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(78,685</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Netting</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,649</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,649</FONT></B>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73,928</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(74,036</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2004</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      liabilities</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
      exchange</FONT></TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,318</FONT>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(34,172</FONT>
    </TD>
    <TD width=2% align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      rate</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,041</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(36,874</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,784</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,874</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
      derivatives</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,341</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,394</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commodity
      and other</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,275</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,243</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross
      total fair values</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73,759</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(76,557</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Netting</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(41,569</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,569</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,190</FONT>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(34,988</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">285</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p286"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D
  I N G S &nbsp; P L C</FONT> </p>
<P> <font face="Arial,Arial,Helvetica,sans-serif"><B><FONT size="3">Notes on the
  Financial Statements<font size="2"> </font></FONT></B><FONT size=2>(continued)</FONT></font>
</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="7" align=center><font size="2">&nbsp;</font> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="7" align=center><HR noshade size=1></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="3" align=center> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT><font size="2">&nbsp;</font>
    </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD colspan="3" align=center> <font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif"> <B>Trading</B></font><font size="2">&nbsp;</font>
    </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="3" align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD colspan="3" align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assets</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
      exchange</FONT></TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">896</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">144</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,595</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      rate</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">72</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">142</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=1></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#eeeeee">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross
      total fair values</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,643</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><HR noshade size=2></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
      are financial instruments that derive their value from the price of underlying
      items such as equities, bonds, interest rates, foreign exchange, credit
      spreads, commodities and equity or other indices. Derivatives enable users
      to increase, reduce or alter exposure to credit or market risks. HSBC makes
      markets in derivatives for its customers and uses derivatives to manage
      its exposure to credit and market risks.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
      are carried at fair value and shown in the balance sheet as separate totals
      of assets and liabilities. Asset values represent the cost to HSBC of replacing
      all transactions with a fair value in HSBC&#146;s favour assuming which
      all HSBC&#146;s relevant counterparties default at the same time, and that
      transactions can be replaced instantaneously. Liability values represent
      the cost to HSBC&#146;s counterparties of replacing all their transactions
      with HSBC with a fair value in their favour if HSBC were to default. Derivative
      assets and liabilities on different transactions are only set off if the
      transactions are with the same counterparty, a legal right of set-off exists
      and the cash flows are intended to be settled on a net basis.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Use of derivatives</font>
    </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC transacts
      derivatives for three primary purposes: to create risk management solutions
      for clients, for proprietary trading purposes, and to manage and hedge HSBC&#146;s
      own risks. Derivatives (except for derivatives which are designated as effective
      hedging instruments as defined in IAS 39) are held for trading. The held
      for trading classification includes two types of derivatives: those used
      in sales and trading activities, and those used for risk management purposes
      but which for various reasons do not meet the qualifying criteria for hedge
      accounting. The second category includes derivatives managed in conjunction
      with financial instruments designated at fair value. These activities are
      described more fully below.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      derivative activities give rise to significant open positions in portfolios
      of derivatives. These positions are managed constantly to ensure that they
      remain within acceptable risk levels, with matching deals being utilised
      to achieve this where necessary. When entering into derivative transactions,
      HSBC employs the same credit risk management procedures to assess and approve
      potential credit exposures that are used for traditional lending.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Trading derivatives</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Most of
      HSBC&#146;s derivative transactions relate to sales and trading activities.
      Sales activities include the structuring and marketing of derivative products
      to customers to enable them to take, transfer, modify or reduce current
      or expected risks. Trading activities in derivatives are entered into principally
      for the purpose of generating profits from short-term fluctuations in price
      or margin. Positions may be traded actively or be held over a period of
      time to benefit from expected changes in exchange rates, interest rates,
      equity prices or other market parameters. Trading includes market-making,
      positioning and arbitrage activities. Market-making entails quoting bid
      and offer prices to other market participants for the purpose of generating
      revenues based on spread and volume; positioning means managing market risk
      positions in the expectation of benefiting from favourable movements in
      prices, rates or indices; arbitrage involves identifying and profiting from
      price differentials between markets and products.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As mentioned
      above, other derivatives classified as held for trading include non-qualifying
      hedging derivatives, ineffective hedging derivatives and the components
      of hedging derivatives that are excluded from assessing hedge effectiveness.
      Non-qualifying hedging derivatives are entered into for risk management
      purposes but do not meet the criteria for hedge accounting. These include
      derivatives managed in conjunction with financial instruments designated
      at fair value. Ineffective hedging derivatives were previously designated
      as hedges under UK GAAP, but no longer meet the criteria for hedge accounting.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">286</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p287"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
        and losses from changes in the fair value of derivatives that do not
        qualify for hedge accounting are reported in &#145;Net trading income&#146;,
        except for derivatives managed in conjunction with financial instruments
        designated at fair value, where gains and losses are reported in &#145;Net
        income from financial instruments designated at fair value&#146;, together
        with the gains and losses on the hedged items. Changes in the fair values
        of trading derivatives are inclusive of contractual interest. Changes
        in the fair value of derivatives managed in conjunction with financial
        instruments designated at fair value are included in &#145;Net income
        from financial
instruments designated at fair value&#146; inclusive of contractual interest
unless the derivatives are managed with debt securities in issue, in which case
the contractual interest is shown in interest payable with the interest payable
on the
issued debt. Substantially all of HSBC Holdings&#146; derivatives entered into
with HSBC undertakings are managed in conjunction with financial liabilities
designated at fair value.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan=5 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD colspan=8 align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Contract
    amounts of derivatives held for trading purposes by product type</font></b> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B><font size="2">&nbsp;</font>       </TD>
        <TD align=right>&nbsp;</TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B><font size="2">&nbsp;</font>      </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign exchange</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,721,456</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,484,516</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,224</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest rate</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,731,721</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,948,178</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,304</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">101,364</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,124</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">511,741</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">195,603</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commodity and other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,458</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,022</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,104,740</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,711,443</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,528</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Derivatives
    valued using models with unobservable inputs</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The amount
        that has yet to be recognised in the consolidated income statement relating
        to the difference between the fair value at initial recognition (the
        transaction price) and the amount that would have arisen had valuation
        techniques used for subsequent measurement been applied at initial recognition,
    less subsequent releases, is as follows:</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unamortised balance at 1 January</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B>
        </TD>
        <TD width=3% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferral on new transactions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">340</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Recognised in the income statement during the period:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD width="3%" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  amortisation</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(56</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  subsequent
    to observability</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(64</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  maturity
    or termination</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(25</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  exchange
    differences</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(16</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unamortised balance at 31 December</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">252</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Hedging Instruments</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC uses
        derivatives (principally interest rate swaps) for hedging purposes in
        the management of its own asset and liability portfolios and structural
        positions. This enables HSBC to optimise the overall cost to the Group
        of accessing debt capital markets, and to mitigate the market risk which
        would otherwise arise from structural imbalances in the maturity and
    other profiles of its assets and liabilities.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The accounting
        treatment of hedge transactions varies according to the nature of the
        instrument hedged and the type of hedge transactions. Derivatives may
        qualify as hedges for accounting purposes if they are fair value hedges,
        cash flow hedges, or investment hedges. These are described under the
    relevant headings below:</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">287</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p288"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <font face="Arial,Arial,Helvetica,sans-serif"><B><FONT size="3">Notes on
        the Financial Statements<font size="2"> </font></FONT></B><FONT size=2>(continued)</FONT></font> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Contract amounts of derivatives held for hedging purposes by product type</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flow</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair value</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedge</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedge</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign exchange</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,940</FONT></B></TD>
        <TD width=2% align=right><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,699</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest rate</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">174,875</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,745</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">191,815</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,444</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">With respect
        to exchange rate and interest rate contracts, the notional or contractual
        amounts of these instruments indicate the nominal value of transactions
        outstanding at the balance sheet date; they do not represent amounts
    at risk.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
    value hedges</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        fair value hedges principally consist of interest rate swaps that are
        used to protect against changes in the fair value of fixed-rate long-term
        financial instruments due to movements in market interest rates. For
        qualifying fair value hedges, all changes in the fair value of the derivative
        and in the fair value of the item in relation to the risk being hedged
        are recognised in income. If the hedge relationship is terminated, the
        fair value adjustment to the hedged item continues to be reported as
        part of the basis of the item and is amortised to income as a yield adjustment
    over the remainder of the hedging period.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fair
        values of outstanding derivatives designated as fair value hedges at
        31 December 2005 were assets of US&#36;149 million and liabilities of
    US&#36;471 million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gains or losses arising from fair value hedges</FONT></B></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains/(losses):</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#8211; on
hedging instruments</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#8211; on
the hedged items attributable to the hedged risk</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(67</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash
    flow hedges</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is
        exposed to variability in future interest cash flows on non-trading assets
        and liabilities which bear interest at variable rates or which are expected
        to be re-funded or reinvested in the future. The amounts and timing of
        future cash flows, representing both principal and interest flows, are
        projected for each portfolio of financial assets and liabilities on the
        basis of their contractual terms and other relevant factors, including
        estimates of prepayments and defaults. The aggregate principal balances
        and interest cash flows across all portfolios over time form the basis
        for identifying gains and losses on the effective portions of derivatives
        designated as cash flow hedges of forecast transactions. Gains and losses
        are initially recognised directly in equity, in the cash flow hedging
        reserve, and are transferred to the income statement when the forecast
        cash flows affect the income
statement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31
        December 2005, the fair values of outstanding derivatives designated
        as cash flow hedges of forecast transactions were assets of US&#36;3,528
        million and liabilities of US&#36;1,062
million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      schedule of forecast principal balances on which the expected interest
    cash flows arise as at 31 December 2005 is as follows:</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B>         <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">More than 3</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5 years or less</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3 months</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">months but less</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">but more than</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">More than</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">or less</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">than 1 year</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1 year</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5 years</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash inflows from assets</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">91,703</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=11% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">68,985</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=11% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54,205</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,108</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash outflows from liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(44,957</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(32,485</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(24,955</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(165</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net cash inflows</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46,746</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,500</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,250</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,943</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">288</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p289"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reconciliation of movements in the cash flow hedge reserve</FONT></B></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">410</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts recognised directly in equity during the year</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(63</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts removed from equity and included in the income statement for the year in:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> trading
    income</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> net
    interest income</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(101</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred tax</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">233</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The gains
        and losses on ineffective portions of such derivatives are recognised
        immediately in the income statement. At 31 December 2005, a loss of US&#36;96
    million was recognised due to hedge ineffectiveness.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hedges
    of net investments in foreign operations</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        consolidated balance sheet is affected by exchange differences between
        the US dollar and all the non-US dollar functional currencies of subsidiaries.
        HSBC hedges structural foreign exchange exposures only in limited circumstances.
        Hedging is undertaken using forward foreign exchange contracts which
        are accounted for as hedges of a net investment in a foreign operation,
        or by financing with borrowings in the same currencies as the functional
    currencies involved.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31
        December 2005, the fair values of outstanding financial instruments designated
        as hedges of net investments in foreign operations were liabilities of
    US&#36;114 million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The ineffectiveness
        recognised in &#145;Net trading income&#146; in the year ended 31 December
    2005 that arose from hedges in foreign operations was US&#36;nil.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Sensitivity
        of fair values to changing significant assumptions to reasonably possible
    alternatives</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair values
        of certain derivatives recognised in the financial statements may be
        determined in whole or in part using valuation techniques based on assumptions
        that are not supported by prices from current market transactions or
        observable market data. In these instances, the net fair value recorded
    in the financial statements is the sum of three components:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the value
        given by application of a valuation model, based upon HSBC&#146;s best
    estimate of the most appropriate</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">model inputs;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">any fair
        value adjustments to account for market features not included within
        the valuation model (for example,</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">bid-mid spreads, counterparty credit spreads and/or market
    data uncertainty); and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">inception
        profit, or an unamortised element thereof, not recognised immediately
        in the income statement in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accordance
    with Note 2(k).</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As the
        valuation models are based upon assumptions, changing the assumptions
        changes the resultant estimate of fair value. HSBC performs various sensitivity
        analyses on its valuation assumptions. The potential effect of using
        reasonably possible alternative assumptions in valuation models has been
        quantified as a reduction in assets of approximately US&#36;77 million
        using less favourable assumptions, and an increase in assets of approximately
        US&#36;73 million using more favourable assumptions. The ranges of reasonably
        possible alternative assumptions are established by application of professional
        judgement to an analysis of the data available to support each assumption.
    </font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The total
        amount of the change in fair value estimated using a valuation technique
        that was recognised in the year ended 31 December 2005 was a loss of
    US&#36;129 million.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">289</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p290"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT face="Univers,Bold,Arial,Helvetica,sans-serif">Notes on the Financial
      Statements<font size="2"> </font></FONT></B><FONT size=2 face="Univers,Arial,Helvetica,sans-serif">(continued)</FONT> </P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">18</font></b></td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial
    investments</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211; which may
be pledged or resold by counterparties</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,041</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211; not subject
to repledge or resale by counterparties</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">176,301</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,342</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="4" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font> </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Carrying</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">amount</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury and other eligible bills</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,042</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,042</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,666</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> available-for-sale</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,834</FONT></B></TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,834</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> held-to-maturity</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">208</FONT></B></TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">208</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">149,781</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">149,962</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">153,103</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> available-for-sale</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141,699</FONT></B></TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141,699</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> held-to-maturity</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,082</FONT></B></TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,263</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,519</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,519</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,563</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> available-for-sale</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,519</FONT></B></TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,519</FONT></B></TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total financial investments</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,342</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,523</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">unrealised</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">unrealised</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">gains</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">losses</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Treasury</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,015</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(23</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,997</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Government agencies</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,173</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(52</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,173</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Government sponsored entities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,099</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(292</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,889</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK Government</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,658</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,740</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Government</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,429</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(23</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,408</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other government</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,623</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">317</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(87</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34,853</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset-backed securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,893</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(12</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,889</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate debt and other securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">96,018</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">452</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(415</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">96,055</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,414</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,111</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,519</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">181,322</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,112</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(911</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,523</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left></TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Treasury</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,998</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,001</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Government agencies</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,657</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">91</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(94</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,654</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Government sponsored entities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,093</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">133</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(48</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,178</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK Government</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,510</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,509</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Government</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,274</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,362</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other government</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,393</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">543</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(290</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,646</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset-backed securities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,367</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,389</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate debt and other securities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,477</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,061</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(136</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,402</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,563</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,136</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,689</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,106</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(608</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">187,830</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2>
  </TD>
  <TD align=left></TD>
  <TD align=left><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
        within corporate debt and other securities are debt securities issued
        by banks and other financial institutions of US&#36;68,954 million (2004:
        US&#36;60,166 million). The fair value of these was US&#36;68,933 million
    (2004: US&#36;60,655 million).</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">290</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p291"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Treasury</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and other</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">available-</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">held-to-</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">eligible bills</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for-sale</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">maturity</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying amount at 31 December 2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Listed on a recognised exchange</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">62,187</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,022</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,394</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,603</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unlisted</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,042</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79,512</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,060</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,125</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">112,739</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,042</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141,699</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,082</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,519</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,342</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      fair value of listed held-to-maturity debt securities as at 31 December
    2005 was US&#36;4,143 million.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Treasury</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">and other</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">eligible bills</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt securities</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Carrying amount at 31 December 2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Listed on a recognised exchange</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77,920</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,506</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,426</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unlisted</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,666</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,183</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,057</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">104,906</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,666</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">153,103</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,563</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As at 31
        December 2004, the fair value of listed debt securities was US&#36;83,176
        million, and the fair value of listed equity securities was US&#36;2,546
    million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
        within listed investments are US&#36;1,246 million (2004: US&#36;3,120
    million) of investments listed in Hong Kong.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC Holdings</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair value</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale debt securities issued by HSBC undertakings</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,256</FONT></B></TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,256</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale equities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">261</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">261</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As at
        31 December 2004, the carrying amount of securities issued by HSBC undertakings
    was US&#36;1,885 million.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0><TR align="left" valign="top">
        <TD>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">19</FONT></B> </TD>
        <TD colspan=2>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Securitisations and other structured transactions</FONT></B>    </TD>
</TR>
<TR align="left" valign="top"><TD><hr size="1" noshade></TD>
  <TD><hr size="1" noshade></TD>
  <TD><hr size="1" noshade></TD>
</TR>
<TR align="left" valign="top">
<TD>&nbsp;</TD> <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC enters into transactions in the normal course of business by which it transfers recognised financial assets directly to third parties or to special purpose entities. These transfers
may give rise to the full or partial derecognition of the financial assets concerned.</FONT>    </TD>
</TR>
<TR align="left" valign="top"><TD colspan=3>&nbsp;</TD></TR><TR align="left" valign="top">
<TD width="3%">&nbsp;</TD>      <TD width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Full derecognition occurs when HSBC transfers its contractual right to receive cash flows from the financial assets and substantially all the risks and rewards of ownership. The risks
include credit, interest rate, currency, prepayment and other price risks.</FONT>       </TD>
</TR>
<TR align="left" valign="top"><TD colspan=3>&nbsp;</TD></TR><TR align="left" valign="top">
<TD>&nbsp;</TD> <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Partial derecognition occurs when HSBC sells or otherwise transfers financial assets in such a way that some but not substantially all of the risks and rewards of ownership are
transferred but control is retained. These financial assets are recognised on the balance sheet to the extent of HSBC&#146;s continuing involvement.</FONT>     </TD>
</TR>
<TR align="left" valign="top"><TD colspan=3>&nbsp;</TD></TR><TR align="left" valign="top">
<TD>&nbsp;</TD><TD colspan="2">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The majority of
financial assets that do not qualify for derecognition are (i) debt securities
held by counterparties as collateral under repurchase agreements or (ii) equity
securities  lent under securities lending agreements. The following table analyses
the carrying amount of financial assets at 31 December 2005 that did not qualify
for</FONT> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">derecognition
during
the year, and their associated financial liabilities:</font> </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">291</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p292"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount of</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">transferred</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">associated</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">liabilities</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Nature of transaction</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Repurchase agreements</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,989</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75,745</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities lending agreements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,607</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,858</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107,596</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81,603</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A small
        proportion of financial assets </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">that
        do not qualify for derecognition relate to</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif"> loans, credit cards, debt securities
        and trade receivables that have been securitised under arrangements by
        which HSBC retains a continuing involvement in such transferred assets.
        Continuing involvement may entail retaining the rights to future cash
        flows arising from the assets after investors have received their contractual
        terms (for example, interest rate strips); providing subordinated interest;
        liquidity support; continuing to service the underlying asset; or entering
        into derivative transactions with the securitisation vehicles. As such,
    HSBC continues to be exposed to risks associated with these transactions.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The rights
        and obligations that HSBC retains from its continuing involvement in
        securitisations are initially recorded as an allocation of the fair value
        of the financial asset between the part that is derecognised and the
        part that continues to be recognised on the date of transfer. The following
        analyses the carrying amount of financial assets at 31 December 2005,
        to the extent of HSBC&#146;s continuing involvement, that qualified for
    partial derecognition during the year, and their associated liabilities:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount of</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">assets</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(currently</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">associated</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(original)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">recognised)</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">liabilities</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Nature of transaction</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securitisations</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,731</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">256</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">256</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">20</font></b></td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> Interests
    in associates and joint ventures</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Principal
    associates of HSBC</font></TD>
  <TD colspan="9" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="9" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Issued</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Country of</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">interest
in</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">incorporation</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity capital</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">capital</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Listed</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">People&#146;s</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Republic of</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank of Communications Co., Limited</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">China</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.9</FONT>
        </TD>
        <TD width=2% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">RMB45,804m</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,480</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,143</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">People&#146;s</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ping An Insurance (Group) Company of</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Republic of</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=center>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;China Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">China</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.9</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">RMB6,195m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,837</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,274</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Saudi British Bank</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Saudi Arabia</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SR2,500m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">772</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,800</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,089</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,217</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Unlisted</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">AEA Investors (Cayman) I LP<SUP>1,6</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Barrowgate Limited<SUP>2,7</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.64</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=left><div align="right"><font size="2">&nbsp;</font>
            <FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT> </div></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> US&#36; 81m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;32m fully paid</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">British Arab Commercial Bank Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46.51</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;5m nil paid</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Erisa S.A.</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49.99</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;115m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">HSBC PE European No. 2 LP<SUP>3,6</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">People&#146;s</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Republic of</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Industrial Bank Company Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">China</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.98</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">RMB3,999m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private Equity Portfolio (Investment)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">LP Inc<SUP>4,6</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Wells Fargo HSBC Trade Bank, N.A<SUP>5</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD align=left><div align="right"><font size="2">&nbsp;</font>
        <FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT> </div></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">292</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p293"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%"  valign=top>&nbsp;</TD>
        <TD width="3%" align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Venture Capital Limited partnership. Address of principal place of business is c/o Walkers SPV Limited, Walker House, 87 Mary Street, PO Box 908GT, George Town, Grand Cayman,
Cayman Islands.</FONT></I>      </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Issued equity capital is less than HK&#36;1 million.</FONT></I> </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Limited partnership. Address of principal place of business is 68 Upper Thames Street, London EC4V 3PE.</FONT></I>      </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Limited partnership. Address of principal place of business is 68 Upper Thames Street, London EC4V 3PE.</FONT></I>      </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Issued equity capital is less than US&#36;1 million.</FONT></I> </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Limited partnership where the group owns more than 50 per cent but does not have control due to the limitations within these types of entities.</FONT></I>      </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD align="left"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD align="left" valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Investment held through Hang Seng Bank Limited, a 62.14 per cent owned subsidiary of HSBC.</FONT></I>   </TD>
</TR></TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All the
        above investments in associates are owned by subsidiaries of HSBC Holdings.
        During the year, HSBC&#146;s shareholding of 21.16 per cent in the Cyprus
        Popular Bank Limited (trading as Laiki Group) was reclassified as a held
    for sale asset. See Note 25.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has
        US&#36;4,318 million (2004: US&#36;nil) of investments in associates
    and joint ventures listed in Hong Kong. </font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For the
        year ended 31 December 2005, HSBC&#146;s share of associates and joint ventures tax on profit
        was US&#36;225 million (2004: US&#36;45 million), which is included within
    share of profit in associates and joint ventures on the income statement.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Summarised aggregate financial information on associates</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s share of:</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> assets</FONT></font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63,347</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,738</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> liabilities</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58,883</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,938</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> revenues</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,330</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,009</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> profit/(loss)</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">556</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">270</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        share of associates&#146; contingent liabilities amounted to US&#36;7,818
    million at 31 December 2005 (2004: US&#36;5,663 million).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        15.98 per cent investment in Industrial Bank Company Limited was equity
        accounted with effect from May 2004, reflecting HSBC&#146;s significant
        influence over this associate.
HSBC&#146;s significant influence was established as a result of representation
on the Board of Directors, and in accordance with the Technical Support and Assistance
Agreements, HSBC is assisting in the development of financial and operating
policies.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        19.9 per cent investment in Ping An Insurance Company of China Limited
        was equity accounted with effect from 31 August 2005, reflecting HSBC&#146;s
        significant influence over
this associate. HSBC&#146;s significant influence was established as a result
of the acquisition of an additional participation of 9.91 per cent on 31 August
2005, for a consideration of US&#36;1,039 million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        significant influence on Bank of Communications Co., Limited was established
        as a result of representation on the Board of Directors, and in accordance
        with the Technical
Support and Assistance
        Agreements, HSBC is assisting in the development of financial and operating
        policies and a number of staff
have been seconded to assist in this process.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The statutory
        accounting reference date of Bank of Communications Co., Limited and
        Ping An Insurance Company of China Limited is 31 December. For the year
        ended 31 December 2005, these companies were included on the basis of
        financial statements made up to 30 September 2005, taking into account
        changes in the subsequent period from 1 October 2005 to 31 December 2005
    that would have materially affected their results.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC also
        has a 100 per cent interest in the issued preferred stock (less than
        US&#36;1 million) of Wells Fargo HSBC Trade Bank, N.A. HSBC has a 40
        per cent economic interest in Wells Fargo HSBC Trade Bank, N.A. by virtue
        of the joint agreement under which HSBC&#146;s equity capital and preferred
    stock interests are being held.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">293</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p294"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Interests in joint ventures</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=left><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">interest in</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Issued</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Country of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Principal</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Incorporation</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">activity</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">capital</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">capital</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holding</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HCM Holdings Limited</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Company</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51</FONT>
        </TD>
        <TD width=2% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">%</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3m</FONT>
        </TD>
        <TD width=2% align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HCM Holdings
        Limited prepares its financial statements up to 31 December and its principal
        country of operation is the United Kingdom. During 2005 HCM Holdings
        disposed of its trading subsidiary. The remaining investment represents
    an interest in a holding company.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Although
        HSBC owns more than 50 per cent of the equity capital of HCM Holdings
        Limited, the agreement with the other shareholder means that there are
        severe long-term restrictions which
substantially hinder HSBC&#146;s rights over the assets and management of the
entity. HSBC does however continue to exercise significant influence and together
with the other shareholder controls the entity.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Summarised aggregate financial information on joint ventures</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s share of:</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD width=3% align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> current
    assets</FONT></font></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> non-current
    assets</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">55</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">126</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> current
    liabilities</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> non-current
    liabilities</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">107</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">131</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> income</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif"> expenses</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">21</font></b></td>
    <td> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Goodwill
    and intangible assets</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
        and intangible assets includes goodwill arising on business combinations,
        the present value of in-force long-term insurance business, and other
    intangible assets.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Goodwill</FONT></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of Asia-</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong Kong</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pacific</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">America</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January 2005</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,873</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">284</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,490</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">595</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">30,362</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">108</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">547</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">660</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(70</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(73</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,137</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(17</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">428</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">85</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,642</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other changes</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(22</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(62</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(82</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,777</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">270</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,440</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">618</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,225</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The addition
        to goodwill in North America related principally to the acquisition of
    Metris Companies Inc. on 1 December 2005.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">294</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p295"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of Asia-</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pacific</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">America</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January 2004</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,655</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">279</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,945</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">502</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,498</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">282</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">526</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">61</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">871</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disposals</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">942</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">988</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other changes</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,873</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">120</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">284</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,490</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">595</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,362</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
        within &#145;Other operating income&#146; for the year ended 31 December
        2005 is US&#36;23 million (2004: US&#36;nil) relating to the excess of
        acquirer&#146;s interest in the net fair value of acquiree&#146;s identifiable
        assets, liabilities and contingent liabilities over cost, which was recognised
    in respect of the acquisition of Allianz Rentas Vitalicias.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">The present value of in-force long-term insurance business (&#145;PVIF&#146;)</FONT></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Movement on the PVIF</FONT></B></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,877</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs transition adjustment at 1 January 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(384</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Addition from current year new business</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">289</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Movement from in-force business</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(268</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(114</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,400</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">PVIF-specific assumptions</FONT></B></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
            key assumptions used in the computation of PVIF for HSBC&#146;s main insurance
    subsidiaries are:</font> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">UK</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong Kong</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk free rate</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.90</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.19</FONT></B>
        </TD>
        <TD width=2% align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk discount rate</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8.00</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11.00</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expenses inflation</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.20</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.00</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The PVIF
        represents the value of the shareholder&#146;s interest in the in-force
        business of the life insurance operations. The calculation of the PVIF
        is based upon assumptions that take into account risk and uncertainty.
        To project these cash flows, a variety of assumptions regarding future
        experience is made by each insurance operation which reflect local market
        conditions and management&#146;s judgement of local future trends. Some
        of the Group&#146;s insurance operations incorporate risk margins separately
        into the projection assumptions for each product, while others incorporate
        risk margins into the overall discount rate. This is reflected in the
    wide range of risk discount rates applied.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">295</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p296"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Other
      intangible assets</font><br>
</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="14" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      analysis of the movement of intangible assets, excluding the present value
      of in-force long-term insurance business, for the year ended 31 December
    2005 is as follows:</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Customer/</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Mortgage</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Internally</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">merchant</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trade</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">servicing</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">generated</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Purchased</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">relation-</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">names</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">rights</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">software</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">software</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ships</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January 2005</FONT></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">791</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,823</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">210</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">764</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">393</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,022</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Additions<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">136</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">420</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">49</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">626</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acquisition of subsidiaries</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">271</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">271</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disposals</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(63</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(15</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(79</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(104</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(19</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(72</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(44</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(235</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other changes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(45</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">118</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">213</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">979</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,094</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">295</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,034</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">373</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,818</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
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  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
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  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Accumulated amortisation</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(474</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,064</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(115</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(95</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,763</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Charge for the year<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(27</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(354</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(76</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(99</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(19</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(581</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disposals</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">123</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(37</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other changes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(60</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(6</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(21</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(15</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(560</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,301</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(170</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(173</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(24</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,243</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net carrying amount
at 31 December 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">419</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">793</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">861</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">349</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,575</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January 2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">854</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,556</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">490</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,092</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Additions<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">314</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">259</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">725</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acquisition of subsidiaries</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disposals</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(54</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(65</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other changes</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(78</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(110</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">168</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">791</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,823</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">210</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">764</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">393</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,022</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accumulated amortisation</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January 2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(364</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(804</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(87</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,251</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Charge for the year<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(205</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(379</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(78</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(699</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disposals</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment losses</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(15</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other changes</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">111</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">110</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">191</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(474</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,064</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(115</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(95</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,763</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=right>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Net carrying amount
at 31 December 2004</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">317</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">759</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">669</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">386</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,259</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD  valign=top>&nbsp;</TD>
  <TD  valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%"  valign=top>&nbsp;</TD>
        <TD width="3%"  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">At 31 December 2005, HSBC had US&#36;56 million (2004: US&#36;95 million) of contractual commitments to acquire intangible assets.</FONT></I>   </TD>
</TR><TR>
  <TD  valign=top>&nbsp;</TD>
        <TD  valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT>&nbsp; &nbsp; &nbsp;      </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The amortisation charge for the year is recognised within the income statement under &#145;Amortisation of intangible assets&#146;, with the exception of the amortisation of
mortgage servicing rights that are charged to net fee income.</FONT></I>        </TD>
</TR></TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">22</font></b></td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> Impairment
    of assets other than financial instruments</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
        2005 there was no impairment of goodwill (2004: US&#36;nil). Impairment
        testing in respect of goodwill is performed annually by comparing the
        recoverable amount of cash generating
units (&#145;CGUs&#146;) that has been determined at 1 July 2005 based on a value
in use calculation. That calculation uses cash flow estimates based on management&#146;s
cash flow projections, extrapolated in perpetuity using a nominal long-term growth
rate based on current GDP and inflation for the countries within which the CGU
operates. The discount rate used is based on the cost of capital HSBC allocates
to investments in the countries within which the CGU operates.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="Arial,Arial,Helvetica,sans-serif">296</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p297"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The cost
        of capital assigned to an individual cash-generating unit and used to
        discount its future cash flows can have a significant effect on its valuation.
        The cost of capital percentage is generally derived from an appropriate
        Capital Asset Pricing Model, which itself depends on inputs reflecting
        a number of financial and economic variables including the risk-free
        rate in the country concerned and a premium to reflect the inherent risk
        of the business being evaluated. These variables are established on the
    basis of management judgement.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management
        judgement is required in estimating the future cash flows of the cash-generating
        units. These values are sensitive to the cash flows projected for the
        periods for which detailed forecasts are available, and to assumptions
        regarding the long-term sustainable pattern of cash flows thereafter.
        While the acceptable range within which underlying assumptions can be
        applied is governed by the requirement for resulting forecasts to be
        compared with actual performance and verifiable economic data in future
        years, the cash flow forecasts necessarily and appropriately reflect
    management&#146;s view of future business prospects.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
        CGUs include in their carrying value goodwill that is a significant proportion
        of total goodwill reported by HSBC. These CGUs do not carry on their
        balance sheet any intangible assets with indefinite useful lives, other
    than goodwill.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Nominal</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">growth rate</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">beyond initial</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Goodwill at</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Discount</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">cash flow</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash Generating Unit</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1 July 2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">rate</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">projections</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal Financial Services &#150; Europe</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,515</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.2</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.3</FONT></B></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial Banking &#150; Europe</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,913</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private Banking &#150; Europe</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,701</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.2</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate, Investment Banking and Markets &#150; Europe</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,694</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4.0</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal Financial Services &#150; North America (other than Mexico)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,451</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.1</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total goodwill in the CGUs listed above</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,274</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">There was
        no evidence of impairment arising from this review. The only circumstances
        where a reasonably possible change in key assumptions might have caused
        an impairment loss to be recognised was in respect of Private Banking
    Europe where:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></td>
    <td align="left" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">a fall
        of 0.9% in the long-term growth rate beyond the initial cash flow projections;
    or</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT><font size="2">&nbsp;</font></td>
    <td align="left" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">an increase
    of 0.8% in the discount rate</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">would
        have caused an impairment loss to be recognised. Recognising this, the
        calculation of the value in use for Private Banking &#150; Europe, based
        on discounted projected cash flows, has been additionally benchmarked
        against market transactions in private banking companies in Europe to
    ensure the carrying value is supportable.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">297</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p298"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P> <B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">23</font></b></td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Property,
    plant and equipment</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Property,
    plant and equipment</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Long</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Short</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Equipment</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Freehold</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Leasehold</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">leasehold</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Equipment,</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">on</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">land and</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">land and</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">land and</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">fixtures</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">operating</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">buildings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">buildings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">buildings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">and fittings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">leases</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">
    <B>Total</B>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif"><SUP>1</SUP></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Cost or fair value</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January 2005</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4,384</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">2,153</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">2,252</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">8,722</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">6,117</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">23,628</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
Additions at cost<SUP>2</SUP>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">601</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">142</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">124</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1,269</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">751</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">2,887</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Acquisition of subsidiaries</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">10</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">5</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">14</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">29</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fair value adjustments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">48</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">95</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">58</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">201</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(224</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(87</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(77</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(542</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(359</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(1,289</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Transfers</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">30</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(30</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(245</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(82</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(55</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(445</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(660</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(1,487</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">224</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">14</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(12</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(379</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(885</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(1,038</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif"><b>At 31 December 2005</b></FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4,828</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">2,235</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">2,265</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">8,639</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4,964</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">22,931</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Accumulated depreciation</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January 2005</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(204</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(74</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(590</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(5,375</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(1,761</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(8,004</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Depreciation charge for the year</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(76</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(55</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(101</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(1,082</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(318</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(1,632</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">6</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">51</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">431</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">243</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">731</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Impairment losses reversed</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">18</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">5</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">35</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">285</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">182</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">525</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(8</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">323</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">335</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">653</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif"><b>At 31 December 2005</b></FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(252</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(132</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(604</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(5,418</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(1,319</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(7,725</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><b>
    <FONT size=2 face="Times New Roman, Times, serif">Net carrying amount at</FONT></b></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <div align="left"><font face="Times New Roman, Times, serif"><b><FONT size=2>&nbsp;&nbsp;&nbsp;31
    December 2005</FONT></b></font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4,576</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">2,103</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,661</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">3,221</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">3,645</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">15,206</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Cost or fair value</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January 2004</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,615</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,091</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,169</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">7,301</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,095</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">20,271</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
Additions at cost<SUP>2</SUP>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">533</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">62</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,210</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,002</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,808</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Acquisition of subsidiaries</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">169</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">52</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">221</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fair value adjustments</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">23</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">40</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">36</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">99</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(130</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(27</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(34</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(341</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(430</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(962</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">192</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">58</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">50</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">460</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">452</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,212</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(18</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(10</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(31</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">40</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(21</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif"><b>At 31 December 2004</b></FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,384</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,153</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,252</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">8,722</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">6,117</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">23,628</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif"><b>Accumulated depreciation</b></FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January 2004</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(97</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(8</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(499</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(4,313</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,510</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(6,427</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Depreciation charge for the year</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(100</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(64</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(99</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,070</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(398</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,731</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">7</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">313</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">282</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">618</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Impairment losses recognised</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(24</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(24</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(18</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(30</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(282</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(131</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(462</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">28</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">22</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(23</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">22</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><b>
    <FONT size=2 face="Times New Roman, Times, serif">At 31 December 2004</FONT></b></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(204</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(74</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(590</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(5,375</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,761</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(8,004</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><b>
    <FONT size=2 face="Times New Roman, Times, serif">Net carrying amount at</FONT></b></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><b>
    <FONT size=2 face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;31
    December 2004</FONT></b></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,180</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,079</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,662</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,347</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,356</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">15,624</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif"><i>Leasehold
          land and buildings are held under finance lease contracts where the
          value of the land cannot reliably be separated from the value of the
    lease, and the premiums are not clearly held under operating leases.</i></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Includes
          assets with a net book value of US&#36;13 million (2004: US&#36;12
    million) pledged as security for liabilities.</font></i> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</font></td>
    <td><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">At
          31 December 2005, HSBC had US&#36;1,256 million (2004: US&#36;878 million)
    of contractual commitments to acquire property, plant and equipment.</font></i> </td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">298</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p299"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
        within &#145;Short leasehold land and buildings&#146; are the following
        amounts in respect of assets classed as improvements to buildings, which
        are carried at depreciated
historical cost:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD colspan="3" align=center><font face="Times New Roman, Times, serif">
    <B><FONT size=2>2005</FONT></B>     <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </font></TD>
        <TD align=center><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font face="Times New Roman, Times, serif">
    <FONT size=2>2004</FONT>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Accumulated</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Accumulated</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Cost</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">depreciation</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Cost</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">depreciation</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

    </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">993</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(347</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">933</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(323</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Additions</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">124</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">60</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(58</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">36</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(25</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Depreciation charge for the year</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(22</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(26</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(52</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">32</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">45</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(25</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">19</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(14</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(20</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">23</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><b>
    <FONT size=2 face="Times New Roman, Times, serif">At 31 December</FONT></b></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,026</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(315</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">993</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(347</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><b>
    <FONT size=2 face="Times New Roman, Times, serif">Net carrying amount at 31 December</FONT></b>    </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">711</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">646</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment
    properties</font></b></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      composition of the investment properties at fair value in the year was
    as follows:</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Long</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Short</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Freehold</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">leasehold</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">leasehold</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">land and</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">land and</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">land and</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">buildings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">buildings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">buildings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">Total</FONT></B>
        </TD>
        <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Fair value</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January 2005</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">704</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">250</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">209</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,163</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Additions at cost</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">455</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">137</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">592</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(47</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(3</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(12</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(62</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fair value adjustments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">48</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">95</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">58</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">201</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(8</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(4</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(12</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">286</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">2</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">288</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 31 December 2005</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,438</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">477</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">255</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">2,170</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fair value</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January 2004</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">310</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">235</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">170</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">715</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Additions at cost</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">423</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">423</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(16</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(21</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fair value adjustments</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">23</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">40</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">36</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">99</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other changes</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(51</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(9</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">7</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(53</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 31 December 2004</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">704</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">250</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">209</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,163</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
      properties are valued on an open market value basis as at 31 December each
      year by independent professional valuers who have recent experience in
      the location and type of properties. Investment properties in Hong Kong,
      the Macau Special Administrative Region and mainland China, which represent
      25 per cent by value of HSBC&#146;s investment properties subject to revaluation,
      were valued by DTZ Debenham Tie Leung Limited, which is a member of the
    Hong Kong Institute of Surveyors.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As
      a result of the revaluation, the net book value of investment properties
      increased by US&#36;201 million (2004: surplus of US&#36;99 million). A
      surplus of US&#36;201 million (2004:
surplus of US&#36;99 million), was credited to the income statement for the year
ended 31 December 2005.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Holdings had no investment properties at 31 December 2005 or 2004.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
      within &#145;Other operating income&#146; was rental income of US&#36;116
      million (2004: US&#36;67 million) earned by HSBC on its investment properties.
      Direct operating expenses
of US&#36;39 million (2004: US&#36;14 million) incurred in respect of the investment
properties during the year were recognised in &#145;General and administrative
expenses&#146;. Direct operating expenses arising in respect of investment properties
that did not generate rental income during 2005 amounted to US&#36;3 million
(2004: US&#36;1 million).</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      recognised US&#36;10 million (2004: US&#36;9 million) as contractual obligations
    to purchase, construct, develop, maintain or enhance investment properties.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">299</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p300"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial,Arial,Helvetica,sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial,Arial,Helvetica,sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">(continued)</FONT><font face="Arial,Arial,Helvetica,sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><b><font size="2" face="Times New Roman, Times, serif">HSBC
    properties leased to customers</font></b><br></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      properties leased to customers included US&#36;646 million at 31 December
      2005 (2004: US&#36;552 million) let under operating leases, net of accumulated
      depreciation of US&#36;42
million (2004: US&#36;53 million). None was held by HSBC Holdings.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC
    Holdings</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><b><font size=2 face="Times New Roman, Times, serif">Property,
    plant and equipment</font></b></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan=3 align=center><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<B><FONT size=2 face="Times New Roman, Times, serif">Equipment, fixtures and fittings</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2004</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Cost</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Additions at cost</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1</FONT>
        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Accumulated depreciation</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(2</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Depreciation charge for the year</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(1</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Disposals</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(3</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Net carrying amount at 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">300</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p301"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">24</font></b></TD>
  <TD colspan="6" align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Investments
    in subsidiaries</font></b></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Principal
    subsidiary undertakings of HSBC Holdings</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Country of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">incorporation</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">interest in</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">or registration</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity capital</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Issued equity</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">capital</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Europe</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HFC Bank Limited</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;109m</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Investments
(UK) Limited (formerly HSBC Asset Management (Europe) Limited)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;142m</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Asset Finance (UK) Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;265m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank A.S.</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Turkey</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TRL277m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malta p.l.c.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Malta</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70.03</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lm9m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Jersey</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;331m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank plc</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;797m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France (formerly CCF S.A.)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99.99</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;372m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Guyerzeller Bank AG</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFr95m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Insurance Brokers Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;2.8m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Life (UK) Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;94m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Bank (Guernsey) Limited<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guernsey</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Bank (Suisse) S.A.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Switzerland</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFr683m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Bank (UK) Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">England</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;177m</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Trinkaus &amp; Burkhardt KGaA (partnership limited by shares)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Germany</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77.89</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hong Kong</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">62.14</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;9,559m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Insurance (Asia) Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;125m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Life (International) Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;327m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking Corporation Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;22,494m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Rest of Asia-Pacific</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Australia Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Australia</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">A&#36;811m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Egypt S.A.E.</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Egypt</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">94.53</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">E&#163;500m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=center>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Investments
(Taiwan) Limited (formerly HSBC Asset Management (Taiwan) Limited)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taiwan</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TWD788m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia Berhad</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Malaysia</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">RM&#36;114m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">North America</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Bank of Bermuda Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;30m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Canada</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canada</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">C&#36;1,125m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA, N.A.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;
        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;2m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance Corporation</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=right>&nbsp;
        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;2,875m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico S.A.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexico</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99.74</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">MXP3,772m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Securities (USA) Inc.</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">
    <FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </font></TD>
        <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif"><SUP>2</SUP></FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Technology &amp; Services (USA) Inc.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">
    <FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif"><SUP>2</SUP></FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">South America</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina S.A.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99.99</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ARS926m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Brasil S.A. &#150; Banco M&uacute;ltiplo</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">BRL1,930m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC La Buenos Aires Seguros S.A.</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99.53</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ARS44m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Seguros (Brasil) S.A.</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazil</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97.92</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">BRL194m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maxima S.A. AFJP</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentina</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">59.99</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ARS200m</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT>  </TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">HSBC also owns 100 per cent of the issued redeemable preference share capital of US&#36;17 million.</FONT></I>  </TD>
</TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Issued equity capital is less than US&#36;1 million.</FONT></I> </TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All
    of the above subsidiaries are included in the consolidation.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Details
      of all HSBC companies will be annexed to the next Annual Return of HSBC
    Holdings filed with the UK Registrar of Companies.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All
      the above make their financial statements up to 31 December except for
      HSBC Bank Argentina S.A., HSBC La Buenos Aires Seguros S.A. and Maxima
    S.A. AFJP, whose financial statements are made up to 30 June annually.</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">      The principal countries of operation are the same as the countries of incorporation
      except for HSBC Bank Middle East Limited which operates mainly in the Middle
      East, and HSBC Life (International) Limited which operates mainly in Hong
    Kong.</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">301</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p302"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial, Helvetica, sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Subsidiaries
          which experience significant restrictions on their ability to transfer
    funds to HSBC in the form of cash dividends or to repay loans and advances</font></b></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">None of
        the Group&#146;s subsidiaries has experienced significant restrictions
        on paying dividends or repaying loans and advances except in the case
        of HSBC Argentina during the recent debt crisis. All regulated banking
        and insurance entities are subject to regulations which require them
        to maintain capital ratios at agreed levels and so govern the availability
    of funds available for distribution.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Subsidiaries
    where HSBC owns less than 50 per cent of the voting rights</font></b></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">interest in</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity capital</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Description of relationship</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Subsidiary</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">that gives HSBC control</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=35% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Beijing HSBC Insurance Brokers Limited</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.9</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=50% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has the right
to appoint the majority of the board, therefore has management control.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Insurance Brokers (India) Private Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.9</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has the right
to appoint the majority of the board, therefore has management control.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Equity Fund 3</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38.8</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is the fund manager and controls the fund.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Continental European Alpha Fund</FONT></TD>
        <TD align=right valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fund is a &#145;Wider
Purpose Fund&#146; and consolidation is required under IAS 27 &#145;Consolidated
and Separate Financial Statements&#146;.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Global Technology Alpha Fund</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48.7</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fund is a &#145;Wider
Purpose Fund&#146; and consolidation is required under IAS 27.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Beijing HSBC Insurance Brokers Limited</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24.9</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has the right
to appoint the majority of the board, therefore has management control.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Insurance Brokers (India) Private Limited</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.9</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has the right
to appoint the majority of the board, therefore has management control.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Equity Fund 3</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC is the fund manager and controls the fund.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Continental European Alpha Fund</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19.9</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fund is a &#145;Wider
Purpose Fund&#146; and consolidation is required under IAS 27.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investments
          where HSBC owns 20 per cent or more of the voting rights but does not
    classify the investment as a subsidiary, joint venture or associate</font></b></p></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">interest in</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity capital</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Description of relationship that results in HSBC accounting</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">%</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for entity as an investment</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=35% align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Zhong-Run Company Limited</FONT></TD>
        <TD width=10% align=right valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25.0</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=50% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Entity is held
by a venture capital organisation which is exempt from classifying investments
as associates under IAS 28.</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><i><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Acquisitions</font></i></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      made the following acquisitions of subsidiaries or business operations
    in 2005, which were accounted for using the purchase method:</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> On
      1 December 2005, HSBC Financial Corporation Limited, a wholly-owned subsidiary
      of
      HSBC, acquired 100 per cent of the share capital of Metris Companies Inc.
      (&#145;Metris&#146;) for a cash consideration of US&#36;1,595 million.
      Metris was the 11th largest issuer of MasterCard and Visa Cards in the
    US.</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
      of US&#36;521 million arose from this acquisition. The goodwill on the
      Metris acquisition represents value obtainable from synergies with HSBC,
      expertise HSBC brings to the proposition and the platform the acquisition
      provides for the Group to extend its presence in the near-prime credit
    card segment of the US market.</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    post acquisition profit before tax of Metris was US&#36;6 million.</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      also made the following acquisitions of subsidiaries or business operations
    in 2005, which were accounted for using the purchase method:</font></TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(i)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On 1 June 2005,
HSBC Investments (USA) Inc., a wholly-owned subsidiary of HSBC, acquired Atlantic
Advisors LLC for a contingent consideration of US&#36;9 million. Goodwill of
US&#36;9
million arose from this acquisition.</FONT></TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">302</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p303"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD width="3%" valign=top nowrap>&nbsp;</TD>
        <TD width="3%" valign=top nowrap>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On 6 June 2005, HSBC Financial Corporation Limited, a wholly owned subsidiary of HSBC, acquired the entire share capital of Invis Incorporated for a consideration of US&#36;13 million.
Goodwill of US&#36;4 million arose from this acquisition.</FONT>        </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR><TR>
  <TD nowrap valign=top>&nbsp;</TD>
        <TD nowrap valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iii)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On 31 August 2005, HSBC Bank (Panama) S.A., a wholly owned subsidiary of HSBC, acquired the entire share capital of the Financomer Group for a cash consideration of US&#36;21 million.
Goodwill of US&#36;13 million arose from this acquisition.</FONT>       </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR><TR>
  <TD nowrap valign=top>&nbsp;</TD>
        <TD nowrap valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iv)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On 31 August 2005, HSBC acquired a 70.1 per cent equity interest in Dar Es Salaam Investment Bank of Iraq for a cash consideration of US&#36;15 million. Goodwill of US&#36;4 million arose
from this acquisition.</FONT>   </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR><TR>
  <TD nowrap valign=top>&nbsp;</TD>
        <TD nowrap valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(v)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increase in stake in an existing subsidiary is excluded from the table below. On 31 December 2005, HSBC increased its stake in HSBC Trinkaus &amp; Burkhardt KGaA by 4.42 per cent to 77.89
per cent for a cash consideration of US&#36;119 million. Goodwill of US&#36;76 million arose on the acquisition.</FONT> </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      fair values of the assets, liabilities and contingent liabilities of the
      companies acquired during the year, which relate principally to Metris,
    were as follows:</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying value</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">immediately</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">prior to</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">acquisition</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At date of acquisition</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash and balances at central banks</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,258</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,494</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">236</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">235</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">271</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property, plant and equipment</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other asset categories</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">161</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">138</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(47</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(34</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,610</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,595</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions for liabilities and charges</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(93</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(93</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liability categories</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(211</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(195</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Less: minority interests</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net assets acquired</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,102</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,071</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill attributable:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subsidiaries (Note 21)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">551</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total consideration including costs of acquisition</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,653</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
      addition to the above, there were other minor acquisitions and increases
    in investment in subsidiaries which increased goodwill by US&#36;109 million.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">25</FONT></B></TD>
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other assets</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=3% align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bullion</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,358</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,180</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assets held for sale</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">959</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">988</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reinsurers&#146; share of liabilities under insurance contracts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,545</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current taxation recoverable</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">496</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">213</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred taxation (Note 30)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,665</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,260</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Endorsements and acceptances</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,973</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,600</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,436</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,596</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,077</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets held for sale</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Disposal groups and non-current assets held for sale</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests in associates</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">162</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property, plant and equipment</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">774</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">823</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Receivables</font></TD>
  <TD align=right bgcolor="#eeeeee"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23</font></b></TD>
  <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=right bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">165</font></TD>
  <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
    assets classified as held for sale</font></TD>
  <TD align=right bgcolor="#eeeeee"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">959</font></b></TD>
  <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=right bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">988</font></TD>
  <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">303</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p304"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interests
    in associates</font></b></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following
        a review of strategic options in relation to HSBC&#146;s interest in
        The Cyprus Popular Bank Limited (trading as Laiki Group), an associate
        of the Group, it was decided to dispose of the holding. The sale was
        completed on 6 February 2006. Neither a gain nor loss was created on
        reclassifying this asset as held for sale. The interest is presented
    within the geographical segment Europe.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Property,
    plant and equipment</font></b></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The property,
        plant and equipment classified as held for sale is the result of repossession
        of property that had been pledged as collateral by customers. These assets
        are disposed of within 12 months of acquisition. Neither a gain nor loss
        was created on reclassifying these assets as held for sale. The majority
    arose within the geographical segment North America.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Receivables</font></b></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The receivables
        classified as held for sale relate to mortgage loans which HSBC no longer
        offers to its customers. An agreement to sell the portfolio has been
        signed, and the sale is scheduled to be completed in March 2006. Neither
        a gain nor loss was created on reclassifying these assets as held for
    sale. They are presented within the geographical segment South America.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">26</FONT></B></TD>
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Financial liabilities designated at fair value</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=3% align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks and customer accounts</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">253</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities to customers under investment contracts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,445</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue (Note 27)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,338</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities (Note 31)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,447</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Preference shares (Note 31)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,346</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      carrying amount at 31 December 2005 of financial liabilities designated
      at fair value was US&#36;1,899 million higher than the contractual amount
    at maturity. At
      31 December 2005, the accumulated amount of the change in fair value attributable
    to changes in credit risk was US&#36;664 million.</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC Holdings</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities (Note 31):</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; owed
    to third parties</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,315</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; owed
    to HSBC undertakings</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,055</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      carrying amount at 31 December 2005 of financial liabilities designated
      at fair value was US&#36;910 million higher than the contractual amount
    at maturity. At
      31 December 2005, the accumulated amount of the change in fair value attributable
    to changes in credit risk was US&#36;398 million.</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">304</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p305"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">27</FONT></B></TD>
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Debt securities in issue</FONT></B></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Carrying</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">amount</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="3%" align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bonds and medium term notes</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">165,773</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">135,200</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other debt securities in issue</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,613</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76,521</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">243,386</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Of which, debt securities in issue reported as:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; trading
    liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(26,976</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; financial
    liabilities designated at fair value (Note 26)</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(28,338</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,072</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain
      debt securities in issue are managed on a fair value basis as part of HSBC&#146;s
      interest rate risk management policies. The hedged portion of these debt
      securities is presented
within the balance sheet caption &#145;Financial liabilities designated at fair
value&#146;, with the remaining portion included within &#145;Trading liabilities&#146;.</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following table analyses bonds and medium term notes in issue at 31 December
    2005 with original maturities greater than one year:</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fixed rate</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.875% Adjustable Conversion-Rate Equity Security Units</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">594</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debentures &#150; 8.375%: due 2007</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">101</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">100</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Secured financing:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">1.14%
              to 3.99%: due 2006 to 2009</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,669</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,805</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">4.00%
              to 4.99%: due 2006 to 2010</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,090</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">414</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.00%
              to 5.99%: due 2006 to 2010</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">843</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">638</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">6.00%
              to 6.99%: due 2006 to 2010</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">7.00%
              to 7.99%: due 2006 to 2010</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">217</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">8.00%
              to 8.99%: due 2005</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other fixed rate senior debt:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">2.15%
              to 3.99%: due 2006 to 2044</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,527</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,935</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">4.00%
              to 4.99%: due 2006 to 2023</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32,295</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,685</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.00%
              to 5.99%: due 2006 to 2035</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,302</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,853</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">6.00%
              to 6.99%: due 2006 to 2033</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25,356</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,853</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">7.00%
              to 7.99%: due 2006 to 2032</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,450</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,878</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">8.00%
              to 9.99%: due 2006 to 2015</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,743</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,694</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">10.00%
              or higher: due 2006 to 2014</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">890</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">113,448</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75,678</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Variable interest rate</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Secured financings &#150; 0.00% to 9.99%: due 2006 to 2009</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,601</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,070</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FHLB advances &#150; 4.00% to 4.99%: due 2006 to 2008</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,000</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,000</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other variable interest rate senior debt &#150; 2.16% to 6.17%: due 2006 to 2036</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24,374</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,510</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">44,975</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,580</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Structured notes</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest rate linked</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,748</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,794</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity, equity index or credit linked</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,602</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,148</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,350</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,942</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total bonds and medium term notes</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">165,773</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">135,200</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">305</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p306"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial, Helvetica, sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">28</font></b></TD>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Other
    liabilities</font></b></TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B><font size="2">&nbsp;</font>       </TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B><font size="2">&nbsp;</font>      </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts
    due to investors in funds consolidated by</FONT><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">HSBC</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">683</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Current taxation</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,640</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,648</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Obligations under finance leases</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">639</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">695</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend declared and payable by HSBC Holdings</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,193</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,189</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,193</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,189</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Endorsements and acceptances</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,033</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,327</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,049</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">26,515</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,581</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,203</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,198</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Obligations under finance leases falling due:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; within
    1 year</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; between
    1 and 5 years</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; over
    5 years</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">560</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">630</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">639</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">695</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">29</font></b></TD>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Liabilities
    under insurance contracts issued</font></b></TD>
  <TD colspan="5" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD colspan="5" align=center><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reinsurers&#146;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">share</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-life insurance liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unearned premium provision</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,346</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(202</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,144</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Notified claims</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">872</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(335</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims incurred but not reported</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">424</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(130</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">294</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">229</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">227</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,871</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(669</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,202</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Life insurance policyholders&#146; liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Life (non-linked)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,369</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(807</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,562</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Investment contracts with discretionary participation features<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Life (linked)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,895</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(69</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,826</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,273</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(876</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,397</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities under insurance contracts issued</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,144</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,545</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,599</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Though investment contracts with discretionary participation features are financial instruments, HSBC continued to treat them as insurance contracts as permitted by IFRS
4.</FONT></I>   </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">306</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p307"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      movement of liabilities under insurance contracts during the year ended
    31 December 2005 was as follows:</font></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD colspan="8" align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Non-life insurance liabilities</FONT><font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="7" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reinsurers&#146;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">share</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Unearned premium provision</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,250</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(217</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,033</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross written premiums</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,364</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(479</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,885</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross earned premiums</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,139</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">419</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,720</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(129</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">75</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(54</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,346</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(202</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,144</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Notified and incurred but not reported claims</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,360</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(463</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">897</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Notified
              claims</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">871</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(408</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">463</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Claims
              incurred but not reported</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">489</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(55</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">434</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims paid in current year</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(966</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">146</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(820</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims incurred in respect of current year</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,070</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(150</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">920</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims incurred in respect of prior years</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(32</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(26</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(136</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(140</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,296</FONT></B>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(465</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">831</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Notified
              claims</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">872</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(335</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Claims
              incurred but not reported</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">424</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(130</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">294</FONT></B>
        </TD>
        <TD align=left bgcolor="#cccccc"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,296</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(465</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">831</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">229</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">227</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total non-life insurance liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,871</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(669</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,202</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="7" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      above table includes an insignificant amount in respect of the development
      of prior year claims. For this reason, no detailed table of claims development
      has been provided. This is because a significant majority of the non-life
    insurance business claims are settled within a short period of time.</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD colspan="6" align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Life insurance policyholders&#146; liabilities</FONT>        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reinsurers&#146;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Gross</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">share</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Life (non-linked)</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,860</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,049</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,811</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benefits paid</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(621</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">111</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(510</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims incurred</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,304</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,384</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(174</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">51</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(123</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,369</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(807</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,562</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment contracts with discretionary participation features</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims incurred</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Life (linked)</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,523</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(73</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,450</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Benefits paid</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(357</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(346</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Claims incurred</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">802</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(22</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">780</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(73</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(58</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,895</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(69</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,826</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total policyholders&#146; liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,273</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(876</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,397</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">307</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p308"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The claims
        incurred represent the aggregate of all events giving rise to additional
        policyholders&#146; liabilities in the year. These include death claims,
        surrenders, lapses, the setting up of liability to policyholders at the
        initial inception of the policy, the declaration of bonuses and other
    amounts attributable to policyholders.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">30</font></b></td>
    <td><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Provisions</font></b></td>
  </tr>
  <tr valign="top">
    <td><hr size="1" noshade></td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
        provisions at 31 December 2005 were US&#36;1,966 million (2004: US&#36;4,071
        million), of which US&#36;530 million (2004: US&#36;1,435 million) relates
        to deferred tax and
US&#36;1,436 million (2004: US&#36;2,636 million) relates to other provisions.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Deferred taxation</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</font></b></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;
</TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>         <font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deferred</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Deferred</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">tax asset</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">tax liability</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">tax asset</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">tax liability</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Temporary differences:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; retirement
    benefits</FONT></font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,621</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,537</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">84</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,039</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">728</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,311</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; loan
    impairment allowances</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,220</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,899</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">321</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,407</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,115</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">292</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; assets
    leased to customers</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,342</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,250</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(92</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,706</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(221</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,485</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; revaluation
    of property</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(339</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(400</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(458</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(237</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(221</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; accelerated
    capital allowances</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(55</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(5</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(50</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(88</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(151</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; other
    short term timing differences</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(107</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">247</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(354</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(456</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">697</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,153</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unused tax losses</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">223</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">176</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">47</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision
    for tax on profit remitted</font><font size="2">&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">from
    overseas</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(86</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(86</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(28</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(28</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,135</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,665</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(530</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,825</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,260</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,435</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="12" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      amount of temporary differences for which no deferred tax asset is recognised
      in the balance sheet is US&#36;835 million (2004: US&#36;973 million).
      Of this amount, US&#36;458 million
(2004: US&#36;569 million) has no expiry date and US&#36;377 million (2004: US&#36;404
million) is scheduled to expire within 10 years.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred tax liability</FONT><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Temporary differences:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; short-term
    timing differences</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision for tax on profit remitted from overseas</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">65</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred
      tax is not recognised on temporary differences associated with investments
      in subsidiaries and branches because earnings are intended to be indefinitely
      reinvested in the case of subsidiaries and no further tax is expected to
      arise in the foreseeable future in the case of branches. The total amount
      of such relevant temporary differences amounted to US&#36;15,367 million
    (2004: US&#36;12,681 million).</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">There
      are no deductible temporary differences, unused tax losses and unused tax
    credits for which no deferred tax asset is recognised in the balance sheet.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">308</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p309"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Other provisions</FONT></TD>
        <TD align=left>

        </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">provisions</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,636</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs transition adjustment at 1 January 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,033</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Additional provisions/increase in provisions<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">637</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions utilised</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(327</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts reversed</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(310</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences and other movements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(167</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,436</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif" width="3%">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The increase in &#145;other provisions&#146; includes unwinding of discounts of US&#36;11 million (2004: US&#36;12 million) in relation to vacant space provisions and US&#36;23
million (2004: US&#36;19 million) in relation to Brazilian provisions for civil and fiscal labour claims.</FONT></I>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR></TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Included
    within &#145;Other provisions&#146; are:</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(i)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions for onerous property contracts of US&#36;149 million (2004: US&#36;202 million), of which US&#36;74 million (2004: US&#36;66 million) relates to discounted future costs
associated with leasehold properties that became vacant as a consequence of HSBC&#146;s move to Canary Wharf in 2002. The provisions cover rent voids while finding new tenants, shortfalls in expected rent receivable compared with rent payable, and
the cost of refurbishing the buildings to attract tenants. Uncertainties arise from movements in market rents, delays in finding new tenants and the timing of rental reviews.</FONT>   </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Labour, civil and
fiscal litigation provisions in HSBC&#146;s Brazil operations of US&#36;235 million
(2004:</FONT><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;231
million). These relate to labour and overtime litigation claims brought by employees
after
leaving the bank. The provisions are based on the expected number of departing
employees, their individual salaries and historical trends. The timing of the
settlement of these claims is uncertain.</font> </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iii)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions of US&#36;652 million (2004: US&#36;809 million) have been made in respect of costs arising from contingent liabilities and contractual commitments (Note 40), including
guarantees of US&#36;55 million (2004: US&#36;77 million) and commitments of US&#36;122 million (2004: US&#36;71 million).</FONT>       </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR></TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">31</FONT></B></TD>
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Subordinated liabilities</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="4" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Carrying amount</FONT><font size="2">&nbsp;</font>        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=3% align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; At
    amortised cost</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,537</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,546</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Preferred securities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,991</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; Designated
    at fair value (Note 26)</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,793</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,447</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Preferred securities</FONT></font></TD>
        <TD align=right bgcolor="#cccccc">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,346</FONT></B></TD>
        <TD align=right bgcolor="#cccccc">&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right bgcolor="#cccccc">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#cccccc">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,330</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs reclassification
as at 1 January 2005:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; Preferred
    securities reclassified as liabilities</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,114</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,330</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,600</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; HSBC
    Holdings</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,765</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,669</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; Other
    HSBC</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,565</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,931</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,330</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,600</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">309</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p310"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial, Helvetica, sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD></TD>
  <TD colspan="5"></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD colspan="5"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC&#146;s
    subordinated borrowings</font></b></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

    </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

    </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD width="10%"></TD>
  <TD></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD colspan="2">&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="3%"><font size="2">&nbsp;</font>       <font size="2">&nbsp;
    </font></TD>
        <TD colspan="2" bgcolor="#eeeeee"><font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Amounts
                owed to third parties by HSBC Holdings </font></b><font face="TimesNewRoman,Times New Roman,Times,serif">(see
    below)</font></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,765</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,669</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><font size="2">&nbsp;</font>
      <B></B></TD>
        <TD colspan="2"><b></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other
    HSBC subordinated borrowings</font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,400</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.3687% Non-cumulative Step-up Perpetual Preferred Securities<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,653</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,908</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">9.547% Non-cumulative Step-up Perpetual Preferred Securities, Series 1<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,350</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,250</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">4.61% Non-cumulative Step-up Perpetual Preferred Securities<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,250</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,250</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Primary capital subordinated undated floating rate notes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,207</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,200</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">700</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.844% Non-cumulative Step-up Perpetual Preferred Securities<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,205</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,354</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,000</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.875% subordinated notes 2034</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,017</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">993</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,000</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.625% subordinated notes 2014</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">997</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">997</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,000</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.911% trust preferred securities<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">990</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.375% subordinated notes 2033</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">940</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">964</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">900</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">10.176% Non-cumulative Step-up Perpetual Preferred Securities, Series 2<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">900</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">889</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">750</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.13% Non-cumulative Step-up Perpetual Preferred Securities<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">885</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,025</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">4.75% callable subordinated notes 2020<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">861</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">8.208% Non-cumulative Step-up Perpetual Preferred Securities<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">861</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">958</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">750</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undated floating rate primary capital notes</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">752</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">750</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">750</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.625% subordinated notes 2035</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">737</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">600</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">4.25% Callable subordinated notes 2016<SUP>5</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">731</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">819</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">600</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">8.03% Non-cumulative Step-up Perpetual Preferred Securities<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">708</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">812</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.375% Callable subordinated step-up notes 2030<SUP>6</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">647</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">677</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Callable subordinated variable coupon notes 2017<SUP>7</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">635</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">677</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5% Callable subordinated notes 2023<SUP>8</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">613</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">676</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Callable subordinated floating rate notes 2020<SUP>9</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">588</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">5.862% Non-cumulative Step-up Perpetual Preferred Securities<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">558</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">580</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.5% subordinated notes 2023</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">509</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">577</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.625% subordinated notes 2006</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">507</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undated floating rate primary capital notes</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">502</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">225</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.25% subordinated notes 2041</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">384</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">432</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">7.65% subordinated notes 2025<SUP>10</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">358</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.95% subordinated notes 2011</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">326</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undated floating rate primary capital notes Series 3</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">302</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7% subordinated notes 2006</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">300</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">8.625% step-up undated subordinated notes<SUP>11</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">277</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">290</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">9.25% step-up undated subordinated notes<SUP>12</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">268</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">290</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">BRL608m</FONT>      <font size="2">&nbsp;</font>
    </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated debentures 2008</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">261</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">229</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.875% subordinated notes 2008</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">240</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">237</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.20% subordinated debentures 2097</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">216</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">216</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.75% subordinated notes 2009</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">207</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.53% STOPS capital securities 2026</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.50% trust preferred securities 2031</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">202</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.25% trust preferred securities 2031</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">200</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">204</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.808% capital securities 2026</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">200</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.38% capital securities 2027</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">200</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.625% subordinated notes 2009</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">198</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9% subordinated notes 2005</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">385</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10% trust preferred securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">306</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>      <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other subordinated liabilities each less than US&#36;200m</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,621</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,895</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>      <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28,565</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,931</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>      <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,330</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,600</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD colspan="6"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      loan capital is repayable at par on maturity, but some is repayable prior
      to maturity at the option of the borrower, generally with the consent of
      the Financial Services Authority, and, where relevant, the local banking
      regulator, in certain cases at a premium over par. Interest rates on the
      floating rate loan capital are related to interbank offered rates. On the
      remaining subordinated loan capital, interest is payable at fixed rates
    up to 10.176 per cent.</font></TD>
  </TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">See Step-up Perpetual Preferred Securities, note (a) Guaranteed by HSBC Holdings. Classified as liabilities from 1 January 2005.</FONT></I>     </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">See Step-up Perpetual Preferred Securities, note (b) Guaranteed by HSBC Bank. . Classified as liabilities from 1 January 2005.</FONT></I>       </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The distributions on the trust preferred securities change in November 2015 to three-month dollar LIBOR plus 1.926 per cent.</FONT></I> </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 4.75 per cent callable subordinated notes 2020 changes in September 2015 to three-month sterling LIBOR plus 0.82 per cent.</FONT></I>  </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">310</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p311"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 4.25 per cent callable subordinated notes changes in March 2011 to three-month EURIBOR plus 1.05 per cent.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 5.375 per cent callable subordinated step-up notes 2030 changes in November 2025 to three month sterling LIBOR plus 1.50 per cent.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the callable subordinated variable coupon notes 2017 is fixed at 5.75 per cent until June 2012. Thereafter, the rate per annum is the sum of the gross
redemption yield of the then prevailing five-year UK gilt plus 1.70 per cent.</FONT></I>        </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest on the 5 per cent callable subordinated notes 2023 changes in March 2018 to become the rate per annum which is the sum of the gross redemption yield of the
prevailing five-year UK gilt plus 1.80 per cent.</FONT></I>     </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest margin on the callable subordinated floating notes 2020 increases by 0.5 per cent from September 2015.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The 7.65 per cent subordinated notes 2025 are repayable at the option of each of the holders in May 2007.</FONT></I>    </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 8.625 per cent step-up updated subordinated notes changes in December 2007 to become, for each successive five year period, the rate per annum which is
the sum of the yield on the then five year benchmark UK gilt plus 1.87 per cent.</FONT></I>     </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 9.25 per cent set-up updated subordinated notes changes in December 2006 to become, for each successive five year period, the rate per annum which is
the sum of the yield on the then five year benchmark UK gilt plus 2.15 per cent.</FONT></I>     </TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Footnotes
        3 to 12 (excluding footnote 10) all relate to notes that are repayable
        at the option of the borrower on the date of the change of the interest
        rate, and at subsequent interest rate reset dates and interest payment
        dates in some cases, subject to</font></i><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif"> </font></i><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">the
    prior consent of the Financial Services Authority.</font></i></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Step-up
    Perpetual Preferred Securities</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(a)</FONT></B></TD>
        <TD>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Guaranteed by HSBC Holdings</FONT></B>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The seven issues of Non-cumulative Step-up Perpetual Preferred Securities (footnote 1) were made by Jersey limited partnerships and are guaranteed, on a subordinated basis, by HSBC
Holdings. The proceeds of the issues were on-lent to HSBC Holdings by the limited partnerships by issue of subordinated notes. The Preferred Securities qualify as innovative tier 1 capital for HSBC. The Preferred Securities, together with the
guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of HSBC Holdings that are equivalent to the rights that they would have had if they had purchased non-cumulative
perpetual preference shares of HSBC Holdings.</FONT>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Preferred Securities are perpetual, but redeemable in 2014, 2010, 2013, 2016, 2030, 2015 and 2012 respectively at the option of the general partner of the limited partnerships. If not
redeemed the distributions payable step-up and become floating rate or, for the sterling issue, for each successive five-year period, the sum of the then five-year benchmark UK gilt plus a margin. There are limitations on the payment of
distributions if prohibited under UK banking regulations or other requirements, if a payment would cause a breach of HSBC&#146;s capital adequacy requirements, or if HSBC Holdings has insufficient distributable reserves (as defined).</FONT>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings has covenanted that if it is prevented under certain circumstances from paying distributions on the Preferred Securities in full, it will not pay dividends or other
distributions in respect of its ordinary shares, or effect repurchase or redemption of its ordinary shares, until after a distribution has been paid in full.</FONT>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If (i) HSBC&#146;s total capital ratio falls below the regulatory minimum ratio required, or (ii) the Directors expect that, in view of the deteriorating financial condition of HSBC
Holdings, (i) will occur in the near term, then the Preferred Securities will be substituted by Preference Shares of HSBC Holdings having economic terms which are in all material respects equivalent to those of the Preferred Securities and the
guarantee taken together.</FONT>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(b)</FONT></B></TD>
        <TD>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Guaranteed by HSBC Bank</FONT></B>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The two issues of Non-cumulative Step-up Perpetual Preferred Securities (footnote 2) were made by Jersey limited partnerships and are guaranteed, on a subordinated basis, by HSBC Bank.
The proceeds of the issues were on-lent to HSBC Bank by the limited partnerships by issue of subordinated notes. The Preferred Securities qualify as innovative tier 1 capital for HSBC and for HSBC Bank on a solo and consolidated basis and, together
with the guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of HSBC Bank that are equivalent to the rights they would have had if they had purchased non-cumulative
perpetual preference shares of HSBC Bank.</FONT>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Preferred Securities are perpetual, but redeemable in 2031 and 2020, respectively, at the option of the general partner of the limited partnerships. If not redeemed the distributions
payable step-up and become floating rate. The same limitations on the payment of distributions apply to HSBC Bank as to HSBC, as described above. HSBC Bank has provided a similar covenant to that provided by HSBC Holdings, also as described
above.</FONT>   </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If (i) any Preferred Securities are outstanding in November 2048 or April 2049, respectively, or (ii) the total capital ratio of HSBC Bank on a solo and consolidated basis falls below the
regulatory minimum ratio required,</FONT>       </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">311</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p312"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial, Helvetica, sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">or (iii)
        in view of the deteriorating financial condition of HSBC Bank, the Directors
        expect (ii) to occur in the near term, then the Preferred Securities
        will be substituted by Preference Shares of HSBC Bank having economic
        terms which are in all material respects equivalent to those of the Preferred
    Securities and the guarantee taken together.</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC Holdings</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Carrying amount</FONT><font size="2">&nbsp;</font>        </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">at amortised
      cost</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,812</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">designated
      at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>     <font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,606</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,812</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings&#146; dated subordinated loan capital is repayable:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">between 2
      and 5 years</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,723</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,408</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">over 5 years</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,883</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,404</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>     <font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,606</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,812</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
    Holdings subordinated borrowings</font></b></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD></TD>
        <TD></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts falling due after</FONT></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
        <TD></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">more
              than 1 year</FONT></font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
        <TD></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
        <TD></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
        <TD colspan="2">
      <B></B><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Amounts
    owed to third parties</font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3%>&nbsp;</TD>
        <TD width=10% bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;2,000</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Callable subordinated floating rate notes 2014<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,374</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,730</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,400</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.25% subordinated notes 2012</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,421</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,394</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,000</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.375% subordinated notes 2012</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,322</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,360</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">650</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.75% subordinated notes 2027</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,267</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,250</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,000</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.5% subordinated notes 2009</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,115</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">999</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">700</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">3.625% callable subordinated notes 2020<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">831</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">750</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Callable subordinated floating rate notes 2015<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">749</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">250</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">9.875% subordinated bonds 2018<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">595</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">478</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">488</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.625% subordinated notes 2032</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">482</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">481</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.5% subordinated notes 2009</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">390</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">409</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">222</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.35% subordinated notes 2032</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">219</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">218</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD>&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated step-up coupon floating rate notes 2010</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">350</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
        <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,765</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,669</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD></TD>
  <TD></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">312</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p313"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD width="3%" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width="10%"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts falling due after</FONT></TD>
    <TD width="2%" align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">more
              than 1 year</FONT></font><font size="2">&nbsp;</font>     </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD width="10%" align=right><hr size="1" noshade></TD>
  <TD width="2%" align=right><hr size="1" noshade></TD>
  <TD width="10%" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></TD>
  <TD colspan=2>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=2>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Amounts owed to HSBC undertakings</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;1,400</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3687% fixed/floating
subordinated notes 2043 &#150; HSBC Capital Funding (Euro 2) LP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,878</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,894</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;1,350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.547% subordinated
step-up cumulative notes 2040 &#150; HSBC Capital Funding (Dollar 1) LP</FONT></TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,331</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;1,250</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.61% fixed/floating
subordinated notes 2043 &#150; HSBC Capital Funding (Dollar 2) LP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,185</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,238</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;750</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.13% fixed/floating
subordinated notes 2044 &#150; HSBC Capital Funding (Euro 3) LP.</FONT></TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">992</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;900</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.176% subordinated
step-up cumulative notes 2040 &#150; HSBC Capital Funding (Dollar 1) LP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">900</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">891</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.208% subordinated
step-up cumulative notes 2040 &#150; HSBC Capital Funding (Sterling 1) LP</FONT></TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">853</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">958</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=right>&nbsp;
        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;600</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.03% subordinated
step-up cumulative notes 2040 &#150; HSBC Capital Funding (Euro 1) LP.</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">702</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">812</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,841</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,143</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,606</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,812</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest margins on the callable subordinated floating rate notes 2014 and 2015 increase by 0.5 per cent from September 2009 and March 2010, respectively. The notes are
repayable from their step up date at the option of the borrower, subject to the prior consent of the Financial Services Authority.</FONT></I>   </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 9.875 per cent subordinated bonds 2018 changes in April 2013 to become the higher of (i) 9.875 per cent or (ii) the sum of the yield on the relevant
benchmark treasury stock plus 2.5 per cent. The bonds may be redeemed in April 2013 at par and redemption has also been allowed from April 1998, subject to the prior consent of the Financial Services Authority, for an amount based on the redemption
yields of the relevant benchmark treasury stocks.</FONT></I>    </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The interest rate on the 3.625 per cent callable subordinated notes 2020 changes in June 2015 to become three-month EURIBOR plus 0.93 per cent. The notes may be redeemed at par
from June 2015 at the option of the borrower, subject to the prior consent of the Financial Services Authority.</FONT></I>      </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">32</font></b></TD>
  <TD colspan=2><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Fair
    values of financial instruments</font></b></TD>
</TR>
<TR>
  <TD><hr size="1" noshade></TD>
  <TD colspan=2><hr size="1" noshade></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following table provides an analysis of the fair value of financial instruments
    not measured at fair value in the balance sheet:</font></TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Carrying</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">amount</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">126,218</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,449</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,794</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,439</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">674,360</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments: Debt securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,082</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,263</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">153,103</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">154,400</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,727</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,540</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,055</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">83,493</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,316</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">691,527</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,072</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,401</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">214,652</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,537</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,380</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,359</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      methods used to determine fair values for financial instruments for the
      purpose of measurement and disclosure are set out in Note 2(d). The majority
      of HSBC&#146;s financial instruments measured at fair value are valued
      using quoted market prices, or valuation techniques based on observable
      market data. Observable market prices are not, however, available for many
      of HSBC&#146;s financial assets and liabilities not measured at fair value.
      The determination of the fair values of the assets and liabilities in the
    table above are as follows:</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(i)</FONT></I></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Loans and advances to banks and customers</FONT></I>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fair values of personal and commercial loans and advances are estimated by discounting anticipated cash flows (including interest at contractual rates).</FONT>       </TD>
</TR></TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">313</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p314"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Performing
      loans are grouped, as far as possible, into homogeneous pools segregated
      by maturity and the coupon rates of the loans within each pool. In general,
      cash flows are discounted using current market rates for instruments with
      similar maturity, repricing and credit risk characteristics. For fixed
      rate loans, assumptions are made on the expected prepayment rates appropriate
    to the type of loan.</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Conforming
      residential mortgages in the US are treated differently when there is an
      established market value for asset-backed securities. In such cases, fair
      value is estimated by reference to quoted market prices for loans with
    similar characteristics and maturities.</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For impaired
      uncollateralised commercial loans, fair value is estimated by discounting
      the future cash flows over the time period they are expected to be recovered.
      For impaired commercial loans where collateral exists, fair value is the
      lower of the carrying values of the loans net of impairment allowances,
    and the fair value of the collateral, discounted as appropriate.</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(ii)</FONT></I></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Financial investments</FONT></I>        </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2004, financial investments include debt securities and equity shares intended to be held on a continuing basis. Such financial investments were included in the balance sheet at cost
less provision for any permanent diminution in value.</FONT>    </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">From 1 January 2005, on implementation of IAS39, the only financial investments not measured at fair value in the balance sheet are held-to-maturity debt securities. Held-to-maturity debt
securities are initially recorded at fair value plus any directly attributable transaction costs, and are subsequently measured at amortised cost using the effective interest rate method, less any impairment losses.</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are determined using valuation techniques that
take into consideration future earnings streams and valuations of equivalent quoted securities.</FONT>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(iii)</FONT></I></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Deposits by banks and customer accounts</FONT></I>      </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks and customer accounts are grouped by residual maturity. Fair values are estimated using discounted cash flows, applying either market rates, where applicable, or current
rates offered for deposits of similar remaining maturities.</FONT>      </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(iv)</FONT></I></TD>
        <TD>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Debt securities in issue and subordinated liabilities</FONT></I>        </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair values
      are determined using quoted market prices at the balance sheet date where
    applicable, or by reference to quoted market prices for similar instruments.</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      fair values presented in the table above are stated at a specific date
      and may be significantly different from the amounts which will actually
      be paid or received on the maturity or settlement dates of the instruments.
      In many cases, it would not be possible to realise immediately the estimated
      fair values. Accordingly these fair values do not represent the value of
      these financial instruments to HSBC as a going
concern.</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      fair values of intangible assets, such as values placed on portfolios of
      core deposits, credit card relationships and customer goodwill, are not
      included above, because they are not
financial instruments.</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As
      other financial institutions use different valuation methodologies and
      assumptions in determining fair values, comparisons of fair values between
      financial institutions may not be meaningful and users are advised to exercise
    caution when using this data.</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition,
      the following table lists those financial instruments where the carrying
      amount is a reasonable approximation of fair value, for example, because
      they are either short term in nature or reprice to current market rates
    frequently:</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="48%"><font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets </font></b></font></td>
    <td width="49%"><font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</font></b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Cash
    and balances at central banks</font></font></td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong Government currency notes in circulation</font></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;&nbsp;&nbsp;<font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">(representative
    of Hong Kong banknotes issued)</font></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Items
    in the course of collection</font></font></td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Items
    in the course of transmission</font></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong Government certificates of indebtedness</font></font></td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Endorsements
    and acceptances</font></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;&nbsp;&nbsp;<font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">(representative
    of Hong Kong banknotes issued)</font></font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Endorsements
    and acceptances</font></font></td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Short-term
    payables within &#145;Other Liabilities&#146;</font></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif">Short-term
    receivables within &#145;Other Assets&#146;</font></font></td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">314</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p315"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC Holdings</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amount</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=3% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to HSBC undertakings</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,252</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts owed to HSBC undertakings</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,075</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,728</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,493</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">33</FONT></B></TD>
        <TD colspan="4" align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Maturity analysis of assets and liabilities</FONT></B>  </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD colspan="4" align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      following is an analysis of assets and liabilities by remaining contractual
      maturities at the balance sheet date for assets and liability line items
      that combines amounts expected to be recovered or settled in under one
    year, and after one year.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets and liabilities are excluded because they are not held for collection
    or settlement over the period of contractual maturity.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC</FONT></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Due after</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Due within</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">more than</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">one year</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">one year</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial assets designated at fair value</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,537</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,509</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,046</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121,387</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,578</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,965</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">301,181</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">438,821</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">740,002</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79,239</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103,103</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,342</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other financial assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,589</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">134</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,723</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">515,933</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">560,145</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,076,078</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">60,863</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,864</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,727</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">712,317</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">27,102</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">739,419</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial liabilities designated at fair value</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,854</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54,975</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,829</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100,636</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">87,436</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188,072</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other financial liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,565</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">799</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,364</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">313</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,224</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,537</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">891,548</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">195,400</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,086,948</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT><font size="2">&nbsp;</font>      </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Due after</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Due within</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">more than</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">one year</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">one year</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">139,007</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,442</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,449</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">257,882</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">415,009</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77,707</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">107,625</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">474,596</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">527,076</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,001,672</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78,080</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,975</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,055</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">670,224</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,848</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102,927</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">108,794</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other financial liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">676</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">701</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">749</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,737</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">852,005</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">164,030</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,016,035</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">315</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p316"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial, Helvetica, sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">HSBC
    Holdings</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Due after</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Due within</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">more than</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">one year</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">one year</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to HSBC undertakings</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,661</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,431</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,517</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">171</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments and accrued income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,843</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,956</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,799</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts owed to HSBC undertakings</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,900</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,175</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,075</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial liabilities designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,370</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,196</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,203</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals and deferred income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">95</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,236</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,191</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20,788</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">23,979</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Due after</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Due within</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">more than</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">one year</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">one year</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to HSBC undertakings</FONT></TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,197</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,439</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,636</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,885</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,885</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">632</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">632</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments and accrued income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,834</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,324</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,158</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts owed to HSBC undertakings</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">242</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,110</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,352</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,198</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,198</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals and deferred income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">172</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,812</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,812</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,612</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,922</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,534</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">34</font></b></TD>
  <TD colspan="6" align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Foreign
    exchange exposures</font></b></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD colspan="6" align=left><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Structural
    foreign exchange exposures</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      structural foreign exchange exposures are represented by the net asset
      value of its foreign exchange equity and subordinated debt investments
      in subsidiary undertakings, branches, joint ventures and associates. Gains
      or losses on structural foreign exchange exposures are taken to reserves.
      HSBC&#146;s management of its structural foreign exchange exposures is
      discussed in the &#145;Market risk&#146; section on page
168.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Holdings retains foreign exchange exposure to dividends receivable from
    its UK subsidiaries and euro-denominated loans to subsidiaries.</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">316</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p317"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD colspan="4" align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net structural foreign exchange exposures</FONT></B>      </TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Currency of structural exposure</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Euros</FONT></TD>
        <TD width=10% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18,821</FONT></B>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,054</FONT>
        </TD>
        <TD width=2% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sterling</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,615</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,749</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chinese renminbi</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,135</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,105</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mexican pesos</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,777</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,907</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong dollars<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,945</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,693</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Canadian dollars</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,926</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,250</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazilian reais</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,174</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,498</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Swiss francs</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,957</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,921</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Indian rupees</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,182</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">745</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UAE dirhams</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,111</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">760</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Turkish lira</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">919</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">705</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Malaysian ringgit</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">705</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">605</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Australian dollars</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">609</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">703</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Korean won</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">506</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">420</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Saudi riyals<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">347</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">107</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Singapore dollars</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">334</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">401</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taiwanese dollars</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">298</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">326</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Japanese yen</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">252</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">225</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maltese lira</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">250</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">278</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Egyptian pounds</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">234</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">181</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Thai baht</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">234</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">203</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Indonesia rupiah</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">188</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">155</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Chilean pesos</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">187</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">175</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Philippine pesos</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">176</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New Zealand dollars</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South African rand</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">106</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Argentine pesos<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(85</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(76</FONT>
        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Others, each less than US&#36;100 million</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">787</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">587</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,831</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67,836</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The reduction in the net structural foreign exchange exposure to Hong Kong dollars relates principally to the reclassification of preference share capital from equity to
financial liability with effect from 1 January 2005, on application of IAS32.</FONT></I>        </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">After deducting sales of Saudi riyals amounting to US&#36;480 million (2004: US&#36;480 million) in order to manage the foreign exchange risk of the investments.</FONT></I>    </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD valign="top">
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The negative net investment in Argentine pesos reflects the deficiency in domestic net assets following the pesification of certain balances formerly denominated in US
dollars.</FONT></I>     </TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">35</font></b></TD>
  <TD colspan="2" valign=top><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Assets
        charged as security for liabilities and collateral accepted as security
    for assets</font></b></TD>
  </TR>
<TR>
  <TD valign=top><hr size="1" noshade></TD>
  <TD valign=top><hr size="1" noshade></TD>
  <TD><hr size="1" noshade></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    assets pledged to secure liabilities are as follows:</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Assets
              pledged at</FONT></font><font size="2">&nbsp;</font>      </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">31
              December</FONT></font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury bills and other eligible securities</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,607</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,152</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,310</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,590</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,992</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">89,973</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,819</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity shares</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,137</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">537</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,438</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141,154</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">93,401</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">These
      transactions are conducted under terms that are usual and customary to
    standard lending, and stock borrowing and lending activities.</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Collateral
      accepted as security for assets</font><br>
</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      fair value of financial assets accepted as collateral that HSBC is permitted
    to sell or repledge in the absence of default is US&#36;138,303 million.</font></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">317</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p318"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements</FONT><FONT face="Arial, Helvetica, sans-serif"><font size="2"> </font></FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      fair value of financial assets accepted as collateral that have been sold
      or repledged is US&#36;97,113 million. HSBC is obliged to return equivalent
    securities.</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">These
      transactions are conducted under terms that are usual and customary to
    standard stock borrowing and lending activities.</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">36</FONT></B></TD>
        <TD colspan="2">
      <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Minority interests</FONT></B></TD>
        <TD align=left>&nbsp;

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><hr size="1" noshade></TD>
  <TD><hr size="1" noshade></TD>
  <TD colspan="-1" align=left><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan="-1" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=10%><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>          <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD></TD>
  <TD></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width=3% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" bgcolor="#eeeeee"><font size="2">&nbsp;</font>      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority interests
    attributable to holders of ordinary shares in subsidiaries</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,618</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,957</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2"><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Preference shares issued by subsidiaries</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,176</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,718</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2"></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2" bgcolor="#eeeeee"><font size="2">&nbsp;</font>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total minority interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,794</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,675</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2"></TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="2"><font size="2">&nbsp;</font>
      <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Preference shares issued by subsidiaries</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>          <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>          <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan="-1" align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">575</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">6.36% non-cumulative preferred stock, Series B<SUP>1</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">559</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">518</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Floating rate non-cumulative preferred stock, Series F<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">518</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">374</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Floating rate non-cumulative preferred stock, Series G<SUP>2</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">374</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CAD175m</FONT></TD>
        <TD colspan="-1" align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-cumulative redeemable class 1 preferred shares, Series C<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CAD175m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Non-cumulative redeemable class 1 preferred shares, Series D<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depositary shares each representing 25% interest in a share of</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>          <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">adjustable rate cumulative preferred stock, Series D<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Cumulative preferred stock<SUP>5</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">150</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Dutch auction rate transferable securities preferred stock, Series A and B<SUP>6</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><font size="2">&nbsp;</font>          <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-cumulative redeemable class 1 preferred shares,</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CAD125m</FONT>        <font size="2">&nbsp;</font>
        </TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Series A redeemed in 2005</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">104</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cumulative preferred stock</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,400</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.3687% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,908</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">700</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.844% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,354</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,350</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.547% non-cumulative Step-up Perpetual Preferred Securities, Series 1</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,338</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,250</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.61% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,250</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">750</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.13% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,025</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.208% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">958</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">900</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.176% non-cumulative Step-up Perpetual Preferred Securities, Series 2</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">889</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">600</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.03% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">812</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">300</FONT><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">m</FONT></TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.862% non-cumulative Step-up Perpetual Preferred Securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">580</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD></TD>
  <TD colspan="-1" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD bgcolor="#eeeeee"><font size="2">&nbsp;</font>        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD colspan="-1" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,176</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,718</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD></TD>
  <TD colspan="-1" align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">From 1 January
      2005, the Step-up Perpetual Preferred Securities are classified as financial
    liabilities under IAS 32 and are included in Subordinated liabilities.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The series B preferred stock is redeemable, at the option of HSBC Finance Corporation, in whole or part, from 24 June 2010 at par.</FONT></I>   </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The Series F and Series G preferred stock are redeemable at par, at the option of HSBC USA Inc., in whole or part, on any dividend payment date on or after 7 April 2010 and at
any time from 1 January 2011, respectively.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The Series C and Series D preferred stock are redeemable at a declining premium above par, at the option of HSBC Bank Canada, in whole or part, from 30 June 2010 and 31 December
2010, respectively.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The preferred stock has been redeemable, at the option of HSBC USA Inc., in whole or part, from 1 July 1999 at par.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The preferred stock is redeemable, at the option of HSBC USA Inc., in whole or part, at any time on or after 1 October 2007 at par.</FONT></I>  </TD>
</TR><TR>
        <TD valign=top>&nbsp;</TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">6</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The preferred stock of each series is redeemable, at the option of HSBC USA Inc., in whole or part, on any dividend payment date at par.</FONT></I>     </TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All
      redemptions are subject to the prior consent of the Financial Services
    Authority and, where relevant, the local banking regulator.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">37</font></b></TD>
  <TD colspan="2" valign=top><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Called
    up share capital</font></b></TD>
</TR>
<TR>
  <TD valign=top><hr size="1" noshade></TD>
  <TD colspan="2" valign=top><hr size="1" noshade></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Authorised</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      authorised ordinary share capital of HSBC Holdings at 31 December 2005
      and 2004 was US&#36;7,500 million divided into 15,000 million ordinary
    shares of US&#36;0.50 each.</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005 and 2004, the authorised preference share capital of HSBC
      Holdings was 10 million non-cumulative preference shares of &#163;0.01
      each, 10 million non-cumulative
preference shares of US&#36;0.01 each, and</font></TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">318</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p319"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 million
        non-cumulative preference shares of &#128;0.01 each.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31
        December 2005 and 2004, the authorised non-voting deferred share capital
        of HSBC Holdings was &#163;301,500 divided into 301,500 non-voting deferred
        shares of &#163;1 each.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Issued</FONT></TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        Holdings ordinary shares</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings ordinary shares</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        1 January 2005</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,172,075,550</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,587</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
            issued in connection with the early settlement of HSBC Finance</font> 8.875
            per cent Adjustable Conversion-Rate Equity Security Units</FONT></div>
    </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">324,726</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued under HSBC Finance share plans</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">878,224</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued under other employee share plans</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56,363,536</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">28</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued in lieu of dividends</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103,961,906</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">52</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        31 December 2005</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,333,603,942</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        1 January 2004</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,960,018,480</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
            issued in connection with the early settlement of HSBC Finance</font> 8.875
            per cent Adjustable Conversion-Rate Equity Security Units</FONT></div>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,590,319</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued under HSBC Finance share plans</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">293,254</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued under QUEST</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,079,099</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued under other employee share plans</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,052,156</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        issued in lieu of dividends</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160,042,242</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        31 December 2004</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,172,075,550</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All
        ordinary shares confer identical rights in respect of capital, dividends,
        voting and otherwise.</font></TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings preference shares</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        1 January 2005</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Issue
        of non-cumulative preference shares of US&#36;0.01 each</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,450,000</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
        31 December 2005</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,450,000</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade>
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends
        on HSBC Holdings non-cumulative dollar preference shares are paid quarterly
        at the sole and absolute discretion of the Board of Directors. The Board
        of Directors will not declare a dividend if payment of the dividend would
        cause HSBC not to meet the applicable capital adequacy requirements of
        the FSA. HSBC Holdings may not declare or pay dividends on any class
        of its shares ranking lower in the right to dividends than the preference
        shares nor redeem nor purchase in any manner any of its other shares
        ranking equal with or lower than the preference shares unless it has
        paid in full, or set aside an amount to provide for payment in full,
        the dividends on the preference shares for the then-current dividend
        period. The preference shares carry no rights to conversion into ordinary
        shares of HSBC Holdings. Holders of the preference shares will only be
        entitled to attend and vote at general meetings of shareholders of HSBC
        Holdings if the dividend payable on the preference shares has not been
        paid in full for four consecutive dividend payment dates. In such circumstances,
        holders of preference shares will be entitled to vote on all matters
        put to general meetings until such time as HSBC Holdings shall have paid
        a full dividend on the preference shares. HSBC Holdings may redeem the
        preference shares in whole at any time on or after 16 December 2010,
        with the consent of the FSA.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        301,500 non-voting deferred shares were in issue throughout 2004 and
        2005 and are held by a subsidiary undertaking of HSBC Holdings. Holders
        of the non-voting deferred shares are not entitled to receive dividends
        on these shares. In addition, on winding-up or other return of capital,
        holders are entitled to receive the amount paid up on their shares after
        distribution to ordinary shareholders of the amount of &#163;10,000,000
        in respect of each ordinary share held by them.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Details
        of the options outstanding to subscribe for HSBC Holdings ordinary shares
        under the HSBC Holdings Group Share Option Plan, HSBC Holdings Executive
        Share Option Scheme, The HSBC Share Plan and HSBC Holdings savings-related
        share option plans are given in Note 9, &#145;Share-based payments&#146;,
        on pages 269 to 275. In aggregate, the options outstanding under these
        plans is as follows:</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">319</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page><a name="p320"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings</font></b></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=left></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">341,281,540</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006
          to 2015</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#163;2.1727&#150; &#163;9.642</FONT></B> </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><b></b></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">374,369,127</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
        to 2014</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;2.1727&#150; &#163;9.642</FONT> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">347,007,843</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004
        to 2013</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;2.1727&#150; &#163;9.642</FONT> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following
        the acquisition of HSBC France in 2000, outstanding employee share options
        over HSBC France shares vested. On exercise of the options, the HSBC
        France shares are exchangeable for HSBC Holdings ordinary shares in the
        same ratio as for the acquisition of HSBC France (13 HSBC Holdings ordinary
        shares for each HSBC France share).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
        2005, 435,784 (2004: 451,080) HSBC France shares were issued following
        the exercise of employee share options and exchanged for 5,665,192 HSBC
        Holdings ordinary shares such shares being delivered from The HSBC Holdings
        Employee Benefit Trust 2001 (No. 1) (2004: 5,864,040). During 2005, no
        options over HSBC France shares lapsed (2004: 800). During 2005, 1,500
        (2004: 9,500) HSBC France shares previously issued following the exercise
        of employee share options were exchanged for 19,500 (2004: 123,500) HSBC
        Holdings ordinary shares, such shares being delivered from The HSBC Holdings
        Employee Benefit Trust 2001 (No. 1). There were 1,732,996 HSBC France
        employee share options exchangeable for HSBC Holdings ordinary shares
        outstanding at 31 December 2005 (2004: 2,162,780). At 31 December 2005,
        The HSBC Holdings Employee Benefit Trust 2001 (No. 1) held 21,102,823
        (2004: 26,787,515) HSBC Holdings ordinary shares which may be exchanged
        for HSBC France shares arising from the exercise of options.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France
        options effectively outstanding over HSBC Holdings ordinary shares under
        this arrangement are as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          France</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">shares
          exchangeable</font></b></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for
          HSBC Holdings</font></b></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=left></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,732,996</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006
          to 2010</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#128;35.52&#150; &#128;142.50</FONT></B> </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <B></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,170,280</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
        to 2010</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#128;</FONT></B>32.78&#150; &#128;142.50</FONT> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,625,660</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004
        to 2010</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#128;</FONT>32.78&#150; &#128;142.50</FONT> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">There also
        exist outstanding options over the shares of various HSBC France subsidiaries
        which are exchangeable for HSBC Holdings ordinary shares, the details
        of which are set out in the Directors&#146; Report on pages 189 to 214
        and summarised below. On exercise of options over shares of Sinopia Asset
        Management (&#145;Sinopia&#146;) the Sinopia shares were exchangeable
        for HSBC Holdings ordinary shares in the ratio of 2.143 HSBC Holdings
        ordinary shares for each Sinopia share. During 2005, 125,500 (2004: 94,000)
        Sinopia shares were issued following the exercise of employee share options
        and exchanged for 268,944 (2004: 201,439) HSBC Holdings ordinary shares,
        such shares being delivered from The CCF Employee Benefit Trust 2001
        (Sinopia).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sinopia
        options that were effectively outstanding over HSBC Holdings ordinary
        shares under this arrangement were as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of Sinopia</FONT></B></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">shares
          exchangeable</FONT></B></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for
          HSBC Holdings</FONT></B></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=left></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <FONT size=2 face="Symbol,Symbol">-</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <FONT size=2 face="Symbol,Symbol">-</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="Symbol,Symbol">-</FONT> </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125,500</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;18.66&#150; &#128;18.80</FONT> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">221,500</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004
        to 2005</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#128;8.61&#150; &#128;21.85</FONT> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On exercise
        of options over shares of HSBC Private Bank France, the HSBC Private
        Bank France shares are exchangeable for HSBC Holdings ordinary shares
        in the ratio of 1.83 HSBC Holdings shares for each HSBC Private Bank
        France share. During 2005, 473,400 HSBC Private Bank France shares were
        issued following the exercise of employee share options and exchanged
        for 841,291 HSBC Holdings ordinary shares, such shares being delivered
        from The CCF Employee Benefit Trust 2001 (Private Banking France). During
        2005, options over 59,875 (2004: 126,000) HSBC Private Bank shares lapsed.
        During 2005, 1,150 HSBC Private Bank France shares previously issued
        following the exercise of employee share options were exchanged for 2,104
        HSBC Holdings ordinary shares. At 31</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">320</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page><a name="p321"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">December
        2005, 14,819 (2004: 1,125) HSBC Private Bank France shares were in issue
        and will be exchanged for HSBC Holdings ordinary shares on the fourth
        anniversary of the date of the awards of the options. There were 597,660
        HSBC Private Bank France employee share options exchangeable for HSBC
        Holdings ordinary shares outstanding at 31 December 2005 (2004: 1,130,935).
        At 31 December 2005, The CCF Employee Benefit Trust 2001 held 1,452,775
        (2004: 2,294,066) HSBC Holdings ordinary shares which may be exchanged
        for HSBC Private Bank France shares arising from the exercise of options.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private
        Bank France options (including shares issued but not exchanged) effectively
        outstanding over HSBC Holdings ordinary shares under this arrangement
        are as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of HSBC</font></b></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Private
          Bank France</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">shares
          exchangeable</font></b></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">for
          HSBC Holdings</font></b></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=left></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">612,479</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006
          to 2012</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#128;10.84 <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150; &#128;22.22</font></b></FONT></B> </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,132,060</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
        to 2012</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#128;</FONT>10.84 <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; &#128;22.22</font></FONT> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,359,810</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004
        to 2012</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#128;</FONT>10.84 <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150; &#128;22.22</font></FONT> </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On the
        acquisition of Banque Hervet in 2001, Banque Hervet shares were held
        in a Plan d&#146;Epargne Entreprise on behalf of Banque Hervet employees
        to vest and be released to employees over a 5 year period. It was agreed
        to exchange these Banque Hervet shares, on vesting, for HSBC Holdings
        ordinary shares in the ratio of 3.46 HSBC Holdings ordinary shares for
        each Banque Hervet share. During 2005, 7,670 (2004: 44,870) Banque Hervet
        shares were released in connection with the vesting of interests in the
        Plan d&#146;Epargne Entreprise and exchanged for 26,539 (2004: 155,219)
        HSBC Holdings ordinary shares, such shares being delivered from The CCF
        Employee Benefit Trust 2001 (Banque Hervet). At 31 December 2005, The
        CCF Employee Benefit Trust 2001 (Banque Hervet) held 586,213 (2004: 612,752)
        HSBC Holdings ordinary shares which may be exchanged for Banque Hervet
        shares from the vesting of interests.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Banque
        Hervet shares to be exchanged for HSBC Holdings ordinary shares under
        this arrangement are as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of Banque</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Hervet
          shares</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">exchangeable
          for</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of vesting</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">169,416</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">177,086</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005 &#150; 2006</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">221,956</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004 &#150; 2006</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following
        the acquisition of HSBC Finance Corporation in 2003, all outstanding
        options and equity-based awards over HSBC Finance Corporation common
        shares were converted into rights to receive HSBC Holdings ordinary shares
        in the same ratio as the share exchange offer for HSBC Finance Corporation
        (2.675 HSBC Holdings ordinary shares for each HSBC Finance Corporation
        common share) and the exercise prices per share adjusted accordingly.
        During 2005, options over 3,563,020 (2004: 6,073,291) HSBC Holdings ordinary
        shares were exercised and 2,638,816 (2004: 5,771,110) HSBC Holdings ordinary
        shares delivered from The HSBC (Household) Employee Benefit Trust 2003
        to satisfy the exercise of these options. During 2005, options over 152,936
        (2004: 415,430) HSBC Holdings ordinary shares lapsed. At 31 December
        2005, The HSBC (Household) Employee Benefit Trust 2003 held 3,006,623
        (2004: 5,645,439) HSBC Holdings ordinary shares and 2,198,829 (2004:
        2,200,000) ADSs, each of which represents five HSBC Holdings ordinary
        shares, which may be used to satisfy the exercise of these options and
        equity-based awards under the HSBC Finance Corporation share plans.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
        and equity-based awards outstanding over HSBC Holdings ordinary shares
        under the HSBC Finance Corporation share plans are as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings</font></b></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">38,107,930</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006
          to 2012</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">nil &#150; US&#36;21.37</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,823,886</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
        to 2021</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">nil &#150; US&#36;25.40</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48,312,607</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004
        to 2021</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">nil &#150; US&#36;25.40</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">321</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page><a name="p322"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT> </P>
<P> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prior to
        its acquisition by HSBC Holdings, HSBC Finance Corporation issued 8.875
        per cent Adjustable Conversion-Rate Equity Security Units (&#145;Units&#146;)
        which included a contract under which the holder agreed to purchase,
        for US&#36;25 each, HSBC Finance Corporation common shares on 15 February
        2006, with an option for early settlement. The Units which remained outstanding
        following the acquisition of HSBC Finance Corporation were converted
        into contracts to purchase HSBC Holdings ordinary shares. Holders of
        Units electing to settle early received 2.6041 HSBC Holdings ordinary
        shares per Unit. Units exercised at maturity, 15 February 2006, will
        entitle the holder to receive a number of shares based on the market
        value of HSBC Holdings ordinary shares at the time, up to a maximum of
        2.6041 HSBC Holdings ordinary shares for each Unit. During 2005, 324,726
        (2004: 1,590,319) HSBC Holdings ordinary shares were issued in connection
        with the early settlement of 124,698 (2004: 610,700) Units. </font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The maximum
        number of Units outstanding over HSBC Holdings ordinary shares are as
    follows:</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right>
      <p><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
              of Units</FONT></B></font></p>
    </TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">exchangeable
          for</FONT></B></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings</FONT></B></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center><font size="2">&nbsp;</font></TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,315,140</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=15% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;8.00 &#150; US&#36;9.60</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,439,838</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
        to 2006</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;8.00 &#150; US&#36;9.60</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2003</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,050,540</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004
        to 2006</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;8.00 &#150; US&#36;9.60</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following
        the acquisition of Bank of Bermuda in 2004, all outstanding employee
        share options over Bank of Bermuda shares were converted into rights
        to receive HSBC Holdings ordinary shares based on the consideration of
        US&#36;40 for each Bank of Bermuda share and the average closing price
        of HSBC Holdings ordinary shares, derived from the London Stock Exchange
        Daily Official List, for the five business days preceding the closing
        date of the acquisition. During 2005, options over 459,091 HSBC Holdings
        ordinary shares were exercised (2004: 744,727) and delivered from the
        HSBC (Bank of Bermuda) Employee Benefit Trust 2004 to satisfy the exercise
        of these options. During 2005, options over 744,421 (2004: 23,500) HSBC
        Holdings ordinary shares lapsed. At 31 December 2005, the HSBC (Bank
        of Bermuda) Employee Benefit Trust 2004 held 2,796,182 HSBC Holdings
        ordinary shares which may be used to satisfy the exercise of options.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Options
        outstanding over HSBC Holdings ordinary shares under the Bank of Bermuda
        share plans are as follows:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="left" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
          of HSBC</font></b></TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD><font size="2">&nbsp;</font></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Holdings</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ordinary
          shares</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Period
          of exercise</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Exercise
          price</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31
          December 2005</FONT></B></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,366,455</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=12% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006
          to 2013</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=15% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;7.04 &#150; US&#36;18.35</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
        December 2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,569,967</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005
        to 2013</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;3.86 &#150; US&#36;18.35</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The maximum
        obligation at 31 December 2005 to deliver HSBC Holdings ordinary shares
        under all of the above arrangements, the HSBC Holdings Restricted Share
        Plan 2000 and The HSBC Share Plan was 486,436,966 (2004: 514,846,111).
        The total number of shares at 31 December 2005 held by employee benefit
        trusts that may be used to satisfy such obligations to deliver HSBC Holdings
        ordinary shares is 130,812,676 (2004: 123,108,967).</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">322</FONT></P>
<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p323"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">38</FONT></B></TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Equity</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
  <TD><HR noshade size=1></TD>
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  <TD><HR noshade size=1></TD>
</TR>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="21" align=center><B><FONT size="1" face="Times New Roman, Times, serif">2005</FONT></B></TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
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  <TD><HR noshade size=1></TD>
</TR>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD colspan="9" align=center><font size="1" face="Times New Roman, Times, serif">&nbsp;</font>
      <B><FONT size=1 face="Times New Roman, Times, serif">Other reserves</FONT></B>    <font size="1" face="Times New Roman, Times, serif">&nbsp;</font><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD rowspan="3"><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></TD>
</TR>
<TR>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD>&nbsp;</TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD>&nbsp;</TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD>&nbsp;</TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD><HR noshade size=1></TD>
  <TD>&nbsp;</TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD>&nbsp;</TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD>&nbsp;</TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
<TR>
        <TD rowspan="2" align="left"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Called
              up<br>
        </B></font><font size="1" face="Times New Roman, Times, serif"><B>share<br>
capital<br>
US&#36;m</B></font></TD>
        <TD>&nbsp;</TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Share<br>
premium<br>
US&#36;m</B></font></TD>
        <TD valign="middle"><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
1</SUP></font></TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><b>Retained<br>
earnings<br>
US&#36;m</b></font></TD>
        <TD valign="middle"><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
2 </SUP></font></TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Available-<br>
for-sale<br>
fair value<br>
reserve<br>
US&#36;m</B></font></TD>
        <TD align="right" valign="bottom"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Cash
              flow<br>
        </B></font><font size="1" face="Times New Roman, Times, serif"><B>hedging<br>
reserve<br>
US&#36;m</B> </font></TD>
        <TD align="right" valign="bottom"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Foreign<br>
exchange<br>
reserve<br>
US&#36;m</B> </font></TD>
        <TD align="right" valign="bottom"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Share-<br>
based<br>
payment<br>
reserve<br>
US&#36;m</B> </font></TD>
        <TD align="right" valign="bottom"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align="right" valign="bottom"><font face="Times New Roman, Times, serif"><B><FONT size=1>Merger</FONT></B> <font size="1"><B>reserve<br>
US&#36;m</B></font></font></TD>
        <TD valign="middle"><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
3 </SUP></font></TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Total<br>
share-<br>
holders&#8217;<br>
equity<br>
US&#36;m</B> </font></TD>
        <TD>&nbsp;</TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Minority<br>
interests<br>
US&#36;m</B> </font></TD>
        <TD>&nbsp;</TD>
        <TD align="right" valign="bottom"><font size="1" face="Times New Roman, Times, serif"><B>Total<br>
equity<br>
US&#36;m</B> </font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD width="3%" align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">At 1 January</FONT></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">5,587</FONT></B></TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">4,881</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">49,432</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">3,215</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,349</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">21,058</FONT></B></TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">85,522</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">13,675</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width="5%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">99,197</FONT></B>
        </TD>
        <TD width="1%" bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">IFRSs transition adjustment at 1 January 2005</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(1,762</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1,919</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">410</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">686</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1,253</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(10,077</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(8,824</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Shares issued under employee share plans</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">28</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">662</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">690</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">690</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Shares issued in lieu of dividends and amounts</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;arising thereon</font></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">52</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(52</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1,811</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1,811</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">1,811</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">
New share capital subscribed, net of costs<SUP>1</SUP>&nbsp;    </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,405</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,405</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,405</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Profit for the year attributable to shareholders</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">15,081</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">15,081</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">15,081</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Dividends to shareholders of the parent company</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(7,750</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(7,750</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(7,750</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Own shares adjustment</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(558</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">127</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(431</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(431</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Share of changes recognised directly in equity in</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;the equity of associates or joint ventures</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">161</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">161</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">161</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">
Actuarial losses on defined benefit plans<SUP>4</SUP>&nbsp;     </font></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(820</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(820</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(820</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(3,449</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(141</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(41</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(568</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">14</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(4,185</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(4,185</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Fair value losses taken to equity</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(351</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(63</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(414</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(414</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Amounts transferred to the income statement</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(226</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(106</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(332</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(332</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Exercise of HSBC share options</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">303</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(481</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(178</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(178</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Charge to the income statement in respect of</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;equity settled share-based payment instructions</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">540</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">540</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">540</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Other movements</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">58</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(400</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(342</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(342</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">Tax
            on items taken directly to or transferred from
    equity</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">267</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">162</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(8</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">421</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">421</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
      <FONT size=2 face="Times New Roman, Times, serif">Transfers</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">3,449</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">141</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">41</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(3,617</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">(14</FONT></B>
        </TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></B>
        </TD>
        <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="Times New Roman, Times, serif">Carried forward</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">5,667</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">6,896</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">56,223</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,104</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">233</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">(284</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">1,535</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">21,058</FONT></B></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">92,432</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">3,598</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">96,030</FONT></B>
        </TD>
        <TD bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">323</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p324"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></P>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD colspan="21"><hr size="1" noshade></TD>
  <TD><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD><font size="1">&nbsp;</font></TD>
        <TD colspan="9" align=center><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Other reserves</FONT></B></TD>
        <TD><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD colspan="9"><hr size="1" noshade></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Called up<br>
  share capital<br>
US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Share<br>
  premium<br>
US&#36;m</FONT></B></TD>
        <TD valign="middle"><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
      1</SUP></font></TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Retained<br>
        earnings<br>
US&#36;m</FONT></B></TD>
        <TD valign="middle"><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
2 </SUP></font></TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Available-<br>
        for-sale<br>
  fair value<br>
  reserve<br>
US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash flow<br>
  hedging<br>
  reserve<br>
US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="1"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Foreign<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">exchange<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">reserve<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>      </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Share-<br>
        based<br>
  payment<br>
  reserve<br>
US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Merger<br>
  reserve<br>
US&#36;m</FONT></B></TD>
        <TD valign="middle"><SUP><FONT size="1" face="TimesNewRoman,Times New Roman,Times,serif"><br>
          <br>
  3
   </FONT></SUP></TD>
        <TD align=right><B><FONT size=1 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total<br>
        share-<br>
holders&#146;<br>
  equity<br>
US&#36;m</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="1"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Minority<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">interests<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>      </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="1"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">equity<br>
    </FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>      </font></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brought forward</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B></TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,896</FONT></B></TD>
        <TD width=1% bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56,223</FONT></B></TD>
        <TD width=1% bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,104</FONT></B></TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">233</FONT></B></TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(284</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,535</FONT></B></TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,058</FONT></B></TD>
        <TD width=1% bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,432</FONT></B></TD>
        <TD width=1% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,598</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">96,030</FONT></B>
        </TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit attributable to minority interests</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">792</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">792</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends to minority interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(689</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(689</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences, minority interests</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(72</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(72</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increase in minority interest stake and other</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,165</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,165</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">At 31 December<SUP>3</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,667</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,896</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56,223</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,104</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">233</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(284</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,535</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21,058</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,432</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,794</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">98,226</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top><font size="1">&nbsp;</font></TD>
        <TD width="3%" valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Share premium
includes US&#36;40 million of issue costs.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retained earnings
include 59,091,472 (US&#36;1,939 million) of own shares held within HSBC&#146;s
insurance business, its retirement funds for the benefit of policyholders or
beneficiaries within employee trusts for the settlement of shares expected to
be delivered under employee share schemes or bonus plans, and the market-making
activities in Global Markets.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Statutory share
premium relief under Section 131 of the Companies Act 1985 was taken in respect
of the acquisition of HSBC Bank plc in 1992, HSBC France in 2000 and HSBC Finance
Corporation in 2003 and the shares issued were recorded at their nominal value
only. In HSBC&#146;s consolidated accounts the fair value difference of US&#36;8,290 million in respect of CCF and US&#36;12,768
million in respect of HSBC Finance
Corporation is a merger reserve.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In addition,
actuarial gains of US&#36;8 million were recorded in minority interests.</FONT></I></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD><font size="1">&nbsp;</font></TD>
<TD><font size="1">&nbsp;</font></TD>
<TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Cumulative
      goodwill amounting to US&#36;5,138 million has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including
US&#36;3,469 million charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of US&#36;1,669
million has been charged against retained earnings.</FONT></I></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">324</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p325"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=center><font size="1">&nbsp;</font></TD>
  <TD align=center><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD colspan="17"><hr size="1" noshade></TD>
  <TD><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD colspan="5" align=center><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other reserves</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD colspan="5"><hr size="1" noshade></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Called up<br>
    </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">share<br>
    </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">capital<br>
    </FONT>
    <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Share<br>
        </FONT><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">premium<br>
        </FONT><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Retained<br>
        </FONT><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">earnings<br>
        </FONT><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left valign="middle"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
  1
   </SUP></FONT></TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Foreign<br>
    </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">exchange<br>
    </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Reserve<br>
    </FONT>
    <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD valign="middle"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
  2
   </SUP></FONT></TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Share-<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">based<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">payment<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">reserve<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Merger<br>
    </FONT>
    <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">reserve</FONT>
    <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD valign="middle"><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif"><SUP><br>
          <br>
  3
   </SUP></FONT></TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Total<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">share-<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">holders&#146;<br>
    </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">equity<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Minority<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">interests<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Total<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">equity<br>
      </FONT>
      <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>     </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 1 January</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,406</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,673</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,130</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,058</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73,748</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,105</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,853</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares issued/redeemed in connection with the HSBC Finance</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">8.875 per cent Adjustable Conversion-Rate Equity Security Units</FONT></font></TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=1% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=1% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT>
        </TD>
        <TD width=1% align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=1% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=1% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD width=5% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=1% align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares issued under employee share plans</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">555</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">580</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">580</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares issued in lieu of dividends and amounts arising thereon</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(80</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,607</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,607</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,607</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit for the year attributable to shareholders</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends to shareholders of the parent company</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,914</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,914</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,914</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Own shares adjustments</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(842</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">235</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(607</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(607</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Actuarial losses on defined benefit plans<SUP>4</SUP></FONT>&nbsp;
        </font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(709</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(709</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(709</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,215</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,215</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,215</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Charge to the income statement in respect of equity settled</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;      </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=center>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp; &nbsp;share-based payment instructions</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">450</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">450</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">450</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exercise of HSBC share options</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">380</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(465</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(85</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(85</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax on items taken directly to or transferred from equity</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">319</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit attributable to minority interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,340</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,340</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends to minority interests</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,194</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,194</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange differences, minority interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">505</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">505</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Increase in minority interest stake and other</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,919</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,919</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,881</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,432</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,215</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,349</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,058</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,675</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99,197</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
  <TD width="3%" valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Retained earnings
include 36,255,999 (US&#36;1,424 million) of own shares, held within HSBC&#146;s
insurance business; its retirement funds for the benefit of policyholders or
beneficiaries within employee trusts for the settlement of shares expected to
be delivered under employee share schemes or bonus plans, and the market-making
activities in Global Markets.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net exchange differences arising on the retranslation of amounts recognised in Retained earnings.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Statutory share
premium relief under Section 131 of the Companies Act 1985 was taken in respect
of the acquisition of HSBC Bank plc in 1992, HSBC France in 2000 and HSBC Finance
Corporation in 2003 and the shares issued were recorded at their nominal value
only. In HSBC&#146;s consolidated accounts the fair value difference of US&#36;8,290 million in respect of CCF and US&#36;12,768
million in respect of HSBC Finance
Corporation is a merger reserve.</FONT></I></TD>
</TR>
<TR>
        <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In addition,
actuarial losses of US&#36;22 million were recorded in minority interests.</FONT></I></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
<TD><font size="1">&nbsp;</font></TD>
<TD><font size="1">&nbsp;</font></TD>   <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Cumulative goodwill
amounting to US&#36;5,138 million has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including
US&#36;3,469 million charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of US&#36;1,669
million has been charged against retained earnings.</FONT></I></TD>
</TR>
</TABLE>

<p align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">325</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p326"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></P>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td align=left> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">39</font></b></td>
    <td align=left> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Notes
          on the cash flow statement</font></b></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td colspan="10" align=left><hr size="1" noshade></td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-cash
          items included in the income statement</font></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td colspan="3" align=center><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</font></b></td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td colspan="3" align=center><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC
          Holdings</font></b></td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td colspan="3" align=right><hr size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td colspan="3" align=right><hr size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr>
    <td width=3% align=left><font size="2">&nbsp;</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation
        and amortisation</font></td>
    <td width=8% align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,213</font></b> </td>
    <td width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td width=8% align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,225</font> </td>
    <td width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td width=8% align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11</font></b> </td>
    <td width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td width=8% align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</font> </td>
    <td width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Revaluations
        on investment property</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(201</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(99</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Issue
        of share options</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">540</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">450</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
        impairment losses</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,801</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,191</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">118</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        written off net of recoveries</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8,549</font></b> </td>
    <td align=left bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7,931</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        for liabilities and charges</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">327</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,181</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        utilised</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(327</font></b> </td>
    <td align=left bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,018</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(55</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
        of financial investments</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(105</font> </td>
    <td align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(11</font></b> </td>
    <td align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">92</font> </td>
    <td align=left><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accretion
        of discounts and amortisation of premiums</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(446</font></b> </td>
    <td align=left bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</font></b></td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(175</font> </td>
    <td align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</font></td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="1" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr>
    <td align=left><font size="2">&nbsp;</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,358</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">719</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</font></b> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
    <td align=right bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">167</font> </td>
    <td align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </td>
  </tr>
  <tr>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
    <td align=right><hr size="2" noshade>
    </td>
    <td align=left>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><b>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in operating assets</FONT></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in loans to HSBC undertakings</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,544</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,880</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in prepayments and accrued income</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,121</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,329</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(14</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in net trading securities and net derivatives</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,940</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,695</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in loans and advances to banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">307</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,825</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in loans and advances to customers</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(71,107</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(130,228</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in financial assets designated at fair value</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(15,048</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in other assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(8,923</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,262</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(19</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(82,710</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(124,299</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,511</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,883</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><b>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in operating liabilities</FONT></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD colspan="4" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B>  <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in accruals and deferred income</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,810</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,578</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(77</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(17</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in deposits by banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(14,328</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,187</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46,394</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">104,877</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in debt securities in issue</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(19,047</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52,256</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in financial liabilities designated at fair value</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">61,837</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Change in other liabilities</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(113</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,116</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,272</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,173</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">70,933</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">178,014</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,349</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,156</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><b>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash and cash equivalents comprise</FONT></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash at bank with HSBC undertakings</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash and balances at central banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,712</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,944</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in the course of collection from other banks</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,300</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,338</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks of one month or less</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">100,527</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">117,658</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
    bills, other bills and certificates of deposit</FONT> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">less
    than three months</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">22,790</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,317</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Less: items in the course of transmission to other banks</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,022</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,301</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">141,307</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">160,956</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      total interest paid by HSBC during the year was US&#36;33,974 million (2004:
    US&#36;19,038 million).</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">326</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p327"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">40</font></b></TD>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Contingent
    liabilities and contractual commitments</font></b></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD colspan="10" align=left><hr size="1" noshade></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contingent
    liabilities and contractual commitments</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B><font size="2">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC Holdings</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan="3"><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD colspan="3"><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Contract amounts</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contingent liabilities</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Acceptances and endorsements</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,214</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Guarantees
              and irrevocable letters of credit</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">pledged
    as collateral security</FONT></font></TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,475</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,828</FONT></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=8% align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,708</FONT></TD>
    <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other contingent liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">152</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,627</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63,099</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,708</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commitments</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">  &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Documentary
    credits and short-term trade-related</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">transactions</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,090</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,788</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Forward
    asset purchases and forward forward</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">deposits
    placed</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,179</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,689</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">  &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Undrawn
    note issuing and revolving</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">underwriting
    facilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">468</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">601</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">  &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Undrawn
    formal standby facilities, credit lines</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">and
    other commitments to lend:</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp; &nbsp; <FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; 1
 year and under</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">527,506</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">464,541</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,517</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,625</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; over
 1 year</FONT></font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">103,398</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92,077</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,146</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">542</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">641,641</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">567,696</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,663</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,167</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan="9"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      above table discloses the nominal principal amounts of third party off-balance
      sheet transactions. Contingent liabilities and commitments are mainly credit-related
      instruments which include letters of credit, guarantees and commitments
      to extend credit. Contractual amounts represent the amounts at risk should
      contracts be fully drawn upon and clients default. Since a significant
      portion of guarantees and commitments are expected to expire without being
      drawn upon, the total of the contractual amounts is not representative
    of future liquidity requirements.</font></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan="9">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan="9"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005, HSBC had US&#36;1,218
      million (2004: US&#36;1,212 million) of capital commitments contracted
      but not provided for and US&#36;333 million (2004: US&#36;311 million)
    of capital commitments authorised but not contracted for.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Guarantees</b></font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      provides guarantees and similar undertakings on behalf of both third party
      customers and other entities within the HSBC Group. These guarantees are
      generally provided in the normal
course of HSBC&#146;s banking business. The principal types of guarantees provided,
and the maximum potential amount of future payments which HSBC could be required
to make at 31 December 2005, were as follows:</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At 31 December 2005</FONT></B></TD>
        <TD colspan=5 align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December 2004</FONT></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD colspan=3 align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD colspan=3 align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Guarantees</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guarantees</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">by HSBC</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by HSBC</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Holdings</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holdings</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Guarantees in</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">in favour of</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guarantees</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in favour of</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">favour of</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">other HSBC</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">in favour of</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other HSBC</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">third parties</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Group entities</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">third parties</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group entities</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Guarantee type</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD width=3% align=left><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Acceptances and endorsements<SUP>1</SUP></FONT>&nbsp;    </font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,214</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Financial guarantees<SUP>2</SUP></FONT>&nbsp;    </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,080</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,412</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,708</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">      <FONT face="TimesNewRoman,Times New Roman,Times,serif">Standby
              letters of credit which are financial</FONT> <FONT face="TimesNewRoman,Times New Roman,Times,serif">guarantees<SUP>3</SUP></FONT>&nbsp;   </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,649</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,108</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other direct credit substitutes<SUP>4</SUP></FONT>&nbsp; </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,302</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,848</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Performance bonds<SUP>5</SUP></FONT>&nbsp;       </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,355</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,910</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Bid bonds<SUP>5</SUP></FONT>&nbsp;       </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">595</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">382</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=center><font size="2">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif"> Standby letters of credit
related to particular transactions<SUP>5</SUP></FONT>&nbsp;     </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,640</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,322</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">
<FONT face="TimesNewRoman,Times New Roman,Times,serif">Other transaction-related guarantees<SUP>5</SUP></FONT>&nbsp;    </font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,709</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,824</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other items</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">297</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">57,627</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">63,099</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,708</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade>    <font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade>    <font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade>    <font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><hr size="2" noshade>    <font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">327</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p328"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></P>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
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  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top><font size="1">&nbsp;</font></TD>
        <TD width="2%" valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">1</font></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Acceptances and endorsements arise when HSBC guarantees payments on negotiable instruments drawn up by customers, prior to selling the accepted instruments into the market on a
discounted basis. From 1 January 2005, acceptances and endorsements are recognised on-balance sheet in &#145;Other assets&#146; and &#145;Other liabilities&#146; as a result of the adoption of IAS 39.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">2</font></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Financial guarantees include undertakings to fulfill the obligations of customers or HSBC Group entities should the obligated party fail to do so.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">3</font></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Standby letters of credit which are financial guarantees are irrevocable obligations on the part of HSBC to pay third parties when customers fail to meet
commitments.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">4</font></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Other direct credit substitutes include re-insurance letters of credit and trade-related letters of credit issued without provision for the issuing entity to retain title to the
underlying shipment.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">5</font></TD>
        <TD><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Performance bonds, bid bonds, standby letters of credit and other transaction-related guarantees are undertakings by which the obligation on HSBC to make payment depends on the
outcome of a future event which is unconnected to the creditworthiness of the customer concerned.</FONT></I></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      amounts disclosed in the above table reflect HSBC&#146;s maximum exposure
      under a large number of individual guarantee undertakings. The risks and
      exposures arising from guarantees are captured and managed in accordance
      with HSBC&#146;s overall credit risk management policies and procedures.
      Approximately half of the above guarantees have a term of less than one
      year. Guarantees with terms of more than one year are subject to
HSBC&#146;s annual credit review process.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When
      HSBC gives a guarantee on behalf of a customer, it retains the right to
      recover from that customer amounts paid under the guarantee. A provision
      is booked only when HSBC considers it probable that it has an obligation
    under an outstanding guarantee. Provisions are disclosed in Note 30.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Joint
    ventures and associates</font></b></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      and its operations are contingently liable with respect to lawsuits and
      other matters that arise in the normal course of business. Management is
      of the opinion that while it is impossible to ascertain the ultimate legal
      and financial liability with respect to these contingencies, their eventual
      outcome is not expected to materially affect the Group&#146;s financial
    position and operations.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
        relation to joint ventures, HSBC had no contingent liabilities, incurred
        jointly or otherwise. </font></p>
    <p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC had
      no commitments of its joint ventures at 31 December 2005 (2004:&nbsp;US&#36;&nbsp;nil).</font></p></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      had no capital commitments incurred jointly or otherwise in relation to
    its interests in joint ventures.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> In
      relation to associates, HSBC&#146;s share of those matters, incurred jointly
      with other investors, that had not been provided for amounted to US&#36;7,733
      million (2004: US&#36;5,663 million). No matters arose where HSBC was severally
    liable.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top><b><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-employment
    benefit obligations</font></b></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC had
    no contingent liabilities relating to post-employment benefits.</font></TD>
  </TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">41</FONT></B></TD>
        <TD align=left>
<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Lease commitments</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD colspan="14" align=left><hr size="1" noshade></TD>
  </TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=2 align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Finance lease commitments</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="5" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan="5"><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD colspan="5"><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total future</FONT></B></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total future</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">minimum</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interest</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Present</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">minimum</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">payments</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">charges</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">payments</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">charges</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
        <TD width=3% align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No later than one year</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">50</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(25</FONT></B>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">25</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26</FONT>
        </TD>
        <TD width=2% align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Later than
    one year and no later than five years</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">152</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(98</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">54</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">155</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(115</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Later than five years</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">630</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(70</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">560</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">745</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(115</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">630</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">832</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(193</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">639</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">951</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(256</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">695</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan="13"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
      2005 US&#36;1 million (2004: US&#36;1 million) was paid as contingent rents
    and charged to &#145;General and administrative expenses&#146;.</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">328</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p329"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">No
      future minimum sublease payments (2004: US&#36;nil) were expected to be
    received under non-cancellable subleases at 31 December 2005.</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"><b>Operating
    lease commitments</b></font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005, HSBC was obligated under a number of non-cancellable
      operating leases for properties, plant and equipment for which the future
      minimum lease payments extend over a
number of years.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Land and</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Land and</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">buildings</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equipment</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">buildings</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equipment</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=center>&nbsp;</TD>
        <TD align=center><font size="2">&nbsp;</font></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Future
            minimum lease payments under non-cancellable operating
    leases:</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" align=left>&nbsp;</TD>
        <TD width="2%" align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">no later than one year</FONT></TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">712</FONT></B></TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">32</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">609</FONT></TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">later than one year and no later than five years</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,730</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,430</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">later than five years</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,452</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,099</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,894</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">56</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,138</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005, future minimum sublease payments of US&#36;26 million
      (2004: US&#36;1 million) were expected to be received under the non-cancellable
      subleases at the balance sheet
date.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
      2005, US&#36;1,901 million (2004: US&#36;951 million) was charged to &#145;General
      and administrative expenses&#146; in respect of lease and sublease agreements,
      of which US&#36;1,880
million (2004: US&#36;930 million) related to minimum lease payments, US&#36;21
million (2004: US&#36;21 million) to contingent rents, and US&#36;nil
(2004: US&#36;nil) to sublease payments.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      contingent rent represents escalation payments made to landlords for operating,
    tax and other escalation expenses.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Finance
    lease receivables</font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="5" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=center><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total future</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Unearned</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total future</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unearned</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">minimum</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">finance</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Present</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">minimum</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interest</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">payments</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">income</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">payments</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">value</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT>
        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lease
    receivables:</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=3% align=center>&nbsp;</TD>
        <TD width=2% align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#150;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">no later than one year</FONT></TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,170</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(266</FONT></B>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,904</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,153</FONT></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(287</FONT>
        </TD>
        <TD width="2%" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD width="8%" align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,866</FONT></TD>
    <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=center>&nbsp;</TD>
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> later than
    one year and no later than five years</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,908</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,329</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,579</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,843</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,228</FONT>
        </TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,615</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=center>&nbsp;</TD>
        <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">later than five years</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8,369</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,109</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,260</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,580</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,824</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,756</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,447</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,704</FONT></B>
        </TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,743</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,576</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,339</FONT>
        </TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,237</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="14" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005, unguaranteed residual values of US&#36;68 million (2004:
      US&#36;94 million), had been accrued, and the accumulated allowance for
      uncollectible minimum lease payments
receivable amounted to US&#36;15 million (2004: US&#36;28 million).</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
    lease receivables</font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD colspan="5" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Land and</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Land and</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">buildings</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equipment</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">buildings</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equipment</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Future
    minimum lease payments under non-cancellable operating leases:</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=2% align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">no later than one year</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">71</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">397</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">535</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">later than one year and no later than five years</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">160</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,136</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,150</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">later than five years</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">153</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">456</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">96</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">418</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">384</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,989</FONT></B></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">228</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,103</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=right bgcolor="#eeeeee"><hr size="2" noshade></TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=right bgcolor="#eeeeee"><hr size="2" noshade></TD>
  <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=right bgcolor="#eeeeee"><hr size="2" noshade></TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
  <TD align=right bgcolor="#eeeeee"><hr size="2" noshade></TD>
  <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
      2005, no material income (2004: US&#36;nil) was received as contingent
    rents and recognised in &#145;Other operating income&#146;.</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">329</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p??"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></P>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD width="3%">&nbsp;</TD>
  <TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC leases
      a variety of different assets to third parties under operating and finance
      lease arrangements, including transport assets (such as rolling stock,
      aircraft and motor vehicles),
property and general plant and machinery.</font></TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">42</FONT></B></TD>
        <TD><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Litigation</FONT></B></TD>
</TR>
<TR valign="top"><TD colspan=2><hr size="1" noshade></TD></TR><TR valign="top">
<TD>&nbsp;</TD> <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC, through a number of its subsidiary undertakings, is named in and is defending legal actions in various jurisdictions arising from its normal business. None of these proceedings is
regarded as material litigation.</FONT> </TD>
</TR>
<TR valign="top"><TD colspan=2>&nbsp;</TD></TR><TR valign="top">
        <TD><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">43</FONT></B></TD>
        <TD><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Related party transactions</FONT></B></TD>
</TR>
<TR valign="top"><TD colspan=2><hr size="1" noshade></TD></TR><TR valign="top">
<TD>&nbsp;</TD> <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Compensation to the Board of Directors and other key management personnel<SUP>1</SUP>   </font></TD>
</TR>
<TR valign="top"><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HSBC</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Short-term employee benefits</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">71</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Post-employment benefits</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share-based payment</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">1</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Italic,Times New Roman,Times,serif"><I>Key
              management personnel of HSBC are Board Directors and Group Managing Directors.</I></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Transactions,
    arrangements and agreements involving Directors and others</font></b></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Particulars
      of transactions, arrangements and agreements entered into by subsidiaries
      of HSBC Holdings with Directors and connected persons and companies controlled
      by them and with officers of HSBC Holdings, disclosed pursuant to section
    232 of the Companies Act 1985, were as follows:</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><font size="2">&nbsp;</font>       </TD>
        <TD align=right>&nbsp;</TD>
        <TD colspan="3" align=center>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT><font size="2">&nbsp;</font>     </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Balance at</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Number of</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance at</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">persons</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31 December</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">persons</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;000</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;000</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Directors
and connected persons</FONT></B> <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">and
companies controlled by them</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">76</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">279,297</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">310,239</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit cards</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">250</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">324</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guarantees</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10,622</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,628</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Officers</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></SUP>&nbsp;  </font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">37</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,857</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,767</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit cards</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">352</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">395</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Guarantees</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">164</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">168</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further
      information on related party transactions, disclosed pursuant to the requirements
      of IAS 24, is shown below. The disclosure of the year-end balance and the
      highest amount outstanding during the year is considered the most meaningful
      information to represent the amount of the transactions and the amount
    of outstanding balances during the year.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD width="3%">&nbsp;</TD>
        <TD width="3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">All of the Directors are key management personnel of HSBC Holdings. The highest amounts outstanding during 2005 of loans, credit card transactions and guarantees with HSBC for
the Directors and connected persons and companies controlled by them were US&#36;495,990,427, US&#36;617,259 and US&#36;16,775,779 respectively. (2004: US&#36;642,727,305, US&#36;811,453 and US&#36;34,767,316 respectively.)</FONT></I></TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
        <TD><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Included within Officers are non-Director members of the key management personnel of HSBC Holdings. During 2005, 6 non- Director key management personnel and members of their
close families entered into loan, credit card transactions and guarantees with HSBC (2004: 4 persons). The highest amounts outstanding during 2005 of loans, credit card transactions and guarantees with HSBC for the non-Director key management
personnel and members of their close family were US&#36;30,116,609, US&#36;287,888 and US&#36;20,385 respectively (2004: US&#36;56,577,166, US&#36;207,235 and US&#36;20,385 respectively). The balances of loans and credit card transactions and
guarantees with HSBC outstanding at 31 December 2005 for the non-Director key management personnel and members of their close family were US&#36;20,166,452, US&#36;66,467 and US&#36;20,385 respectively (2004: US&#36;24,264,409, US&#36; 128,155 and
US&#36;20,385 respectively).</FONT></I></TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="top"><TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Particulars
      of Directors&#146; transactions are recorded in a register held at the
      Registered Office of HSBC Holdings which is available for inspection by
      members for 15 days prior to the HSBC Holdings Annual General Meeting and
    at the Annual General Meeting itself.</font></TD>
</TR></TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">330</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p331"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan=10 align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Some
      of the transactions were connected transactions, as defined by the Rules
      Governing The Listing of Securities on The Stock Exchange of Hong Kong
      Limited but were exempt from any disclosure requirements under the provisions
    of those Rules.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      above transactions were made in the ordinary course of business and on
      substantially the same terms, including interest rates and security, as
      for comparable transactions with persons of a similar standing or, where
      applicable, with other employees. The transactions did not involve more
    than the normal risk of repayment or present other unfavourable features.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><b> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Transactions
    with other related parties of HSBC</font></b></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Highest</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Balance at</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Highest</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance at</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance during</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">31 December</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance during</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 December</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">the year</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">the
    year<SUP>1</SUP></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">2004<SUP>1</SUP></font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts due from joint ventures</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD width="2%" align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Unsubordinated</font></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">539</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">539</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=9% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">839</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">839</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts due from associates</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Subordinated</font></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#150;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Unsubordinated</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,133</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">333</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">340</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">327</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,735</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">901</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,227</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,204</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts due to joint ventures</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,382</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,382</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">978</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">966</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts due to associates</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">161</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">133</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,543</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,515</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,079</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,061</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD><font size="1">&nbsp;</font></TD>
  <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</font></TD>
  <TD colspan="9"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The
        disclosure of the year-end balance and the highest balance during the
        year is considered the most meaningful information to represent transactions
        during the
year.</font></i></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      above outstanding balances arose from the ordinary course of business and
      on substantially the same terms, including interest rates and security,
      as for comparable transactions with
third party counterparties.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pension
    funds</font></b></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005, US&#36;19.4 billion (2004: US&#36;19.3 billion) of HSBC
      pension fund assets were under management by HSBC companies. Fees of US&#36;50
      million (2004: US&#36;35 million) were earned by HSBC companies for these
      management services. HSBC&#146;s pension funds had placed deposits of US&#36;252
      million (2004: US&#36;268 million) with its banking subsidiaries. The above
      outstanding balances arose from the ordinary course of business and on
      substantially the same terms, including interest rates and security, as
    for comparable transactions with third party counterparties.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      International Staff Retirements Benefits Scheme entered into swap transactions
      with HSBC to match the return on the plan assets to the benefit payments
      of the obligations. At 31 December 2005, the fair value of the swap is
    an asset of US&#36;53 million to the pension scheme (2004: US&#36;3 million).</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">331</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p332"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L D I N G S &nbsp; P L C</FONT></P>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><b><font size=2 face="sans-serif">HSBC
        Holdings</font></b></TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Transactions
    and balances during the year with subsidiaries were as follows:</font></b></TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD width=2% align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD colspan="3" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD><hr size="1" noshade></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Highest</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Highest</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">balance during</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Balance at</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance during</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance at</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>the year</B></font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Bold,Times New Roman,Times,serif">
    <B>31 December</B></font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
the year</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
31 December</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></font></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Subsidiaries</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash at bank</FONT></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
        <TD width=2% bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">756</FONT></B></TD>
        <TD width=2% bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=9% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,409</FONT></TD>
        <TD width=2% bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT></TD>
    <TD width=2% bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,795</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">968</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,643</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,643</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17,282</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,092</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,636</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,636</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,240</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,256</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,885</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,885</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investments in subsidiaries</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58,038</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">58,038</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,668</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,668</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total related party assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">84,111</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77,110</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77,241</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76,078</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=left><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
    <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts owed to HSBC undertakings</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,352</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,075</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,352</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,352</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">286</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=center>&nbsp;</TD>
  <TD align=center bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,997</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,786</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,143</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,143</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">fair
    value</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,498</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,055</FONT></B></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD>&nbsp;</TD>
        <TD align=right>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total related party liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16,133</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,202</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,533</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,505</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contingent liabilities and commitments</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">41,455</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">36,877</FONT></B></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,789</FONT></TD>
        <TD bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40,708</FONT></TD>
    <TD bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left><FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
  <TD colspan="9" align=left> <i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The
        disclosure of the year-end balance and the highest balance during the
        year is considered the most meaningful information to represent transactions
        during the
year.</font></i> </TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      above outstanding balances arose from the ordinary course of business and
      are on substantially the same terms, including interest rates and security,
      as for comparable transactions with third party counterparties, except
      for US&#36;3,296 million of loans and advances to subsidiaries and US&#36;3,235
      million of loans from HSBC undertakings to HSBC Holdings made at an agreement
    of zero per cent interest.</font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">44</font></b></TD>
  <TD colspan="2" align=left> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Events
    after the balance sheet date</font></b> </TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">fourth
      interim
dividend of US&#36;3,513 million (US&#36;0.31 per share) (2004: US&#36;3,007
million, US&#36;0.27 per share) </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">was
declared after 31 December 2005 and is subject to approval by the shareholders
at the Annual General Meeting. </font></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On
      6 March 2006, the Board of Directors authorised the financial statements
    for issue.</font> </TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">45</font></b></TD>
  <TD colspan="2" align=left> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">UK
    and Hong Kong accounting requirements</font></b> </TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      financial statements have been prepared in accordance with IFRSs. There
      would be no material differences had they been prepared in accordance with
      Hong Kong Accounting
Standards.</font> </TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">46</font></b></TD>
  <TD colspan="2" align=left> <b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Transition
    to IFRSs</font></b> </TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD colspan="11" align=left><hr size="1" noshade></TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      reported financial position, financial performance and cash flows have
      been affected by the transition from UK GAAP to IFRSs. The transition has
      not affected HSBC&#146;s net cash flows nor the underlying economics of
      its businesses, though the periods in which certain income and expenses
    are recognised have changed.</font> </TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD colspan="10" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      has taken advantage of the section in IFRS 1 that exempts companies from
      presenting comparative information in accordance with IAS 32, IAS 39 and
      IFRS 4. The transitional adjustments are therefore set out in two stages:
      those relating to the restatement of 2004 comparative financial information
      (Notes (a) to (d) below), and those taking effect from 1 January 2005 (Notes
    (e) and (f)).</font> </TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD width="3%">&nbsp;</TD>
  <TD width="3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(a)</font></TD>
  <TD colspan="9"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Transitional
      exemptions adopted by HSBC in addition to the exemption from restating
    comparative information
    in accordance with IAS 32, IAS 39 and IFRS 4.</font></TD>
  </TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan="9">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(b)</font></TD>
  <TD colspan="9"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Key impact
      analysis of IFRSs on the financial position at 31 December 2004, and financial
      performance and cash flows for the year ended 31 December 2004. The most
      significant effects
of the transition to IFRSs on</font> </TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">332</FONT></P>

<hr noshade align="center" width="100%" size="2">




<div style="page-break-before:always"></div><page>
<a name="p333"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD width="3%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
<TD width="3%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
<TD colspan="2">
  <FONT size=2 face="Times New Roman, Times, serif">HSBC&#146;s restated comparative financial information are the result of differences in the accounting treatment applied to goodwill, retirement benefits and dividends.</FONT></TD>
</TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">(c)</FONT></TD>
        <TD colspan="2">
      <FONT size=2 face="Times New Roman, Times, serif">Reconciliation to IFRSs of the financial performance for the year ended 31 December 2004 and the financial position at 31 December 2004 and 1 January 2004 previously reported under UK
GAAP.</FONT></TD>
  </TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">(d)</FONT></TD>
        <TD colspan="2">
      <FONT size=2 face="Times New Roman, Times, serif">Analysis of the effect of IAS 1 &#145;Presentation of Financial Statements&#146; on the financial performance for the year ended 31 December 2004 and the financial position at 31 December
2004 and 1 January 2004. This note describes the adjustments made to reformat HSBC&#146;s income statements and balance sheets from UK GAAP to IFRSs.</FONT></TD>
  </TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">(e)</FONT></TD>
        <TD colspan="2">
      <FONT size=2 face="Times New Roman, Times, serif">Key impact analysis of adopting IAS 32, IAS 39 and IFRS 4 on the opening balance sheet at 1 January 2005.</FONT></TD>
  </TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">(f)</FONT></TD>
        <TD colspan="2">
      <FONT size=2 face="Times New Roman, Times, serif">Reconciliation of consolidated balance sheets at 31 December 2004 and 1 January 2005.</FONT></TD>
  </TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">(g)</FONT></TD>
        <TD colspan="2">
      <FONT size=2 face="Times New Roman, Times, serif">Principal accounting policies applicable to the 2004 comparative information which differ from those applied in 2005.</FONT></TD>
  </TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD>
<FONT size=2 face="Times New Roman, Times, serif">(h)</FONT></TD>
        <TD colspan="2">
      <FONT size=2 face="Times New Roman, Times, serif">Effect of the transition to IFRSs on the financial position of HSBC Holdings. This note includes the reconciliation of HSBC Holdings&#146; UK GAAP balance sheets at 31 December 2004 and 1
January 2004 to its IFRSs balance sheets and an analysis of the effect of adopting IAS 32, IAS 39 and IFRS 4 on the opening balance sheet at 1 January 2005.</FONT></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD width=3%><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="3"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="3"><font size=2 face="Times New Roman, Times, serif">Notes (c)
      and (d) bridge financial statement disclosures under UK GAAP and IFRSs
      and are designed to assist the reader in understanding the nature and quantum
      of differences between them.
Notes (a) to (d) are extracts from HSBC&#146;s publication, </font><font face="Times New Roman, Times, serif"><i><font size=2>2004
IFRSs Comparative Financial Information,</font></i><font size=2> which was issued on 5 July 2005. Notes (e) and (f) are taken
from HSBC&#146;s <i>Interim
Report 2005</i>. Note (g) contains extracts from HSBC&#146;s <i>Annual
Report and Accounts 2004</i>.</font></font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><FONT size=2 face="Times New Roman, Times, serif">(a)</FONT></TD>
  <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Transitional
    exemptions</FONT></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="2"><font size=2 face="Times New Roman, Times, serif">In addition
      to exempting companies from the requirement to restate comparatives for
      IAS 32, IAS 39 and IFRS 4, IFRS 1 grants certain exemptions from the full
      requirements of IFRSs to
companies adopting IFRSs for the first time.</font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="2"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="2"><font size=2 face="Times New Roman, Times, serif">HSBC has
    taken the following exemptions in making the transition to IFRSs:</font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><b><font size=2 face="Times New Roman, Times, serif">(i)</font></b></TD>
  <TD><b><font size=2 face="Times New Roman, Times, serif">Business
    combinations</font></b></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font size=2 face="Times New Roman, Times, serif">HSBC has
      elected not to restate business combinations that took place prior to the
      1 January 2004 transition date. Had this exemption not been taken the main
      effects would have been to recognise additional deferred tax on fair value
      adjustments made at the date of acquisition and to recognise additional
      intangible assets with consequential adjustments to the carrying value
      of goodwill and retained earnings as at 1 January
2004.</font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font size=2 face="Times New Roman, Times, serif">The recognition
      of additional intangibles with a definite life would have given rise to
      an increased amortisation charge, which would have reduced IFRSs net income
      prospectively with a
consequential reduction in total shareholders&#146; equity. The restatement of
goodwill would have had no impact on prospective net income unless it was written
off following a subsequent impairment review.</font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><b><font size=2 face="Times New Roman, Times, serif">(ii)</font></b></TD>
  <TD><b><font size=2 face="Times New Roman, Times, serif">Fair
    value or revaluation as deemed cost</font></b></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD> <font size=2 face="Times New Roman, Times, serif">HSBC has
      elected to measure individual items of property at fair value at the date
    of transition to IFRSs and use that fair value as deemed cost at that date.</font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font size=2 face="Times New Roman, Times, serif">If
      HSBC had continued to revalue properties, this would have led to increases
      in tangible fixed assets at 31 December 2004 and 31 December 2005 with
      corresponding increases in other reserves (net of deferred tax liabilities).
      There would have been a slightly increased depreciation charge and reduced
    net income going forward.</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD> <font size=2 face="Times New Roman, Times, serif">If HSBC
      had reverted to original cost as the basis for carrying properties, net
      income under IFRSs would have been higher for 2004 and 2005 owing to a
      reduced depreciation charge, and
shareholders&#146; equity would have been lower.</font></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">333</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p334"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
        <TD width=3%><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=3%><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=3%><b><font size=2 face="Times New Roman, Times, serif">(iii)</font></b></TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">Employee benefits</FONT></B>       </TD>
</TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD>
<FONT size=2 face="Times New Roman, Times, serif">HSBC has elected to apply the employee benefits exemption and has, therefore, recognised in equity at 1 January 2004 all cumulative actuarial gains and losses on post-employment benefit
plans. Recognising certain actuarial gains and losses under the alternative &#145;corridor approach&#146; would have reduced liabilities and increased retained earnings at 1 January 2004. HSBC has not elected to adopt a corridor approach going
forward under IAS 19 &#145;Employee Benefits&#146;.</FONT></TD>
</TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
        <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><b><font size=2 face="Times New Roman, Times, serif">(iv)</font></b></TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">Cumulative exchange differences</FONT></B> </TD>
</TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD>
<FONT size=2 face="Times New Roman, Times, serif">HSBC has set the cumulative exchange differences for all foreign operations to zero at 1 January 2004. The alternative, a retrospective application of IAS 21 &#145;The Effect of Changes
in Foreign Exchange Rates&#146;, would have resulted in a re-allocation between retained earnings and other reserves at 1 January 2004 but would have had no impact on total equity.</FONT></TD>
</TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
        <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD><b><font size=2 face="Times New Roman, Times, serif">(v)</font></b></TD>
        <TD>
<B><FONT size=2 face="Times New Roman, Times, serif">Share-based payment transactions</FONT></B>        </TD>
</TR>
<TR valign="top"><TD colspan=4><font face="Times New Roman, Times, serif">&nbsp;</font></td></TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font size=2 face="Times New Roman, Times, serif">HSBC has
      elected to undertake full retrospective application of IFRS 2 &#145;Share-based
      Payment&#146;. The alternative, excluding share options issued before 7
      November 2002 as permitted by IFRS 1, would have slightly reduced administrative
      expenses and increased net income in 2004. There would have been no impact
    on retained earnings or total equity.</font></TD>
</TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD>&nbsp; </TD>
  <TD><font size=2 face="Times New Roman, Times, serif">(b)</font></TD>
  <TD colspan="2"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font><font size="2" face="Times New Roman, Times, serif">Key
      impact analysis of IFRSs on the financial results and position at 31 December
    2004</font></TD>
  </TR>
<TR valign="top">
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
<TD><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
<TD>&nbsp;</TD>
<TD colspan="2"> <font size=2 face="Times New Roman, Times, serif">HSBC previously prepared
    its primary financial statements under UK GAAP, which differs in certain
    significant respects from IFRSs. For a summary of the principal accounting
    policies followed for preparing the 2004 comparative information, see Note
    (g) below.</font></TD>
</TR>
<TR><TD colspan=4></td></TR></TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan="6">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="6%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td colspan="6"><font face="Times New Roman, Times, serif"><b><font size=2>Reconciliation
          of previously reported shareholders&#146; funds under UK GAAP to total
          shareholders&#146; equity
under IFRSs at 31 December 2004</font></b><font size=2>&nbsp;<b>and
1 January 2004</b></font></font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="2%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="10%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="2%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="10%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="2%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><FONT size=2 face="Times New Roman, Times, serif">At</FONT></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><FONT size=2 face="Times New Roman, Times, serif">At</FONT></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">31 December</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"> <font size=2 face="Times New Roman, Times, serif">1 January</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">2004</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">2004</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">US&#36;m</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">US&#36;m</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">Shareholders&#146; funds
    as previously reported under UK GAAP</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">86,623</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">74,473</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">Goodwill</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">1,869</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">(22</font></td>
    <td><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="1"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="1"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">88,492</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">74,451</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="1"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="1"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">Retirement
    benefits</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">(4,470</font></td>
    <td bgcolor="#eeeeee"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">(3,529</font></td>
    <td bgcolor="#eeeeee"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">Dividends</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"> <font size=2 face="Times New Roman, Times, serif">2,996</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"> <font size=2 face="Times New Roman, Times, serif">2,627</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">Leases</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">(503</font></td>
    <td bgcolor="#eeeeee"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">(402</font></td>
    <td bgcolor="#eeeeee"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">Share-based
    payments</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">198</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">211</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">Software
    capitalisation</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">551</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">518</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">Property</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"> <font size=2 face="Times New Roman, Times, serif">(1,607</font></td>
    <td><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">&#150;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">Land held
    under operating leases</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">(495</font></td>
    <td bgcolor="#eeeeee"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">(755</font></td>
    <td bgcolor="#eeeeee"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">Other</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">42</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"> <font size=2 face="Times New Roman, Times, serif">245</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">Tax</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">318</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="Times New Roman, Times, serif">382</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="1"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="1"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">Total
    shareholders&#146; equity under IFRSs</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">85,522</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"> <font size=2 face="Times New Roman, Times, serif">73,748</font></td>
    <td bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="2"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right"><hr size="2"></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">334</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p335"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD colspan="4" align=left><b><font size=2 face="Times New Roman, Times, serif">Reconciliation
        of previously reported profit attributable to shareholders under UK GAAP
        to profit attributable to shareholders under IFRSs for the year ended
        31 December
2004</font></b></td>
  </TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Year ended</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">31 December</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2004</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=6% align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Profit
      before tax under UK GAAP</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">17,608</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill amortisation</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,818</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1"></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">19,426</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1"></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Other
      goodwill adjustments</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">(102</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Retirement benefits</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Leases</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">(90</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Share-based payments</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(152</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Software
      capitalisation</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Property</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">106</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Tax
      on associates</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">(48</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(52</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1"></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Profit
      before tax under IFRSs</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">18,943</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1"></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Tax
      &#150; UK GAAP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">(4,507</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Tax &#150; IFRSs adjustments</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(178</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Minority
      interests &#150; UK GAAP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">(1,261</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Minority interests &#150; IFRSs adjustments</FONT></TD>
        <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(79</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="1"></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">Profit
      attributable to shareholders under IFRSs</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="Times New Roman, Times, serif">12,918</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><hr size="2"></TD>
  <TD align=left><font face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="6%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">The following
        is a summary of the main differences between UK GAAP and IFRSs applicable
    to HSBC:</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IFRS
    3 &#145;Business Combinations&#146; (&#145;IFRS 3&#146;)</font></b></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">HSBC applied
        IFRS 3 with effect from 1 January 2004 but, as permitted by IFRS 1, did
    not restate business combinations which occurred prior to 1 January 2004.</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">The carrying
        value of goodwill existing at 31 December 2003 under UK GAAP was carried
        forward under IFRS 1 from 1 January 2004, subject to two adjustments.
        Firstly, previously unrecognised intangible assets that met the recognition
        criteria under IAS 38 &#145;Intangible Assets&#146; in the financial
        statements of the acquired entity were reported separately to the extent
        that they were included in goodwill at the date of transition. Secondly,
        only adjustments to provisional fair values (and hence goodwill) made
        during the first 12 months after an acquisition were reflected in comparative
        information. Accordingly, goodwill adjustments made after the first 12
        months
in accordance with UK GAAP were reversed.</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">IFRS 3
        requires that goodwill should not be amortised but should be tested for
        impairment on transition and at least annually at the cash-generating
        unit level by applying a
fair-value-based test as described in IAS 36 &#145;Impairment of Assets&#146;.
There was no impairment on transition or in any subsequent periods.</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><p><font size=2 face="Times New Roman, Times, serif">Under
          IFRS 3, the acquirer only recognises adjustments to the provisional
          fair values of assets and liabilities acquired in a business combination
          within 12 months of the acquisition date, with a corresponding adjustment
          to goodwill. These adjustments are made as if they had occurred at
          the acquisition date, that is the comparative information is adjusted.
          Adjustments to the fair value of assets, liabilities and contingent
          liabilities after the 12 month period are recognised only to correct
          errors or adjust deferred tax assets that could not be recognised separately
          at the date of acquisition. When such a deferred tax asset is recognised,
          goodwill is reduced to the amount that would have been recognised if
          the deferred tax asset had been recognised at the date of the acquisition.
          Any reduction in goodwill is recognised as an expense, offsetting the
          benefit taken in the tax charge for the recognition of the deferred
          tax asset.</font></p>
    </td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">The effect
        of ceasing goodwill amortisation on operating profit for the year ended
        31 December
2004 was US&#36;1,814 million.</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">The impact
        of other goodwill adjustments, essentially to adjust fair values on acquisition
        to the basis noted above, was a reduction in operating profit for the
        year ended 31 December
2004 of US&#36;96 million.</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">US&#36;241
        million of goodwill was reclassified to other intangible assets on 1
    January 2004.</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">335</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p336"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="6%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IAS
           19 &#145;Employee Benefits&#146; (&#145;IAS 19&#146;)</font></b></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">IAS 19 requires
      pension fund assets to be assessed at fair value and liabilities on the
      basis of current actuarial assumptions using the projected unit credit method.
      As permitted by an amendment to IAS 19, HSBC elected to recognise all actuarial
      gains and losses directly in retained earnings.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">The change
      in accounting resulted in the recognition of a pension obligation of US&#36;6,475
      million at 31 December 2004 (1 January 2004: US&#36;4,982 million) which,
      after adjustment for prospective tax relief and the portion of the deficit
      attributable to minority interests, reduced total shareholders&#146; equity
      by US&#36;4,470 million (1 January 2004: US&#36;3,529 million). The effect
      of the transition to IAS 19 on 2004&#146;s operating profit was to increase
      the charge for pension costs by US&#36;170 million. US&#36;242 million of
      this related to an increase in pension liability from termination benefits
      attributable to members of the HSBC Bank (UK) Pension Scheme arising from
      major staff reduction programme in the second half of the year. Under UK
      GAAP, the impact of the staff reduction programme on the pension scheme
      was spread over the remaining average life of the scheme.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IAS
           10 &#145;Events after the Balance Sheet Date&#146; (&#145;IAS 10&#146;)</font></b></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">Under IAS
      10, equity dividends declared after the balance sheet date are not included
      as a liability at the balance sheet date. Accordingly, HSBC reversed the
      liability for proposed dividends at each balance sheet date. This had the
      effect of increasing shareholders&#146; equity at 31 December 2004 and 1
      January 2004 by US&#36;2,996 million and US&#36;2,627 million respectively.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IAS
           17 &#145;Leases&#146; (&#145;IAS 17&#146;)</font></b></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">IAS 17 requires
      that unearned income on finance leases be taken to income at a rate calculated
      to give a constant rate of return on the net investment in the lease, with
      no account taken in calculating the net investment of the tax effects of
      the lease. In general, this leads to a deferral of finance income compared
      with the pattern of recognition under UK GAAP, where income is recognised
      at a constant rate of return on the net cash investment in the lease including
      the effect of tax.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">Under UK
      GAAP, assets leased out under operating leases are depreciated over their
      useful lives so that, for each asset, rentals less depreciation are recognised
      at a constant periodic rate of return on the net cash invested in that asset.
      Under IFRSs, operating leased assets are depreciated to ensure that in each
      period the depreciation charge is at least equal to that which would have
      arisen on a straight-line basis.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">The effect
      of both finance and operating leases on shareholders&#146; equity at 31
      December 2004 was a decrease of US&#36;503 million (1 January 2004: decrease
      of US&#36;402 million). The effect of the transition to IAS 17 was to decrease
      operating profit by US&#36;90 million for the year ended 31 December 2004.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">Under UK
      GAAP, leasehold land was separately identified within the valuation of land
      and buildings. For HSBC, this principally arose in Hong Kong, where all
      land is held by way of leases. IFRSs require leasehold land to be treated
      as held under an operating lease unless title is expected to pass to the
      lessee at the end of the lease. No revaluation is permitted in respect of
      such owner-occupied operating lease assets. Leasehold land valued at US&#36;1,345
      million at 1 January 2004 was reclassified as operating lease assets on
      the date of transition to IFRSs. This resulted in the reversal of previously
      recognised revaluation surpluses amounting to US&#36;622 million, and the
      inclusion of prepaid rentals of US&#36;723 million in &#145;Other assets&#146;
      at 1 January 2004.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IFRS
           2 &#145;Share-based Payment&#146; (&#145;IFRS 2&#146;)</font></b></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">IFRS 2 requires
      companies to adopt a fair-value-based method of accounting for share-based
      compensation plans which takes into account vesting conditions related to
      market performance, for example total shareholder return. Under this method,
      compensation cost is measured at the date of grant based on the assessed
      value of the award and is recognised over the service period, which is usually
      the vesting period.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">In respect
      of other vesting conditions, an estimate of the number of options that will
      lapse before they vest is made at grant date and adjustments to this estimate
      are made over the service period. Accordingly, the expense recognised reflects,
      over time, the actual number of lapsed options for non-market performance-related
      conditions.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">There is
      no exemption under IFRS 2 for Save-As-You-Earn schemes, as existed under
      UK GAAP.</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">336</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p337"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="6%"><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">HSBC undertook
      full retrospective application of IFRS 2, as permitted by IFRS 1, and recognised
      the fair value of share-based payments to employees whilst reversing charges
      made in respect of employee share schemes under UK GAAP. This resulted in
      a US&#36;152 million reduction in operating profit for the year ended 31
      December 2004.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">At 31 December
      2003, HSBC had a liability under UK GAAP in relation to certain sign-on
      and performance bonuses which were to be settled by the purchase of HSBC
      shares and had been expensed as incurred. Under IFRS 2, these transactions
      are treated as equity-settled share-based payments and are expensed over
      the vesting period.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IAS
      27 &#145;Consolidated and Separate Financial Statements&#146; (&#145;IAS
      27&#146;)</font></b></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">IAS 27 requires
      that all entities be consolidated on a line-by-line basis. HSBC&#146;s insurance
      subsidiaries&#146; third party assets, which were historically presented
      in aggregate on a single line &#145;Long-term assurance assets attributable
      to policyholders&#146; within &#145;Other assets&#146; on the consolidated
      balance sheet have, therefore, been included in appropriate headings for
      such assets.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">In addition,
      funds under management have been consolidated where the requirements of
      IAS 27 and Standard Interpretations Committee 12 &#145;Consolidation &#150;
      Special Purpose Entities&#146; (&#145;SIC&#150;12&#146;) are met.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">SIC&#150;12
        also requires consolidation of special purpose entities (&#145;SPEs&#146;)
        when the substance of the relationship between the SPE and the reporting
        entity indicates that the SPE is controlled by that entity. This resulted
        in certain of the Group&#146;s securitisation and conduit vehicles that
    were off-balance-sheet under UK GAAP being consolidated under IFRSs.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">The effect
        of consolidating funds under management and SPEs under IAS 27 and SIC&#150;12
        was to gross up the 31 December 2004 balance sheet by US&#36;4,796 million
        (1 January 2004:
US&#36;5,075 million) with a minor impact on total shareholders&#146; equity.
Attributable profit for the year ended 31 December 2004 increased by US&#36;12
million as a result.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">Under IAS
        27, investments in subsidiaries may be carried at cost or accounted for
        in accordance with IAS 39 in an entity&#146;s separate financial statements.
        HSBC Holdings took the option of carrying its investments in subsidiaries
        at cost instead of at net asset value, as under its previous UK GAAP
        policy. The effect of this change was a decrease in total shareholders&#146; equity
        by US&#36;39,217
million at 31 December 2004
(US&#36;27,412 million at 1 January 2004).</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><b><font size=2 face="Times New Roman, Times, serif">IAS
    12 &#145;Income Taxes&#146; (&#145;IAS 12&#146;)</font></b></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">Under
        IAS 12, deferred tax liabilities and assets are generally recognised
        in respect of all temporary differences except where expressly prohibited
        by the Standard, subject to an assessment of the recoverability of deferred
        tax assets. Deferred tax assets are recognised to the extent that it
        is probable that taxable profit will be available against which the deductible
    temporary differences can be utilised.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size=2 face="Times New Roman, Times, serif">In addition,
        unremitted earnings from subsidiaries, associates and joint ventures
        operating in lower tax jurisdictions result in a deferred tax liability
        unless the reporting entity is able to control the timing of the reversal
        of temporary differences and it is probable that the temporary differences
    will not reverse in the foreseeable future.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">Under
        IFRSs, fair value adjustments made on acquisition are tax-effected in
        order to present profitability on a tax-equalised basis: under UK GAAP
        no tax adjustments were required for items which did not affect the amount
    of tax payable or recoverable.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">The IFRSs
        balance sheet at 31 December 2004 included an increase in the deferred
        tax asset of US&#36;587 million (1 January 2004: US&#36;813 million)
        and a decrease in the deferred tax
liability of US&#36;631 million (1 January 2004: US&#36;563 million). The net
change in deferred tax mainly arose from prospective tax relief on pension deficits,
tax-effecting fair value adjustments on acquisitions, previously unrecognised
tax-effecting of historical property revaluations, and an adjustment to the grossing
up of the value of in-force long-term assurance business.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td> <font size=2 face="Times New Roman, Times, serif">The effect
        on the IFRSs income statement is shown in Note 46(c). The main item in
        the &#145;other&#146; column, is the deferred tax of US&#36;274 million
        for the year ended 31 December 2004 on the fair value adjustments arising
    on the acquisition of subsidiaries.</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">337</font></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p338"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Notes
        on the Financial Statements</font> </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="6%">&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IAS
    38 &#145;Intangible Assets&#146; (&#145;IAS 38&#146;)</font></b></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS 38
        states that intangible assets should be recognised separately from goodwill
        in a business combination when they arise from contractual or other legal
        rights, or if separable, i.e. capable of being separated or divided from
        the acquired entity and sold, transferred, licensed, rented, or exchanged
        in combination with a related contract, asset or liability. The effect
        of this is that certain intangible assets such as trademarks and customer
        relationships included as part of goodwill under UK GAAP are separately
    measured and recognised on business combinations.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When intangible
        assets have an indefinite useful life, or are not yet ready for use,
        they are tested for impairment annually. This impairment test may be
        performed at any time during an annual period, provided it is performed
        at the same time every year. An intangible asset recognised during the
    current period is tested before the end of the current annual period.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Presentationally,
        intangible assets recognised under UK GAAP, including mortgage servicing
        rights and the value of in-force long-term assurance business, were reclassified
        from &#145;Other assets&#146; to &#145;Intangible assets&#146;. This
        resulted in additional intangible assets at 31 December 2004 of US&#36;308
        million relating to mortgage servicing rights and US&#36;1,874 million
        relating to the value of in-force long-term assurance business (1 January
    2004: US&#36;506 million and US&#36;1,579 million respectively).</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS 38
        further requires costs incurred in the development phase of a project
        to produce application software for internal use to be capitalised and
        amortised over the software&#146;s estimated useful life if the software
        will generate probable future economic benefits, and such costs can be
        measured reliably. Under UK GAAP these costs were expensed as incurred.
        This policy change resulted in US&#36;760 million of software being capitalised
    as at 31 December 2004 (1 January 2004: US&#36;718 million).</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The capitalisation
        of software previously expensed in full resulted in a decrease in general
        and administrative expenses and an increase in depreciation and amortisation
        charged in respect of capitalised software in the form of regular, ongoing
        amortisation and any impairment charge. The net effect was that expenses
    were US&#36;25 million lower for the year ended 31 December 2004.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IAS
    16 &#145;Property, Plant and Equipment&#146; (&#145;IAS 16&#146;)</font></b></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC adopted
        the &#145;cost&#146; model by which assets are carried at cost less any
        accumulated depreciation and impairment losses. HSBC also applied the
        exemption in IFRS 1 which allows fair value at the date of transition
        to IFRSs to be used as deemed cost for the value of property in most
        circumstances. No adjustments were required to restate property, plant
        and equipment in the IFRSs opening balance sheet at 1 January 2004 as
        a result of changing from a policy of revaluation to one of depreciated
        cost. However, US&#36;639 million was transferred out of the revaluation
    reserve to retained earnings on 1 January 2004.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Leasehold
        land valued at US&#36;1,345 million at 1 January 2004, which was previously
        capitalised under UK GAAP but did not meet the criteria for capitalisation
        as finance leased assets under IFRSs, was reclassified as operating leased
        assets. See the paragraph entitled &#145;IAS 17&#146; above for further
    explanation of these adjustments.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IAS
    40 &#145;Investment Property&#146; (&#145;IAS 40&#146;)</font></b></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
        properties are measured at fair value with changes therein recognised
        in the income statement. This resulted in a US&#36;98 million increase
        in operating profit for the year
ended 31 December 2004.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IAS
          21 &#145;The Effects of Changes in Foreign Exchange Rates&#146; (&#145;IAS
    21&#146;)</font></b></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS 21
        states that in consolidated financial statements, all exchange differences
        arising on the retranslation of foreign operations with functional currencies
        which differ from the
entity&#146;s reporting currency, should be recognised as a separate component
of equity in the foreign exchange reserve.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On disposal
        of a foreign operation, the exchange differences previously recognised
        in reserves in relation to that operation are recognised in the income
        statement for the
period.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">As permitted
        by IFRS 1, HSBC deemed cumulative translation differences at 1 January
    2004 to be zero.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">338</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p339"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="6%">&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IAS
    7 &#145;Cash Flow Statements&#146; (&#145;IAS 7&#146;)</font></b></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC previously
        prepared its cash flow statement in accordance with UK Financial Reporting
        Standard 1 (Revised 1996) &#145;Cash Flow Statements&#146; (&#145;FRS
        1 (Revised)&#146;). Its objectives and principles are similar to those
    set out in IAS 7.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">FRS 1
        (Revised) defines cash as cash and balances at central banks and advances
        to banks payable on demand. IAS 7 in addition includes &#145;Cash equivalents&#146;,
        which are defined as short-term highly liquid investments, held for the
        purpose of meeting short-term cash commitments rather than investment,
        that are both convertible to known amounts of cash, and so near their
        maturity that they present an insignificant risk of changes in value.
        The inclusion of cash equivalents in the definition of reported cash
        flows had no significant effect on the reported net cash flows for the
    period to 31 December 2004.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        UK GAAP, HSBC presented its cash flows by operating activities; dividends
        received from associates; returns on investments and servicing of finance;
        taxation; capital expenditure and financial investments; acquisitions
        and disposals; equity dividends paid; and financing. Under IFRSs, only
    three categories are required. These are operating; investing; and financing.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Amendments
    to transitional balances</font></b></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The transitional
        balances reported in the 2005 Accounts have been amended in certain respects
        compared to the balances published in the </font><i><font size=2
face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004 IFRSs Comparative
    Financial Information Document</font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following
        further interpretative guidance on IFRSs, leases of land greater than
        500 years are now accounted for as operating leases, having previously
        been reported in the</font><i><font
size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif"> 2004 IFRSs Comparative
        Financial Information Document </font></i><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">as
        finance leases. This resulted in a reduction of fixed assets and an increase
        in lease rental prepayments of US&#36;366 million as at 1 January 2004
    compared to the comparatives published in the above document.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The foreign
        exchange and share-based payment reserves have been grouped with &#145;Other
        reserves&#146; rather than retained earnings. This resulted in an increase
        in other reserves of
US&#36;3,955 million and a corresponding reduction in reported retained earnings
as at 1 January 2004 compared to the balances reported in the comparative information
document.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">339</FONT></p>
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<div style="page-break-before:always"></div><page><a name="p340"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Notes
        on the Financial Statements</font> </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left> <b><font size=2 face="Times New Roman, Times, serif">Consolidated
    income statement for the year ended 31 December 2004</font></b> </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=right></TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Effect of</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs (except</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">UK GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">transition</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs format</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">to IFRSs</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Interest income</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">50,203</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">268</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">50,471</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Interest expense</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(19,179</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(193</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(19,372</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Net interest income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">31,024</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">75</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">31,099</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Fee income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">15,877</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">15,902</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fee expense</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,784</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,954</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Net fee income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,093</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(145</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">12,948</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Trading income</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,566</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">220</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,786</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Net investment income on assets backing policyholder liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,012</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,012</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Gains less losses from financial investments</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">770</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(230</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">540</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Dividend income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">601</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">21</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">622</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Net earned insurance premiums</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,368</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,368</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other operating income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,335</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,722</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,613</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Total operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">51,389</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,599</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">55,988</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Loan impairment charges and other credit risk provisions</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(6,352</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">161</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(6,191</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Net insurance claims incurred and movement in policyholder</FONT></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,635</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,635</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Net operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">45,037</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">125</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">45,162</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Employee compensation and benefits</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(14,492</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(31</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(14,523</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">General and administrative expenses</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(9,723</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(16</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(9,739</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Depreciation of property, plant and equipment</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,664</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(67</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,731</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Amortisation of intangible assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,842</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,348</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(494</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Total operating expenses</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(27,721</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,234</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(26,487</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Operating profit</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">17,316</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,359</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">18,675</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Share of profit in associates and joint ventures</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">292</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(24</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">268</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Profit before tax</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">17,608</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,335</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">18,943</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Tax expense</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,507</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(178</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,685</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Profit for the year</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,101</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,157</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">14,258</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Profit attributable to minority interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,261</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(79</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,340</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Profit attributable to shareholders</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,840</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,078</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">12,918</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">340</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p341"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Consolidated balance sheet at 31 December 2004</FONT></B></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=right></td>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Effect of</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs (except</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">UK GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">transition</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs format</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">to IFRSs</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">ASSETS</FONT></B></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Cash and balances at central banks</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">9,872</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">72</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">9,944</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of collection from other banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,352</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(14</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,338</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong Government certificates of indebtedness</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Trading securities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">111,022</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">11,138</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">122,160</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Derivatives</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">32,188</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">32,190</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">142,712</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">737</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">143,449</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to customers</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">669,831</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,060</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">672,891</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Financial investments</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">180,461</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,871</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">185,332</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Interests in associates and joint ventures</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,452</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(11</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,441</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill and intangible assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">29,382</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,113</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">34,495</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Property, plant and equipment</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">18,829</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(3,205</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">15,624</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">41,310</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(18,233</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">23,077</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Prepayments and accrued income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">19,489</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(334</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">19,155</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,276,778</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,196</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,279,974</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></td>
  <TD align=left></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">LIABILITIES AND EQUITY</FONT></B></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right></td>
  <TD align=left></TD>
  <TD align=right></TD>
  <TD align=left></td>
  <TD align=right></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Liabilities</FONT></B></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong currency notes in circulation</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Deposits by banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">83,539</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">516</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">84,055</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">693,751</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(679</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">693,072</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of transmission to other banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,301</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,301</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Trading liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">46,460</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">46,460</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Derivatives</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">35,394</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(406</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">34,988</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Debt securities in issue</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">208,593</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,128</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">211,721</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Retirement benefit liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,475</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,475</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">41,461</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(20,880</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">20,581</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Liabilities to policyholders under long-term assurance business</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,190</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,190</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Accruals and deferred income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">16,500</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">16,499</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Provisions</FONT></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150; deferred tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2,066</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(631</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,435</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">&#150; other provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,532</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,896</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,636</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">26,486</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">26,486</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,176,961</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,816</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,180,777</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></td>
  <TD align=left></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Equity</FONT></B></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Called up share capital</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,587</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,587</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Share premium account</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,881</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,881</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other reserves</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">21,457</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,165</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25,622</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Retained earnings</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">54,698</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(5,266</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">49,432</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total shareholders&#146; equity</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">86,623</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,101</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">85,522</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Minority interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13,194</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">481</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13,675</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total equity</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">99,817</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(620</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">99,197</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total equity and liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,276,778</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,196</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,279,974</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">341</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p342"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif">Notes
        on the Financial Statements</font> </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
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</table>
<P>&nbsp;</P>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
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  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Consolidated balance sheet at 1 January 2004</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Effect of</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs (except</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">UK GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">transition</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs format</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">to IFRSs</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">ASSETS</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Cash and balances at central banks</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">7,661</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">72</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">7,733</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of collection from other banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,628</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,628</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong Government certificates of indebtedness</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">10,987</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">10,987</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Trading securities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">86,887</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">8,529</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">95,416</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Derivatives</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">27,652</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(216</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">27,436</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">117,173</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">861</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">118,034</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to customers</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">528,977</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,873</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">533,850</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Financial investments</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">152,795</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3,504</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">156,299</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Interests in associates and joint ventures</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,273</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(20</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,253</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill and intangible assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">28,640</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3,278</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">31,918</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Property, plant and equipment</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">15,748</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,904</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,844</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">35,476</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(15,152</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">20,324</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Prepayments and accrued income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">14,319</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(324</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,995</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,034,216</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,501</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,037,717</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=2></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=2></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">LIABILITIES AND EQUITY</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong currency notes in circulation</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">10,987</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">10,987</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Deposits by banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">70,426</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">70,439</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">573,130</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(101</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">573,029</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of transmission to other banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,383</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,383</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Trading liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">30,127</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">30,127</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Derivatives</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">28,534</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(655</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">27,879</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Debt securities in issue</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">153,562</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,044</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">158,606</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Retirement benefit liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,982</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,982</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">36,008</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(17,513</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">18,495</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Liabilities to policyholders under long-term assurance business</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15,168</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15,168</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Accruals and deferred income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,760</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(46</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,714</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Provisions</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150; deferred tax</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,670</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(563</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,107</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">&#150; other provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,078</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,327</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,751</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">21,197</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">21,197</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">948,862</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,002</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">952,864</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">Equity</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Called up share capital</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,481</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,481</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Share premium account</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,406</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,406</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other reserves</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">21,543</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">21,543</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Retained earnings</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">43,043</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(725</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">42,318</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total shareholders&#146; equity</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">74,473</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(725</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">73,748</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Minority interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">10,881</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">224</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,105</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total equity</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">85,354</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(501</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">84,853</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total equity and liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,034,216</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,501</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,037,717</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">342</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p343"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR align="left" valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width=3% valign="top"> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(c)</font></TD>
    <TD> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Reconciliation
        of financial performance for the year ended 31 December 2004 and financial
        position at 31 December 2004 and 1 January 2004 reported under UK GAAP
    and IFRSs</font></TD>
</TR>
<TR align="left" valign="bottom"><TD colspan=3></td></TR>
<TR align="left" valign="bottom">
  <TD></td>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
<TD></td>       <TD>&nbsp;</TD>
<TD> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
    income statement for the year ended 31 December 2004</font></b> </TD>
</TR>
<TR align="left" valign="bottom"><TD colspan=3></td></TR>
<TR align="left" valign="bottom">
  <TD></td>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
<TD></td>       <TD>&nbsp;</TD>
<TD> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustments
    to conform HSBC&#146;s UK GAAP income statement for the year ended 31 December
    2004 to its accounting policies under IFRSs are set out below:</font></TD>
</TR>
<TR align="left" valign="bottom">
  <TD></td>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">amortisation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Share-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(except</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font><font size="2">
      <font face="Times New Roman, Times, serif">UK</font>      </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Retirement</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">under UK</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">goodwill</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Software</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">based</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Consolid-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif"> GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">benefits</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">adjustments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">capitalisation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">payments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Leases</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Insurance</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">ation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Property</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Interest receivable</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">50,203</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">61</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">254</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(47</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">50,471</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Interest payable</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(19,179</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(245</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">48</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(19,372</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Net interest income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">31,024</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">65</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">9</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">31,099</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Fees and commissions</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;receivable</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15,877</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(3</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(31</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(171</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15,672</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Fees and commissions payable</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2,784</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(356</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(9</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">195</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2,954</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Dealing profits</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,566</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">73</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(20</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,619</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Dividend income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">601</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(4</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">622</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Net investment income on</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;assets backing</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;policyholder liabilities</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,012</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,012</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Net earned insurance</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;premiums</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,368</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">5,368</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other operating income</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3,303</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,482</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">21</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">90</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(151</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,781</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Operating income</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">50,587</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,604</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">88</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">90</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(150</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">55,219</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Administrative expenses</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(24,183</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(39</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">329</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(152</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(49</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(7</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">32</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(24,224</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Depreciation and amortisation</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(3,506</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,814</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(57</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(304</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(90</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(86</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2,225</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></td>
  <TD align=left></TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Operating profit before</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;<B>provisions</B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">22,898</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,814</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(96</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(152</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(90</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,555</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">103</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">87</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(204</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">28,770</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Provision for bad and</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;doubtful debts</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(6,357</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">162</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(6,195</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Provision for contingent</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;liabilities
            and commitments.</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(27</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(44</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(71</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Net insurance claims</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,565</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(70</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,635</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Amounts written off fixed</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;asset investments</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">2</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Operating profit</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">16,514</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,814</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(96</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(152</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(90</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(10</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">37</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">87</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(88</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">17,871</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">343</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p344"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="bottom">
    <td width="3%">&nbsp;</td>
    <td><font size="2" face="Times New Roman, Times, serif"><b>Consolidated income
    statement for the year ended 31 December 2004 </b><i>(continued)</i></font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">amortisation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Share-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(except</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;</font><font size="2">
      <font face="Times New Roman, Times, serif">UK</font>      </font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Retirement</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">under UK</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">goodwill</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Software</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">based</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Consolid-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif"> GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">benefits</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">adjustments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">capitalisation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">payments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Leases</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Insurance</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">ation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Property</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other </FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font size=2 face="Times New Roman, Times, serif">and IFRS 4)</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Operating profit</FONT></B></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">16,514</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,814</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(96</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(152</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(90</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(10</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">37</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">87</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=4% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(88</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">17,871</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Share of profit in associates</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;and joint ventures</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">292</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">18</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(48</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">268</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Gains on disposal of fixed</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;assets and investments</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">802</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(8</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">804</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Profit on ordinary activities</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;<B>before tax</B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">17,608</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(170</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,818</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(102</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(152</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(90</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">37</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">106</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(138</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">18,943</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Tax on profit on ordinary</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;activities</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,507</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">39</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">57</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(21</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(12</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">27</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(6</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(11</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(250</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,685</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Profit on ordinary activities</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;<B>after tax</B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">13,101</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(131</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,818</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(45</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(164</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(63</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">31</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">95</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(388</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">14,258</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Minority interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,261</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(3</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(19</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(35</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(22</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,340</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left><HR noshade size=1></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="Times New Roman, Times, serif">Profit attributable to</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;<B>shareholders</B></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">11,840</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(134</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,818</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(45</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(164</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(63</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">12</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">60</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(410</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">12,918</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
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  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
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  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
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  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
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  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
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  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">344</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p345"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="bottom">
    <td width="3%">&nbsp;</td>
    <td> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated</font></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> </font></b><b><font size=2 face="TimesNewRoman,Bold,Times New
Roman,Times,serif">balance</font></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> sheet
    at 31 </font></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">December</font></b><b><font size=2
face="TimesNewRoman,Bold,Times New Roman,Times,serif"> 2004</font></b></td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustments</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> to </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">conform</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> UK
        GAAP </font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">balance</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> sheet
        at 31 </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">December</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif"> 2004 to its </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">policies</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> under
    IFRSs are set out below:</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Share-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(except</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;UK</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Retirement</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Software</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">based</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Consolid-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif"> GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">benefits</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Dividends</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size=2 face="Times New Roman, Times, serif">Goodwill</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size=2 face="Times New Roman, Times, serif">capitalisation</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">payments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Leases</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Insurance</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">ation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Property</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">ASSETS</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Cash and balances at central</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;banks</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">9,872</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">72</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=4% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=7% align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">9,944</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;collection
    from other banks</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,352</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(14</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,338</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Treasury bills and other</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;eligible bills</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">30,284</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">197</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">30,481</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong Government</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;certificates
    of indebtedness</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to banks</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">142,712</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">699</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">40</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">143,449</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;customers</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">669,831</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(122</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">342</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3,602</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(762</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">672,891</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Debt securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">240,999</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">8,109</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(701</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">248,411</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Equity shares</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,319</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,896</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,321</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">183</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">27,719</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Interests in associates and</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;joint ventures</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,452</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(14</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">3,441</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other participating interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">881</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">881</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Goodwill and intangible</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;assets</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">29,382</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,809</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">760</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,874</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(3</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">673</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">34,495</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Tangible fixed assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">18,829</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(596</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,520</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(89</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15,624</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Other assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">73,498</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,152</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">57</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(138</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">110</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(19,141</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">468</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(249</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(490</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">55,267</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Prepayments and accrued</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;income</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,489</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,003</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(64</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">11</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">736</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(14</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,155</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">Total assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,276,778</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">153</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,869</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">622</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">110</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(718</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(1,088</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">4,796</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(2,047</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">(501</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">1,279,974</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">345</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p346"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<P><font size="3" face="Arial,Bold,Arial,Helvetica,sans-serif"> <B>Notes on the
      Financial Statements </B><font size="2">(continued)</font></font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated </font><font size=2 face="TimesNewRoman,Bold,Times New
Roman,Times,serif">balance</font><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> sheet
    at 31 December 2004 </font></b><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">(continued)</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Share-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(except</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">&nbsp;UK</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Retirement</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Software</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">based</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Consolid-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif"> GAAP</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">benefits</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Dividends</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill </FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size=2 face="Times New Roman, Times, serif">capitalisation</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">payments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Leases</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Insurance</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">ation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Property</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">LIABILITIES</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong currency notes in</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;circulation</font></TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=right>&nbsp;</TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=4% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">11,878</FONT></TD>
    <TD width=1% align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Deposits by banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">83,539</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">516</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">84,055</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Customer accounts</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">693,751</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(528</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(151</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">693,072</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;transmission
    to other banks</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,301</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,301</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Debt securities in issue</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">208,593</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(486</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">3,614</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">211,721</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">123,315</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(3</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(3,173</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">27</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(18,428</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">295</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">102,029</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Liabilities to policyholders</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;under long-term assurance</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;business</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,190</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">19,190</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Retirement benefit liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,475</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,475</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Accruals and deferred income</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">16,500</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">31</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(140</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">57</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">49</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">16,499</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Provision for liabilities and</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;charges:</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;&#150; deferred
    taxation</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,066</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(128</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">71</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">25</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(215</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">362</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">18</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">216</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(980</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,435</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;&#150; other
    provisions</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,532</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,740</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,202</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">45</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,636</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Subordinated liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">26,486</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">26,486</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Minority interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13,194</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(12</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">177</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">484</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(161</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(7</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13,675</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Called up share capital</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,587</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,587</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Share premium account</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,881</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,881</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other reserves</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">21,457</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">210</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">21,667</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Revaluation reserve</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,660</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,660</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Profit and loss account</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">52,038</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(4,470</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2,996</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,869</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">551</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">198</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(503</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">2</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(38</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">558</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">186</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">53,387</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Total liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,276,778</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">153</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,869</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">622</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">110</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(718</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,088</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4,796</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(2,047</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(501</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,279,974</FONT></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">346</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p347"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="bottom">
    <td width="3%">&nbsp;</td>
    <td> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated</font></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> </font></b><b><font size=2 face="TimesNewRoman,Bold,Times New
Roman,Times,serif">balance</font></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"> sheet
    at 1 </font></b><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">January</font></b><b><font size=2
face="TimesNewRoman,Bold,Times New Roman,Times,serif"> 2004</font></b></td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustments</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> to </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">conform</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> UK
        GAAP </font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">balance</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> sheet
        at 1 </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">January</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif"> 2004 to its </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">policies</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> under
    IFRSs are set out below:</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IFRSs</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Share-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(except</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right><font size="2" face="Times New Roman, Times, serif">UK&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Retirement</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Software</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">based</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Consolid-</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">IAS 32/39</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">  GAAP</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">benefits</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Dividends</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size=2 face="Times New Roman, Times, serif">Goodwill</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right><font size=2 face="Times New Roman, Times, serif">capitalisation</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">payments</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Leases</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Insurance</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">ation</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Property</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">and IFRS 4)</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">US&#36;m</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  <TD align=left></td>
  <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<B><FONT size=2 face="Times New Roman, Times, serif">ASSETS</FONT></B></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Cash and balances at central</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD width=3% align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;banks</font></TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">7,661</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">72</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=5% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=4% align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD width=7% align=right>
<FONT size=2 face="Times New Roman, Times, serif">7,733</FONT></TD>
    <TD width=1% align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Items in the course of</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;collection
            from other banks.</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,628</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,628</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Treasury bills and other</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;eligible bills</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">20,391</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">84</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">20,475</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Hong Kong Government</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;certificates
    of indebtedness </font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">10,987</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">10,987</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">117,173</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">752</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">109</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">118,034</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Loans and advances to</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;customers</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">528,977</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(110</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">316</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,555</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(888</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">533,850</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Debt securities</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">205,722</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">4</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">6,597</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(466</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">211,857</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Equity shares</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">12,879</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,037</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">578</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">200</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">18,694</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Interests in associates and</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;joint ventures</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,273</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">8</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(16</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(11</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,253</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other participating interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">690</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">690</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Goodwill and intangible</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;assets</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">28,640</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">112</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">718</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,579</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">869</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">31,918</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Tangible fixed assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">15,748</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(465</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(1,345</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(94</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13,844</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Other assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">63,128</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">733</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">44</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(127</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">111</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(15,169</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(649</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(26</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(286</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">47,759</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Prepayments and accrued</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font>

        </TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="Times New Roman, Times, serif"> &nbsp; &nbsp;income</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">14,319</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(948</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(77</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">24</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">76</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(108</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">723</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(14</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">13,995</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">Total assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,034,216</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(212</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">&#150;</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">87</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">591</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">135</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(575</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(728</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">5,075</FONT></TD>
        <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(659</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">(213</FONT></TD>
        <TD align=left>
<FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="Times New Roman, Times, serif">1,037,717</FONT></TD>
    <TD align=left><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">347</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p348"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif">
  </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=22 align=left> <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
      balance sheet at 1 January 2004 </font></b><i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">(continued)</font></i>
      </font><font size="2">&nbsp;</font><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font><font size="2">&nbsp;</font> <font size="2">&nbsp;</font><font size="2">&nbsp;</font>
      <font size="2">&nbsp;</font><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD rowspan="3" align=left></td>
    <TD rowspan="3" align=left><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
      <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK
      GAAP</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement<br>
    benefits</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
      </FONT></TD>
    <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
    <TD align=right valign="bottom"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Software<br>
    capitalisation</font></TD>
    <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share<br>
      based<br>
      payments</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Leases</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consolid-<br>
    ation</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs<br>
      (except<br>
      IAS
        32/39<br>
      and
      IFRS 4)</FONT></TD>
    <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left valign="bottom"><font size="2">&nbsp;</font></td>
    <TD align=right valign="bottom"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right valign="bottom"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong currency notes in</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">circulation</FONT></font></TD>
    <TD width=5% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,987</FONT></TD>
    <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=5% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=5% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=5% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=6% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD width=5% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=4% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=4% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=5% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=4% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=4% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,987</FONT></TD>
    <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,426</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,439</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573,130</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(78</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(23</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573,029</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">transmission
      to other banks</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,383</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,383</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities in issue</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">153,562</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(516</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,560</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158,606</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">94,669</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(126</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,794</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">156</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14,773</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(598</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(28</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76,501</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
      to policyholders</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">under
      long-term assurance</FONT></font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">business</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,168</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,168</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement
      benefit liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,982</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,982</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals
      and deferred income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,760</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(106</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,714</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision
      for liabilities and</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">charges:</FONT></font></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      deferred taxation</FONT></font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,670</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(142</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(173</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">306</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">197</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(862</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,107</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      other provisions</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,078</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,390</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(73</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(848</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(25</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,751</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,197</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,197</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interests</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,881</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">167</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">148</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(101</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,105</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called
      up share capital</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      premium account</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,406</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,406</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      reserves</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,543</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,543</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Revaluation
      reserve</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,615</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,615</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      and loss account</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,428</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,529</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,627</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(22</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">518</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(402</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">860</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">629</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,318</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,034,216</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(212</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">591</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">135</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(575</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(728</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,075</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(659</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(213</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,037,717</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left><font size="2">&nbsp;</font></TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="sans-serif">348</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p349"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%"  valign=top>&nbsp;</TD>
    <TD width="3%"  valign=top> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(d)</FONT></TD>
    <TD> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Analysis of
      the effect of IAS 1 &#145;Presentation of Financial Statements&#146; on
      the financial performance for the year ended 31 December 2004 and financial
      position at 31 December 2004 and 1 January 2004</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3></td>
  </TR>
  <TR>
    <TD></td>
    <TD></td>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD></td>
    <TD></td>
    <TD> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
      income statement for the year ended 31 December 2004 under IFRSs (except
      IAS 32, IAS 39 and IFRS 4)</FONT></B> </font></TD>
  </TR>
  <TR>
    <TD colspan=3></td>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in UK GAAP format</FONT></B></font></TD>
    <TD align=right></TD>
    <TD align=right></TD>
    <TD align=right> <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reclassification</font></b>
      </font></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in IFRSs format</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=6% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      receivable</FONT></TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,471</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=9% align=left bgcolor="#eeeeee"> </TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,471</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=35% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      payable</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,372</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,372</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      expense</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,099</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      interest income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees
      and commissions receivable</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,672</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">230</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,902</FONT></TD>
    <TD align=left></td>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee
      income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fees
      and commissions payable</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,954</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,954</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee
      expense</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,948</FONT></TD>
    <TD align=left></td>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      fee income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dealing
      profits</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,619</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">167</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,786</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on assets backing policyholder liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,012</FONT></TD>
    <TD align=left></td>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      investment income on assets backing policyholders&#146; liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">540</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      less losses from financial investments</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">622</FONT></TD>
    <TD align=left></td>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividend
      income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,368</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      earned insurance premiums</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,781</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(168</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,613</FONT></TD>
    <TD align=left></td>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      operating income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      income</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,219</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">769</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,988</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating income</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims incurred and movement in policyholder liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,191</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment charges and other credit risk provisions</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,162</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      operating income</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Administrative
      expenses</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(24,224</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,224</FONT></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14,523</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(14,523</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employee
      compensation and benefits</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,739</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,739</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">General
      and administrative expenses</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation
      and amortisation</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,225</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,225</FONT></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,731</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,731</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation
      of property, plant and equipment</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(494</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(494</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of intangible assets</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,487</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      operating expenses</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit before provisions</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,770</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision
      for bad and doubtful debts</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,195</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,195</FONT></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision
      for contingent liabilities and commitments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(71</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">71</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      insurance claims incurred and movement in policyholder liabilities .</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,635</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,635</FONT></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD height="20" align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts
      written off fixed asset investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,871</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">804</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></font></TD>
  </TR>
</TABLE>
<font size="2"></font>
<P align="center"> <FONT size=2 face="sans-serif">349</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p350"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=8 align=left> <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
      income statement for the year ended 31 December 2004 under IFRSs (except
      IAS 32, IAS 39 and IFRS 4) </font></b><i><font face="TimesNewRoman,Italic,Times New
Roman,Times,serif">(continued)</font></i></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in UK GAAP format</FONT></B></font></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reclassification</FONT></B>
      </font></TD>
    <TD align=left></td>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in IFRSs format</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=6% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></font></TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,871</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">804</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,675</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=35% align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Operating
      profit</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates and joint ventures</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">316</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(48</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">268</FONT></TD>
    <TD align=left></td>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      of profit in associates and joint ventures</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      on disposal of fixed assets and investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">804</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(804</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      on ordinary activities before tax</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,991</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(48</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,943</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      before tax</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax
      on profit on ordinary activities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,733</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">48</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,685</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax
      expense</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      on ordinary activities after tax</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,258</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,258</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      for the year</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interests</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,340</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,340</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      attributable to minority interests</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      attributable to shareholders</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Profit
      attributable to shareholders of the parent company</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<font size="2"></font>
<P align="center"> <FONT size=2 face="sans-serif">350</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p351"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=8 align=left> <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
      balance sheet at 31 December 2004 under IFRSs (except IAS 32, IAS 39 and
      IFRS 4)</font></b></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in UK GAAP format</FONT></B></font></TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reclassification</FONT></B>
      </font></TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in IFRSs format</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></font></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD width=6% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      and balances at central banks</FONT></TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,944</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></TD>
    <TD width=9% align=left bgcolor="#eeeeee"> </TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,944</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=35% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      and balances at central banks</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of collection from other banks</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,338</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,338</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of collection from other banks</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
      bills and other eligible bills</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,481</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(30,481</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government certificates of indebtedness</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government certificates of indebtedness</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,190</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,190</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,449</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,449</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">248,411</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(248,411</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity
      shares</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,719</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27,719</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      investments</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests
      in associates and joint ventures</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,441</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,441</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests
      in associates and joint ventures</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      participating interests</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">881</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(881</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
      and intangible assets</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,495</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,495</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
      and intangible assets</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tangible
      fixed assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,624</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,624</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property,
      plant and equipment</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      assets</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,267</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(32,190</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,077</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      assets</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments
      and accrued income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,155</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,155</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments
      and accrued income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      assets</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      assets</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<font size="2"></font>
<P align="center"> <FONT size=2 face="sans-serif">351</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p352"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif">
  </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan=8 align=left> <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
      balance sheet at 31 December 2004 under IFRSs (except IAS 32, IAS 39 and
      IFRS 4) </font></b><i><font face="TimesNewRoman,Italic,Times New
Roman,Times,serif">(continued)</font></i></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in UK GAAP format</FONT></B></font></TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reclassification</FONT></B>
      </font></TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs
      numbers in IFRSs format</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES</FONT></B></font></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES
      AND EQUITY</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD width=6% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong currency notes in circulation</FONT></TD>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"></TD>
    <TD width=9% align=left bgcolor="#eeeeee"> </TD>
    <TD width=2% align=left bgcolor="#eeeeee"></td>
    <TD width=9% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=35% align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong currency notes in circulation</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,055</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,055</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of transmission to other banks</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,301</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,301</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of transmission to other banks</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,460</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,460</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,988</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,988</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities in issue</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities in issue</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement
      benefit liabilities</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,475</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,475</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement
      benefit liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">102,029</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(81,448</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,581</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
      to policyholders under long term assurance business</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,190</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,190</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
      to policyholders under long term assurance business</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals
      and deferred income</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,499</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,499</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals
      and deferred income</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
      for liabilities and charges:</FONT></TD>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;
      deferred taxation</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,435</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,435</FONT></TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;
      deferred tax</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;
      other provisions</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,636</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,636</FONT></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;
      other provisions</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,180,777</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interests</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,675</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(13,675</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called
      up share capital</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called
      up share capital</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      premium account</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,881</FONT></TD>
    <TD align=left></TD>
    <TD align=left> </TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,881</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      premium account</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      reserves</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,667</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,955</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,622</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      reserves</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      and loss account</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,387</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,955</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,432</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retained
      earnings</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Shareholders&#146;
      funds</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      shareholders&#146; equity</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,675</FONT></TD>
    <TD align=left></td>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,675</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interests</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></td>
    <TD align=left></TD>
    <TD align=left></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=left bgcolor="#eeeeee"></TD>
    <TD align=left bgcolor="#eeeeee"> </TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99,197</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      equity</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"><B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total
      liabilities</FONT></B></font></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"></td>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      equity and liabilities</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left></td>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<font size="2"></font>
<P align="center"> <FONT size=2 face="sans-serif">352</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p353"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=8 align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
              balance sheet at 1 January 2004 under IFRSs (except IAS 32, IAS 39 and
    IFRS 4)</font></b> </TD>
        <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs numbers in UK GAAP format</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reclassification</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs numbers in IFRSs format</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">ASSETS</FONT></B></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash and balances at central banks</FONT></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,733</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"></TD>
        <TD width=9% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=9% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,733</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=30% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash and balances at central banks</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in the course of collection from other banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,628</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,628</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in the course of collection from other banks</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury bills and other eligible bills</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,475</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(20,475</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Government certificates of indebtedness</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,987</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,987</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Government certificates of indebtedness</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left bgcolor="#eeeeee">&nbsp;</td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95,416</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">95,416</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,436</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,436</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">118,034</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">118,034</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to banks</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">533,850</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">533,850</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances to customers</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,857</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(211,857</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity shares</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,694</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(18,694</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">156,299</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">156,299</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial investments</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests in associates and joint ventures</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,253</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,253</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests in associates and joint ventures</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other participating interests</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">690</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(690</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill and intangible assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,918</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31,918</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill and intangible assets</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tangible fixed assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,844</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,844</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property, plant and equipment</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,759</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27,435</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,324</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments and accrued income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,995</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,995</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments and accrued income</FONT></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total assets</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,037,717</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,037,717</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total assets</FONT></B></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2>
    </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">353</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p354"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan=10 align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
              balance sheet at 1 January 2004 under IFRSs (except IAS 32, IAS 39 and
    IFRS 4) </font></b><i><font size=1 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">(continued)</font></i></TD>
        <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</td>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs numbers in UK GAAP format</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reclassification</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs numbers in IFRSs format</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left></td>
        <TD width="28%" align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left></td>
        <TD width="3%" align=left></td>
        <TD width="25%" align=left><font size="2">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</td>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES AND EQUITY</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left></td>
  <TD width=3% align=left></td>
        <TD width=3% align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong currency notes in circulation</FONT></TD>
        <TD width=9% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,987</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"></TD>
        <TD width=9% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=9% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,987</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong currency notes in circulation</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,439</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70,439</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573,029</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573,029</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in the course of transmission to other banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,383</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,383</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in the course of transmission to other banks</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left bgcolor="#eeeeee"></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,127</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">30,127</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading liabilities</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,879</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,879</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158,606</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158,606</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in issue</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement benefit liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,982</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,982</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement benefit liabilities</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76,501</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(58,006</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,495</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities to policyholders under long term assurance business</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,168</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,168</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities to policyholders under long term assurance business</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals and deferred income</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,714</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,714</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals and deferred income</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions for liabilities and charges:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&#8211;&nbsp;&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> deferred taxation</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,107</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,107</FONT></TD>
        <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">&#8211;&nbsp;&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">deferred
tax</FONT></TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
        <TD align=right>&#8211;&nbsp;&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> other provisions</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,751</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,751</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>&#8211;&nbsp;&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other provisions</FONT></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,197</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,197</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated liabilities</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left bgcolor="#eeeeee"></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">952,864</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,105</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(11,105</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></td>
        <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called up share capital</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,481</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called up share capital</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share premium account</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,406</FONT></TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,406</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share premium account</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other reserves</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,543</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">645</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22,188</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other reserves</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit and loss account</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42,318</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(645</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">41,673</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retained earnings</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Shareholders&#146; funds</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73,748</FONT></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73,748</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholders&#146; equity</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,105</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,105</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left>
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority interests</FONT></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left bgcolor="#eeeeee"></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,853</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total liabilities</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,037,717</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,037,717</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee">
      <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity and liabilities</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">354</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p355"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%"  valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width="3%"  valign=top>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(e)</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Key impact analysis
of adopting IAS 32, IAS 39 and IFRS 4 on the opening balance sheet as at 1
January 2005</FONT></TD>
</TR>
<TR><TD colspan=3></td></TR>
<TR><TD colspan=3></td></TR>
<TR>
  <TD></td>
  <TD></td>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD></td>
<TD></td>
<TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s consolidated
balance sheet at 1 January 2005 differed from the closing balance sheet dated
31 <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">December 2004
as
the former reflected the first-time adoption of IAS 32 &#145;Financial Instruments:
Presentation&#146; <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(&#145;IAS
32&#146;), IAS 39 &#145;Financial Instruments: Recognition and Measurement&#146; (&#145;IAS
39&#146;) and IFRS 4 &#145;Insurance Contracts&#146; (&#145;IFRS
4&#146;).</font></font></FONT></TD>
</TR>
<TR><TD colspan=3></td></TR>
<TR>
  <TD colspan=3></td>
</TR>
<TR><TD colspan=3></td></TR>
<TR>
  <TD></td>
  <TD></td>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD></td>
<TD></td>       <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For a summary of the principal accounting policies followed in preparing the 2004 comparative information, see Note 2 and (g) below.</FONT></TD>
</TR>
<TR><TD colspan=3></td></TR></TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reconciliation
        of previously reported shareholders&#146; funds under UK GAAP to total
    shareholders&#146; equity under IFRSs at 1 January 2005</font></b></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 January</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; funds as previously reported under UK GAAP</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86,623</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non IAS 32, IAS 39 and IFRS 4 adjustments</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,101</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholders&#146; equity under IFRSs excluding IAS 32, IAS 39 and IFRS 4</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IAS 32, IAS 39 and IFRS 4 adjustments</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives and hedge accounting</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment securities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,026</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair value option</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(812</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(151</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan impairment</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">138</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(192</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">303</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholders&#146; equity under IFRSs</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86,775</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2></TD>
  <TD align=left></td>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Explanation
    of differences</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Derivatives
    and hedge accounting</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        UK GAAP derivatives were classified as trading or non-trading. Trading
        derivatives were reported at market value in the balance sheet, with
        movements in market value recognised immediately in the income statement.
        Non-trading derivatives, which were transacted for hedging and risk management
        purposes, were accounted for on an accruals basis, equivalent to the
    assets, liabilities or net positions being hedged.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> IAS 39
        requires that all derivatives be recognised at fair value in the balance
        sheet as assets or liabilities. The accounting for changes in the fair
        value of a derivative depends on the intended use of the derivative and
        its resulting designation, as
described in Note 2(k).</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The application
        of IAS 39 as at 1 January 2005 resulted in the recognition of additional
        assets of US&#36;346 million and additional liabilities of US&#36;49
        million relating to the fair values of derivatives at that date which
        were previously accounted for on an accruals basis. In addition, the
        carrying values of non-derivative financial instruments subject to fair
        value hedges were adjusted by US&#36;743 million at 1 January 2005 in
        relation to the fair value attributable to the hedged risks of those
        financial instruments. The combined impact on shareholders&#146; equity
        at 1 January 2005 was US&#36;59 million, of which US&#36;410 million
        was taken to the cash flow hedging
reserve.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Investment
    securities</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities
        and equity shares intended to be held on a continuing basis under UK
        GAAP were disclosed as investment securities and included in the balance
        sheet at cost less provision for any permanent diminution in value. Other
        debt securities and equity shares held for trading purposes were included
    in the balance sheet at market value.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        IAS 39, all investment securities (debt securities and equity shares)
        are classified and disclosed within one of the following three categories: &#145;held-to-maturity&#146;; &#145;available-for-sale&#146;;
    or &#145;at fair value through profit or loss&#146;. Securities previously
    classified as held-for-trading purposes remain so classified. The accounting
    treatment for</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="Arial,Arial,Helvetica,sans-serif">355</FONT></P>



<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p356"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">each of
        the categories above under IFRSs is described in Note 2. On transition
        to IFRSs, under IAS 39 HSBC classified most of its investment securities
        as available-for-sale. This resulted in an available-for-sale reserve
        of US&#36;1,919 million, representing the cumulative unrealised gain
    on these securities being recorded within shareholders&#146; equity.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Following
        the adoption of IAS 39 in its separate financial statements, HSBC Holdings
        has reclassified its investments in debt securities from &#145;Investments &#150; debt
        securities of
HSBC undertakings&#146; to available-for-sale financial investments. This has
resulted in the recording within total shareholders&#146; equity of an available-for-sale
reserve of US&#36;464 million, representing the cumulative unrealised gains on
these securities.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
    value option</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        IAS 39, financial assets and financial liabilities may be designated
        at fair value if they meet the criteria set out in the &#145;Amendment
        to IAS 39 Financial Instruments: Recognition and Measurement: The Fair
        Value Option&#146; (&#145;the Amendment&#146;). HSBC has designated at
        fair value at 1 January 2005 certain loans and advances to customers,
        financial investments, and some own debt issued which satisfied the criteria
        in the Amendment. This had the impact of reducing shareholders&#146; equity
    by US&#36;812 million on 1 January 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
        has designated at fair value at 1 January 2005 certain subordinated liabilities
        which satisfied the criteria in the Amendment. This had the effect of
        reducing total
shareholders&#146; equity by US&#36;317 million at 1 January 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fee
    income</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income
        was previously accounted for in the period when receivable, except when
        charged to cover the costs of a continuing service to, or risk borne
        for, the customer, or was interest in nature. In these cases, income
        was recognised on an appropriate basis over the relevant period. Under
        IFRSs, the main change in accounting relates to loan fee income and incremental
        directly attributable loan origination costs, which are amortised to
        the income statement over the expected life of the loan as part of the
        effective interest calculation. This resulted in a reduction in shareholders&#146; equity
        of US&#36;151 million, as previously recognised fees after deduction
        of directly attributable costs were reversed and spread forward over
    the residual term of the financial instrument.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Non-equity
    minority interest reclassification</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Preference
        shares issued by subsidiaries were previously classified in the balance
        sheet as non-equity minority interests with preference share dividends
        recorded as non-equity minority interests in the income statement. Under
        IAS 32, preference shares are generally classified in the balance sheet
        as liabilities. This had the impact of increasing liabilities by US&#36;10,218
    million at 1 January 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Loan
    impairment</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        HSBC&#146;s UK GAAP accounting policies, loans in the consumer finance
        business were written off to the income statement in accordance with
    a predetermined overdue status.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        IAS 39, impairment losses are recognised when an entity has objective
        evidence that an advance is impaired. Impairment under IAS 39 is calculated
        on a discounted future cash flow basis and does not result in an impaired
        loan being fully written off until it is considered that cash flows will
    no longer be received.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">This change
        in the recognition basis of cash recoveries has resulted in an asset
        of US&#36;364 million at 1 January 2005 being the reinstatement of that
        portion of the previously written off loans that, based on historical
    evidence, is recoverable.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Insurance</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        UK GAAP, a value was placed on HSBC&#146;s interest in long-term assurance
        business, including a valuation of the discounted future earnings expected
        to emerge from business currently in force. From 1 January 2005, only
        long-term contracts meeting the definition of an insurance contract under
        IFRS 4 continue to be accounted for in this way. Long-term contracts
        not transferring significant insurance risk, referred to as investment
        contracts, are accounted for as financial instruments. Accordingly, it
        is no longer possible to include for such contracts an asset representing
    the value of the discounted future earnings expected to emerge from business
        currently in force, leading to a reduction in equity of US&#36;192 million.
    Income on such contracts will be</font></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">356</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p357"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> recognised
        in later periods, as investment management fees and incremental directly
        attributable costs are spread over the period in which the services are
        provided.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Offsetting
          of financial assets and financial liabilities</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        UK GAAP the netting of asset and liability balances in the balance sheet
        is only allowed when there is the ability to insist on net settlement.
        Under IAS 32 the offsetting of financial assets and financial liabilities
        is only allowed when there is a legally enforceable right to offset and
        the intention to settle net. The change from an ability to insist on
        net settlement to an intention to settle on a net basis is not in line
        with market practice in a number of areas. As a result of this change
        certain financial instruments have been presented gross on the balance
        sheet. This has increased total assets by US&#36;87,772 million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Acceptances
        were accounted for on a net basis under UK GAAP. There was no grossing
        up of the amount to be paid and the amount receivable from the originator,
        and thus no balance appeared on the balance sheet for these products.
        Under IAS 39 it is necessary to recognise a liability for acceptances
        from the date of acceptance. A corresponding asset due from the originator
        is also recognised. This resulted in a gross up of the balance sheet
        of US&#36;7,214 million, with no impact on shareholders&#146; equity.</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="Arial,Arial,Helvetica,sans-serif">357</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p358"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(f)</font></td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Reconciliation</font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> of </font><font size=2
face="UniversLT55,Arial,Helvetica,sans-serif">consolidated</font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">&nbsp; </font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">balance</font><font size=2
face="UniversLT55,Arial,Helvetica,sans-serif">&nbsp; </font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">sheets</font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> at
        31 </font><font size=2
face="UniversLT55,Arial,Helvetica,sans-serif">December</font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> 2004
    and 1 </font><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">January</font><font size=2
face="UniversLT55,Arial,Helvetica,sans-serif"> 2005</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustments</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> to </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> sheet
        under IFRSs at 31 </font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif">December</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> 2004
        to </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">incorporate</font><font size=2
face="TimesNewRoman,Times New Roman,Times,serif"> its </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">policies</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> under
    IFRSs at 1 </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">January</font><font size=2 face="TimesNewRoman,Times New
Roman,Times,serif"> 2005 (see Note 2) are set out below:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</TD>
  <TD colspan="21" align=center> <font size=1 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of adopting
IAS 32, IAS 39 and IFRS 4</font></TD>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
  <TD align=left>&nbsp;</td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD colspan="21" align=left><HR noshade size=1></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
    <TD align=left><font size="1">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=right><font size="1">&nbsp;</font></TD>
  <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right> <font size=1 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
            at <br>
          31
    December</font></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives<br>
and hedge</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Fair value</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Fee</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Non-equity<br>
reclassi-</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Loan</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Reclassi-</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs at<br>
1 January</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">accounting</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">securities</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">option</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">fication</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">impairment</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Offsetting</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">fications</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading assets</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,160</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">112</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,762</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(40</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,547</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,165</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115,995</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial assets</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">designated at</FONT></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">fair value</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,722</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,729</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14,729</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,190</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,338</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,285</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,596</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,800</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,017</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55,207</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">to banks</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,449</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">551</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(656</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(222</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(328</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,121</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and advances</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">to customers</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">672,891</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,978</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(223</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">364</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66,442</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,800</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,822</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,584</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">738,475</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">investments</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">185,332</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">55</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,546</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8,325</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">637</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,072</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">491</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">173</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,363</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">181,969</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests in associates</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">and joint ventures</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,441</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,464</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill and</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">intangible assets .</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,495</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(384</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(381</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,114</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property, plant and</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">equipment</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,624</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,624</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,077</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(104</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(51</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">313</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(13</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(87</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(639</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,570</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10,543</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(193</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,253</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27,330</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prepayments and</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">accrued income</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,155</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,992</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(43</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,643</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">189</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(144</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(57</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7,598</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,557</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1></TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">985</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,449</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">956</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(99</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">133</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(360</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,772</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,043</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89,793</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,369,767</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
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  <TD align=right><font size="2">&nbsp;</font></TD>
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</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">358</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p359"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=24 align=left> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Reconciliation
    of consolidated balance sheets at 31 December 2004 and 1 January 2005 </font><i><font size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued</font></i><i><font
size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">)</font></i> </TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=21 align=center>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=21 align=center> <font size=1 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of adopting
IAS 32, IAS 39 and IFRS 4</font></TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
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  <TD align=left>&nbsp;</TD>
  <TD colspan=21 align=left><HR noshade size=1></TD>
  <TD align=left></td>
  <TD align=left></td>
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</TR>
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  <TD align=left></td>
        <TD align=left></td>
        <TD align=left></td>
        <TD align=left></TD>
        <TD colspan="21" align=left>

        </TD>
        <TD align=left></td>
        <TD align=left></td>
    <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs at<br>
31 December</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives<br>
and hedge</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Fair value</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Fee</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Non-equity<br>
reclassi-</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Loan</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Reclassi-</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs at<br>
1 January</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">accounting</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">securities</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">option</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">fication</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">impairment</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Offsetting</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">fications</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></TD>
  <TD align=left></TD>
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  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">LIABILITIES AND</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">EQUITY</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
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        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
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        <TD align=left><font size="2">&nbsp;</font>

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  <TD align=left>&nbsp;</TD>
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        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
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</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">currency notes</FONT></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

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        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">in circulation</FONT></font></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits by banks</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">84,055</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(101</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,609</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,473</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77,582</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer accounts .</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693,072</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22</FONT></TD>
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        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,203</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,322</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">65,010</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(25,992</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
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        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,619</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38,556</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">731,628</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items in the course</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

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        <TD align=left><font size="2">&nbsp;</font></td>
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        <TD align=left><font size="2">&nbsp;</font></td>
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        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
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        <TD align=left><font size="2">&nbsp;</font>

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        <TD align=left><font size="2">&nbsp;</font></td>
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        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
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        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
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        <TD align=left><font size="2">&nbsp;</font></td>
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        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">of transmission</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
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        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">to other banks</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,301</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,301</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,460</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
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        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,070</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,375</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(117</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,429</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92,889</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial liabilities</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">designated at</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">fair value</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,815</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,662</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,479</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">57,479</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,988</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,151</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,916</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,197</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(96</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,281</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">53,269</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities in</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

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        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">issue</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">211,721</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(141</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(62</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(26,503</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(339</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(12,925</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">42</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(39,929</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">171,792</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement benefit</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,475</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,482</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other liabilities</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,581</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">693</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">39</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,813</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,010</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(9,046</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(69</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,906</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,487</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities under</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
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</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">insurance</FONT></font></TD>
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</TR>
<TR valign="bottom">
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,190</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(19,190</FONT></TD>
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  <TD align=left>&nbsp;</TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accruals and</FONT></TD>
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</TR>
<TR valign="bottom">
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,434</FONT></TD>
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</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
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        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; deferred
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,435</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">69</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(111</FONT></TD>
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</TR>
<TR valign="bottom">
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,636</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(7</FONT></TD>
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<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,603</FONT></TD>
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</TR>
<TR valign="bottom">
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        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,486</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">104</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(20,300</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,114</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(71</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10,153</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,333</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,180,777</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,044</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">342</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,768</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,114</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(168</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,772</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,302</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98,617</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,394</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">359</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p360"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></p>
<P> <font size="3"><b><font face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements<font size="2"> </font></font></b><font size=2 face="Arial, Helvetica, sans-serif">(continued)</font></font><font face="Arial, Helvetica, sans-serif"> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=24 align=left><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Reconciliation
    of consolidated balance sheets at 31 December 2004 and 1 January 2005 </font><i><font size=1 face="UniversLT55,Italic,Arial,Helvetica,sans-serif">(continued)</font></i> </TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=21 align=center>&nbsp;</TD>
  <TD align=left></td>
  <TD align=left></td>
  <TD align=left></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD align=left><font size="1">&nbsp;</font></TD>
  <TD colspan=21 align=center> <font size=1 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of adopting
IAS 32, IAS 39 and IFRS 4</font></TD>
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
  <TD align=left><font size="1">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD colspan=21 align=left><HR noshade size=1>
        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
    <TD align=left><font size="1">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></TD>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>&nbsp;</TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs at<br>
31 December</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives<br>
and hedge</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Investment</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Fair value</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Fee and<br>
commission</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Non-equity<br>
reclassi-</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Loan</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Reclassi-</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=left><font size="1">&nbsp;</font>

        </TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs at<br>
1 January</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">accounting</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">securities</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">option</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">income</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">fication</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">impairment</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Offsetting</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">fications</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2005</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left></td>
  <TD align=left></td>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=right><font size="1">&nbsp;</font></TD>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="1">&nbsp;</font></td>
        <TD align=right>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right><font size="1">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left></td>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total liabilities</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,180,777</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,044</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">342</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,768</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,114</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(168</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,772</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,302</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">98,617</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,394</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called up share</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">capital</FONT></font></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
        <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=6% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD width=1% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD width=5% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,587</FONT></TD>
    <TD width=1% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share premium</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=left><font size="2">&nbsp;</font></td>
    <TD align=left><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">account</FONT></font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,881</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,881</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other reserves</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">25,622</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">410</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,919</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">52</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(16</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">650</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,015</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,637</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retained earnings</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49,432</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(469</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">107</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(864</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(151</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">138</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(192</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(347</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,762</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,670</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholders&#146;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">equity</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,026</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(812</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(151</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">138</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(192</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">303</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,253</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">86,775</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority interests</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,675</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">81</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10,114</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font></td>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(44</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10,077</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,598</FONT></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">99,197</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(59</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,107</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(812</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(151</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(10,114</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">138</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(192</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">259</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8,824</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,373</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=left><font size="2">&nbsp;</font></td>
  <TD align=right><HR noshade size=1>
  </TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total equity and</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,279,974</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">985</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,449</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">956</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(99</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">133</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(360</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87,772</FONT></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2,043</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">89,793</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,369,767</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=left>&nbsp;</td>
  <TD align=right><HR noshade size=2>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%" align="left" valign="top"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</font></td>
    <td align="left" valign="top"><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Liabilities
    to policyholders under long-term assurance business</font></i></td>
  </tr>
</table>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">360</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p361"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td width="3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(g)</font></td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Principal
        accounting policies which only apply to the 2004
comparative information</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Apart
        from the exceptions noted below, the same principal accounting policies
        apply to financial information disclosed in respect of both 2005 (see
        Note 2) and 2004. The following accounting policies only apply to the
    2004 comparatives:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Interest
    income and expense</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
        income was recognised in the income statement as it accrued, except in
    the case of impaired loans and advances.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Premiums
        and discounts on the issue of debt and fair value adjustments to debt
        arising on acquisitions were amortised to interest payable so as to give
        a constant rate over the life of the debt. When debt was callable, either
        by HSBC or the holder, the premium or discount was amortised over the
    period to the earliest call date.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Non
    interest income</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Fee
    income</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Fee
    income was accounted for as follows:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
        earned on the execution of a significant act was recognised as revenue
        when the act had been completed (for example, commission and fees arising
        from negotiating, or participating in the negotiation of, a transaction
        for a third party, such as the arrangement for the acquisition of shares
    or other securities);</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
        earned from the provision of services was recognised as revenue as the
        services were provided (for example, asset management, portfolio and
    other management advisory and service fees); and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> income
        which was interest in nature was recognised on an appropriate basis over
        the
relevant period and recorded in &#145;Interest income&#146;.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Trading
    income</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Trading
        income comprised gains and losses from the mark-to-market movements of
        trading instruments. Interest income, expense and dividends were presented
        in &#145;Interest income&#146;, &#145;Interest expense&#146; and &#145;Dividend
    income&#146; respectively.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Loans
    and advances to banks and customers</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Loans
        and advances to banks and customers included loans and advances originated
        by HSBC which were not intended to be sold in the short term and had
        not been classified as held for trading. Loans and advances were recognised
        when cash was advanced to borrowers. They were measured at amortised
    cost less provisions for bad and doubtful loans and advances.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Impaired
    loans and advances</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> It
        was HSBC&#146;s policy that each operating company would make provisions
        for impaired loans and advances when there was objective evidence of
        impairment. There were two basic types of provision, specific and general,
    each of which was considered in terms of the charge and the amount outstanding.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Specific
    provisions</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Specific
        provisions represented the quantification of actual and inherent losses
        from homogeneous portfolios of assets and individually identified accounts.
        Specific provisions were deducted from loans and advances in the balance
        sheet. The majority of specific provisions were determined on a portfolio
    basis.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Portfolios</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> When
        homogeneous groups of assets were reviewed on a portfolio basis, two
    alternative methods were used to calculate specific provisions:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When
        appropriate empirical evidence was available, HSBC utilised roll rate
        methodology (a statistical analysis of historical trends of the probability
    of default and amount of consequential loss, assessed at the</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
361</font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p362"></a>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents">Back
to Contents</a></font></p>
</font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2"> <p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">end
          of each time period for which payments were overdue), other historical
          data and an evaluation of current economic conditions to calculate
          an appropriate level of specific provision
  based on inherent loss. Additionally,
            in certain highly developed markets, sophisticated models taking
    into account behavioural and account management trends such as bankruptcy
            and rescheduling statistics were used. Roll rates were regularly
    benchmarked
    against actual outcomes to ensure they remained appropriate.</font></p>
    </td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
        other cases, when information was insufficient or not sufficiently reliable
        to adopt a roll rate</font><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>methodology,
        HSBC adopted a formulaic approach which allocated progressively higher
        loss rates in line</font> <font size=2>with
    the period of time for which a customer&#146;s loan was overdue.</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Individually
    assessed accounts</i></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Specific
        provisions on individually assessed accounts were determined by an evaluation
        of the exposures on a case-by-case basis. This procedure was applied
        to all accounts that did not qualify for, or were not subject to, a portfolio-based
        approach. In determining such provisions on individually assessed accounts,
    the following factors were considered:</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
    aggregate exposure to the customer (including contingent liabilities);</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the
          viability of the customer&#146;s business model and its capability
          to trade successfully
out of financial</font> <font size=2>difficulties and generate sufficient cash
flow to service
its debt obligations;</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> the
    likely dividend available on liquidation or bankruptcy;</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the
          extent of other creditors&#146; commitments ranking ahead of, or pari
          passu with, HSBC and the likelihood of</font> <font size=2>other creditors
    continuing to support the company;</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the
          complexity of determining the aggregate amount and ranking of all creditor
          claims and the extent to</font> <font size=2>which legal and insurance
    uncertainties were evident;</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the amount
    and timing of expected receipts and recoveries;</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> the
        realisable value of security (or other credit mitigants) and likelihood
    of successful repossession;</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> the
    deduction of any costs involved in recovery of amounts outstanding;</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the
          ability of the borrower to obtain, and make payments in, the currency
    of the loan if not in local currency;</font> <font size=2>and</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> when
    available, the secondary market price of the debt.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Releases
        of individually calculated specific provisions were recognised whenever
        HSBC had reasonable evidence that the established estimate of loss had
    reduced.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Cross-border
    exposures</i></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Specific
        provisions were established in respect of cross-border exposures to countries
        assessed by management to be vulnerable to foreign currency payment restrictions.
    This assessment included analysis of both economic and political factors.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Provisions
        were applied to all qualifying exposures within these countries unless
    these exposures:</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> were
    performing, trade-related and of less than one year&#146;s maturity;</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>were
          mitigated by acceptable security cover which was, other than in exceptional
    cases, held outside the</font> <font size=2>country concerned; or</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>were
          represented by securities held for trading purposes for which a liquid
          and active market existed, and</font> <font size=2>which were marked
    to market daily.</font></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>General
    provisions</i></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> General
        provisions augmented specific provisions and provided cover for loans
        that were impaired at the balance sheet date but which would not be individually
        identified as such until some time in the future. HSBC required operating
        companies to maintain a general provision, which was determined after
    taking into account:</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>

<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">362</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p363"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>historical
          loss experience in portfolios of similar risk characteristics (for
    example, by industry sector, loan</font> <font size=2>grade or product);</font></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%"><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        estimated period between impairment occurring and the loss being identified
        and evidenced by the</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> establishment
        of
a specific provision against that loss; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">management&#146;s
        judgement as to whether the then economic and credit conditions were
        such that the actual</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> level
        of inherent loss was likely to be greater or less than that suggested
    by historical experience.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> The
        estimated period between a loss occurring and its identification (as
        evidenced by the establishment of a specific provision for that loss)
        was determined by local management for each
identified portfolio.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Loans
    on which interest was being suspended and non-accrual loans</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Loans
        were designated as non-performing as soon as management had doubts as
        to the ultimate collectibility of principal or interest or when contractual
        payments of principal or interest were 90 days overdue. When a loan was
        designated as non-performing, interest was not normally credited to the
        income statement and either interest accruals ceased (&#145;non-accrual
        loans&#146;) or interest was credited to an interest suspense account
        in the balance sheet which was netted against the relevant loan (&#145;suspended
    interest&#146;).</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Within
        portfolios of low value, high volume, homogeneous loans, interest was
        normally suspended on facilities 90 days or more overdue. In certain
        operating subsidiaries, interest income on credit cards may have continued
        to be included in earnings after the account was 90 days overdue, provided
        that a suitable provision was raised against the portion of accrued interest
    which was considered to be irrecoverable.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> The
        designation of a loan as non-performing and the suspension of interest
    could be deferred for up to 12 months in either of the following situations:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>cash
          collateral was held covering the total of principal and interest due
    and the right of offset was legally</font> <font size=2>sound; or</font></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td valign="middle">&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>the
          value of any net realisable tangible security was considered more than
          sufficient to cover the full</font> <font size=2>repayment of all principal
          and interest due, and credit approval had been given to the rolling-up
    or</font> <font size=2>capitalisation of interest payments.</font></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td valign="middle">&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> In
        certain subsidiaries, principally those in the UK and Hong Kong, interest
        on non-performing loans was charged to the customer&#146;s account provided
        that there was a realistic prospect of interest being paid at some future
        date. However, the interest was not credited to the income statement
        but to an interest suspense account in the balance sheet, which was netted
    against the relevant loan.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> In
        other subsidiaries, when the probability of receiving interest payments
        was remote, interest was no longer accrued and any suspended interest
    balance was written off.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> On
        receipt of cash (other than from the realisation of security), the overall
        risk was re-evaluated and, if appropriate, suspended or non-accrual interest
        was recovered and taken to the income statement. A specific provision
        of the same amount as the interest receipt was then raised against the
        principal balance. Amounts received from the realisation of security
        were applied to the repayment of outstanding indebtedness, with any surplus
    used first to recover any specific provisions and then suspended interest.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        were not reclassified as accruing until interest and principal payments
    were up to date and future payments were reasonably assured.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Loan
    write-offs</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
        (and the related provisions) were normally written off, either partially
        or in full, when there was no realistic prospect of recovery of these
        amounts and when the proceeds from
realising security had been received.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Trading
    assets and trading liabilities</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
        bills, debt securities, equity shares and short positions in securities
        were included in &#145;Trading assets&#146; or &#145;Trading liabilities&#146; in
        the balance sheet at market value. Changes in the market value of these
        assets and liabilities were recognised in the income statement as &#145;Trading
        income&#146; as they arose. For liquid portfolios, market values were
        determined by reference to independently sourced mid-market prices. In
    certain less liquid</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>



<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">363</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p364"></a>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents">Back
to Contents</a></font></p>
</font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">portfolios,
        securities were valued by reference to bid or offer prices as appropriate.
        When independent prices were not available, market values were estimated
        by discounting the expected future cash flows using a suitable interest
        rate adjusted for the counterparty&#146;s credit risk. Interest income,
        interest expense and dividends arising from trading assets and liabilities
        were aggregated in the income statement with similar amounts arising
    from other activities.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Financial
    investments</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
        bills, debt securities and equity shares intended to be held on a continuing
        basis were classified as financial investments and included in the balance
        sheet at cost less
provision for any permanent diminution in value.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> When
        dated financial investments had been purchased at a premium or discount,
        those premiums and discounts were amortised through the income statement
        over the period from the date of purchase to the date of maturity so
        as to give a constant rate of return. If the maturity was at the borrowers&#146; option
        within a specified range of years, the earliest maturity was adopted.
        Those financial investments were included in the balance sheet at cost
        adjusted for the amortisation of premiums and discounts arising on acquisition.
        The amortisation of premiums and discounts was included in &#145;Interest
        income&#146;. Any gain or loss on realisation of these securities was
        recognised in &#145;Gains less losses from financial investments&#146; in
    the income statement as it arose.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Derivatives</b></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Derivative
        financial instruments comprised futures, forward, swap and option transactions
        undertaken by HSBC in the foreign exchange, interest rate, equity, credit
        derivative, and commodity markets that were held off-balance sheet. Netting
    was applied where a legal right of offset existed.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Accounting
        for these instruments was dependent upon whether the transactions were
    undertaken for trading or non-trading purposes.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Trading
    transactions</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Trading
        transactions included transactions undertaken for market-making, to service
        customers&#146; needs and for proprietary purposes, as well as any related
    hedges.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Transactions
        undertaken for trading purposes were marked to market and the net present
        value of any gain or loss arising was recognised in the income statement
        as &#145;Trading
income&#146;, after appropriate deferrals for unearned credit margins and future
servicing costs. Derivative trading transactions were valued by reference to
an independent liquid price when this was available. For those transactions with
no readily available quoted prices, predominantly over the counter transactions,
market values were determined by reference to independently sourced rates, using
valuation models. If market observable data was not available, the entire initial
change in fair value indicated by the valuation model, but based on unobservable
inputs, was not recognised immediately in the income statement. This amount was
held back and recognised over the life of the transaction where appropriate,
or released to the income statement when the inputs became observable, or when
the transaction matured or was closed out. Adjustments were made for illiquid
positions where
appropriate.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assets,
        including gains, resulting from derivative exchange rate, interest rate,
        equities, credit derivative and commodity contracts which were marked
        to market were included in &#145;Derivatives&#146; on the assets side
        of the balance sheet. Liabilities, including losses, resulting from such
        contracts, were included in &#145;Derivatives&#146; on the liabilities
    side of the balance sheet.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><i>Non-trading
    transactions</i></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Non-trading
        transactions, which were those undertaken for hedging purposes as part
        of HSBC&#146;s risk management strategy against cash flows, assets, liabilities
        or positions, were measured on an accrual basis. Non-trading transactions
        included qualifying hedges and positions that synthetically altered the
    characteristics of specified financial instruments.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-trading
        transactions were accounted for on an equivalent basis to the underlying
        assets, liabilities or net positions. Any gain or loss arising was recognised
        on the same basis as that arising from the related assets, liabilities
    or positions.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P align="center"><FONT size=2 face="TUniversLT55,Arial,Helvetica,sans-serif">364</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p365"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="middle">
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">To qualify
        as a hedge, a derivative was required effectively to reduce the price,
        foreign exchange or interest rate risk of the asset, liability or anticipated
        transaction to which it was linked and be capable of designation as a
        hedge at inception of the derivative contract. Accordingly, changes in
        the market value of the derivative were required to be highly correlated
        with changes in the market value of the underlying hedged item at inception
        of the hedge and over the life of the hedge contract. If these criteria
        were met, the derivative was accounted for on the same basis as the underlying
        hedged item. Derivatives used for hedging purposes included swaps, forwards
        and futures. Interest rate swaps were also used to alter synthetically
        the interest rate characteristics of financial instruments. In order
        to qualify for synthetic alteration, a derivative instrument had to be
        linked to specific individual, or pools of similar, assets or liabilities
        by the notional principal and interest rate risks of the associated instruments,
        and had to achieve a result that was consistent with defined risk management
        objectives. If these criteria were met, accruals-based accounting was
        applied, that is income or expense was recognised and accrued to the
        next settlement date in accordance with the contractual terms of the
    agreement.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Any gain
        or loss arising on the termination of a qualifying derivative was deferred
        and amortised to earnings over the original life of the terminated contract.
        When the underlying asset, liability or position was sold or terminated,
        the qualifying derivative was immediately marked to market and any gain
    or loss arising was taken to the income statement.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Insurance
    contracts</b></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> The
        value of in-force long-term assurance business was determined by discounting
        future earnings expected to emerge from business then in force, using
        appropriate assumptions in assessing factors such as recent experience
        and general economic conditions. Movements in the value of in-force long-term
        assurance business were included in &#145;Other operating income&#146; on
    a gross of tax basis.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>Debt
    securities in issue and subordinated liabilities</b></font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities
        in issue were initially measured at fair value, which was the consideration
        received net of transaction costs incurred. Premiums and discounts on
        the issue of debt and fair value adjustments to debt arising on acquisitions
        were amortised to interest payable so as to give a constant interest
        rate over the life of the debt. Where debt was callable, either by HSBC
        or the holder, the premium or discount was amortised over the period
    to the earliest call date.</font></td>
  </tr>
  <tr align="left" valign="middle">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">365</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p366"></a>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents">Back
to Contents</a></font></p>
</font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td width="3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(h)</font></td>
    <td colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Impact
        of the transition
to IFRSs on the financial position of HSBC Holdings</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="3"><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>Reconciliation
          of previously reported shareholders&#146; funds under UK GAAP to total
          shareholders&#146; equity
under IFRSs at 31 December 2004</font></b><font size=2>&nbsp; <b>and
1 January 2004</b></font></font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD rowspan="5" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
        <TD rowspan="5" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </font></TD>
        <TD align=right>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">At</font></TD>
        <TD width=2% rowspan="5" align=left>&nbsp; </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At</font></TD>
        <TD rowspan="5" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    </font></TD>
</TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    31 December</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1 January</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2004</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2004</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD width=6% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Shareholders&#146; funds as previously reported under UK GAAP</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    86,623</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,473</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Dividends</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,662</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,377</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investments in subsidiaries</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (38,172</font></TD>
        <TD align=left>
      <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">)</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (26,388</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total shareholders&#146; equity under IFRSs</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp; </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> For
      an explanation of the main differences between UK GAAP and IFRSs applicable
    to HSBC Holdings, see Note (b).</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>HSBC Holdings balance sheet at 31 December 2004</B></font></TD>
        <TD>&nbsp;      </TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD colspan="2" rowspan="4"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">        <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>  </font></TD>
        <TD rowspan="2" align=right valign="bottom"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">    UK
    GAAP</font></TD>
        <TD rowspan="4" align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Effect of</font></TD>
        <TD rowspan="4"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">      <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs</font></TD>
    <TD rowspan="4"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
  transition</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (except IAS 32</font></TD>
  </TR>
<TR align="left" valign="top">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs format</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    to IFRSs</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    and IAS 39)</font></TD>
  </TR>
<TR align="left" valign="top">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
  </TR>
<TR align="left" valign="top">
  <TD width=6%><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>ASSETS</B></font></TD>
        <TD align=right>&nbsp;  </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Cash at bank and in hand &#8211; balances with HSBC undertakings</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
    <TD width=2% bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,643</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,643</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    16,917</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (281</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    16,636</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial investments</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investments in subsidiaries</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    94,885</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (39,217</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    55,668</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Property, plant and equipment</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other assets</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    632</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    632</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Prepayments and accrued income</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    48</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (43</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    116,258</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (39,541</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    76,717</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right></TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>LIABILITIES AND EQUITY</B></font></TD>
        <TD align=right>&nbsp;  </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Liabilities</B></font></TD>
        <TD align=right>&nbsp;  </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,352</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,352</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other liabilities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,214</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (3,016</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,198</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Accruals and deferred income</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    172</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    172</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Deferred taxation</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    75</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (11</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    64</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Subordinated liabilities</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    17,812</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    17,812</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    29,635</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (3,027</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    26,608</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right></TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Equity</B></font></TD>
        <TD align=right>&nbsp;  </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Called up share capital</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Share premium account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Merger reserve and other reserves</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><b>
    <FONT size=2>&#8211;</FONT></b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other reserves</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    69,362</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (67,622</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,740</font></TD>
    <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Retained earnings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,793</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,166</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,959</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    86,623</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (36,514</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    116,258</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (39,541</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    76,717</font></TD>
    <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right></TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">366</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p367"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>HSBC Holdings balance sheet at 1 January 2004</B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size="2">&nbsp;</font>

        </b></font></TD>
        <TD align=right></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size="2">&nbsp;</font>

        </b></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Effect of</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    UK GAAP</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    transition</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (except IAS 32</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    IFRSs format</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    to IFRSs</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    and IAS 39)</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>ASSETS</B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size="2">&nbsp;</font>

        </b></font></TD>
        <TD align=right></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD width=6%>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Cash at bank and in hand &#8211; balances with HSBC undertakings</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    743</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    743</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,978</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (197</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,781</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial investments</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,175</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,175</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investments in subsidiaries</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    79,326</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (27,412</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51,914</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Property, plant and equipment</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other assets</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    588</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    588</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Prepayments and accrued income</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    44</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (44</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    97,757</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (27,653</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    70,104</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>LIABILITIES AND EQUITY</B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size="2">&nbsp;</font>

        </b></font></TD>
        <TD align=right></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Liabilities</B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size="2">&nbsp;</font>

        </b></font></TD>
        <TD align=right></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,179</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,179</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other liabilities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,936</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2,627</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,309</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Accruals and deferred income</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    223</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    223</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Deferred taxation</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    93</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (11</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    82</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Subordinated liabilities</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,815</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,815</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    23,284</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2,638</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    20,646</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Equity</B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size="2">&nbsp;</font>

        </b></font></TD>
        <TD align=right></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Called up share capital</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,481</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,481</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Share premium account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,406</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,406</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Merger reserve and other reserves</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><b>
    <FONT size=2>&#8211;</FONT></b></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other reserves</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    57,526</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (55,867</font></TD>
        <TD><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,659</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Retained earnings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,060</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,910</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,970</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,473</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (25,015</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
<TR align="left" valign="bottom">
  <TD>&nbsp;</TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    97,757</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (27,653</font></TD>
        <TD bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    70,104</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR align="left" valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>

<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">367</FONT></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p368"></a>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents">Back
to Contents</a></font></p>
</font>

<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=left>&nbsp;</TD>
  <TD colspan=4 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=left><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>HSBC
        Holdings balance sheet at 31 December 2004</font></b><br>
  </font></TD>
  <TD colspan=4 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=4 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD colspan="13" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Adjustments
      to conform HSBC Holdings balance sheet under UK GAAP at 31 December 2004
    to its accounting policies under IFRSs are set out below:</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD colspan="3" rowspan="4" align=left>&nbsp;</TD>
  <TD rowspan="3" align=right valign="bottom"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><br>
    </FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">UK</font><FONT size=2> GAAP</FONT></font></TD>
  <TD rowspan="4" align=left>&nbsp;</TD>
  <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of transition to IFRSs&nbsp;&nbsp;</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD rowspan="4" align=left>&nbsp;</TD>
  <TD rowspan="3" align=right valign="bottom"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">IFRSs</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <br>
(except<br>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> IAS 32<br>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> and IAS
39)</font></TD>
  <TD rowspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left><hr size="1" noshade>
  </TD>
</TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></TD>
  <TD rowspan="2" align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Investments</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <br>
in<br>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> subsidiaries</font></TD>
  <TD rowspan="2" align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other</font></TD>
  <TD rowspan="2" align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total</font></TD>
</TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>FIXED
        ASSETS</b></font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Tangible
    assets</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Investments:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD width=6% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width=3% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    shares in HSBC undertakings</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    94,885</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (39,217</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (39,217</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    55,668</font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    loans to HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,712</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,045</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,045</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,757</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    debt
securities of HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other investments other than loans</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    581</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    581</font></TD>
    <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    102,065</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (38,172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (38,172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    63,893</font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>CURRENT
        ASSETS</b></font></TD>
  <TD width="8%" align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
  <TD width="8%" align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
  <TD width="8%" align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
  <TD width="8%" align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
  <TD width="8%" align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
  <TD width="8%" align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Debtors:</font><font face="TimesNewRoman,Times New Roman,Times,serif"><br>
  </font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD width="6%" align=left>&nbsp;</TD>
        <TD width="3%" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;  </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    money
market deposits with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,036</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,036</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> other
            amounts owed by HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,131</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,354</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,326</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,805</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    amounts owed by HSBC undertakings</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (falling due after more than 1 year)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,680</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,680</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other debtors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    100</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (43</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (43</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    57</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    13,947</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,354</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,369</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,578</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Cash
    at bank and in hand:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    balances with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,193</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,354</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,369</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,824</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>CREDITORS:
    amounts falling due within 1 year</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD colspan=3 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp; &nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Amounts
    owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (858</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (858</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Other
    creditors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (191</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (191</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Dividends
    declared</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4,205</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,016</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,016</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,189</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,254</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,016</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,016</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2,238</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>NET CURRENT ASSETS</b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,939</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,662</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,647</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10,586</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>TOTAL ASSETS LESS CURRENT LIABILITIES</b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    111,004</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,662</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (38,172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (36,525</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,479</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>CREDITORS:
    amounts falling due after more than 1 year</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Subordinated
    liabilities:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    owed to third parties</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (9,669</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (9,669</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    owed to HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (8,143</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (8,143</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Amounts
    owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,494</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,494</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>PROVISIONS FOR LIABILITIES AND CHARGES</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Deferred
    taxation</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (75</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (64</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>NET ASSETS</b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    86,623</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,662</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (38,172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (36,514</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>CAPITAL AND RESERVES</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Called
    up share capital</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Share
    premium account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Revaluation
    reserve</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    68,963</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (40,021</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (40,021</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Reserve
              in respect of obligations under subsidiary
    share options</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    399</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,299</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    42</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,341</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,740</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Profit
    and loss account</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,793</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,662</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    550</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (46</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,166</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,959</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    86,623</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,662</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (38,172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (36,514</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
368</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p369"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=left><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>HSBC
        Holdings balance sheet at 1 January 2004</font></b><br>
  </font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="13" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Adjustments
        to conform HSBC Holdings balance sheet under UK GAAP at 1 January 2004
    to its accounting policies under IFRSs are set out below:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=3 align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD colspan="3" rowspan="4" align=left>&nbsp;</TD>
  <TD rowspan="3" align=right valign="bottom"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2><br>
    </FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">UK </font><FONT size=2>GAAP</FONT></font></TD>
  <TD rowspan="4" align=left>&nbsp;</TD>
  <TD colspan="7" align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Effect
      of transition to IFRSs&nbsp;&nbsp;</FONT><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD rowspan="4" align=left>&nbsp;</TD>
  <TD rowspan="3" align=right valign="bottom"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">IFRSs</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <br>
(except<br>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> IAS 32<br>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> and IAS
39)</font></TD>
  <TD rowspan="4" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left><hr size="1" noshade></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Dividends</font></TD>
  <TD rowspan="2" align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Investments</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <br>
in<br>
</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> subsidiaries</font></TD>
  <TD rowspan="2" align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other</font></TD>
  <TD rowspan="2" align=left>&nbsp;</TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> US&#36;m</font></TD>
  </TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>FIXED
        ASSETS</b></font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Tangible
    assets</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Investments:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD width=6% align=left></TD>
        <TD width="3%" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">shares in HSBC undertakings</FONT></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79,326</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27,412</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(27,412</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51,914</FONT></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    loans to HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,788</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,024</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,024</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,812</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">debt
    securities of HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 1,175</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 1,175</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left>
<div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">other
    investments other than loans &nbsp;</font></div></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    537</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    537</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    84,828</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (26,388</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (26,388</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    58,440</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>CURRENT
    ASSETS</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Debtors:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> money market
    deposits with HSBC </font><FONT size=2>undertakings</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,995</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,995</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">other amounts
    owed by HSBC </font><FONT size=2>undertakings</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,526</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,250</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    29</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,221</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,305</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    amounts owed by HSBC undertakings</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (falling due after more than 1 year)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,412</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,412</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other debtors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    95</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (44</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (44</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,028</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,250</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,265</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10,763</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Cash
    at bank and in hand:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    balances with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,929</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,250</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,265</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,664</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>CREDITORS:
    amounts falling due within 1 year</b> </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Amounts
    owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (700</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (700</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Other
    creditors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (261</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (261</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Dividends
    declared</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (3,936</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,627</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,627</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,309</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4,897</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,627</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,627</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2,270</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>NET
    CURRENT ASSETS</b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,032</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,377</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,362</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,394</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>TOTAL ASSETS LESS CURRENT LIABILITIES</b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    92,860</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,377</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (26,388</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (25,026</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    67,834</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>CREDITORS:
    amounts falling due after more &nbsp;than 1 year</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Subordinated
    liabilities</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    owed to third parties</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,970</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,970</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    owed to HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,845</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,845</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Amounts
    owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,479</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,479</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan=2 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>PROVISIONS FOR LIABILITIES AND CHARGES</b></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Deferred
    taxation</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (93</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (82</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>NET ASSETS</b></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,473</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,377</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (26,388</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (25,015</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><b>CAPITAL
    AND RESERVES</b></font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Called
    up share capital</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,481</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,481</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Share
    premium account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,406</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,406</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Revaluation
    reserve</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    57,041</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (28,099</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (28,099</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Reserve
                in respect of obligations under&nbsp;subsidiary
    share options</font></div></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    485</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,163</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,174</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,659</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
        <TD align=left>&nbsp;</TD>
        <TD colspan=2 align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Profit
    and loss account</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,060</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,377</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    548</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (15</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,910</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,970</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,473</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,377</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (26,388</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (25,015</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>

<p align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">369</font></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p370"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD width=2% align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Analysis
        of the effect of IAS 1 'Presentation of Financial Statements' on the
        financial position of HSBC Holdings at 31 December 2004 and 1 January
    2004</b></font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="8" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>HSBC
        Holdings balance sheet at 31 December 2004 under IFRSs (except IAS 32
    and IAS 39)</i> </font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>IFRSs numbers in UK GAAP format</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Reclassification</B>
        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>IFRSs numbers in IFRSs format</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>ASSETS</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>ASSETS</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>Fixed assets</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Cash
              at bank and in hand &#8211; balances with HSBC undertakings</font></div></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD width=6% align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Tangible assets</font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2</font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD width=9% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=2% align=left>&nbsp;</TD>
        <TD width=25% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD width=2% align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,643</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,643</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    16,636</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    16,636</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances to HSBC undertakings</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Investments:</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial investments</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    shares in HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    55,668</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    55,668</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investments in subsidiaries</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    loans to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,757</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,757</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    debt securities of HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,885</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> other
    investments other than loans</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    581</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (581</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Property, plant and equipment</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    632</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    632</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other assets</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Prepayments and accrued income</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    63,893</font></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>Current assets</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Debtors:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    money market deposits with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,036</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (7,036</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other amounts owed by HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3,805</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (3,805</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">amounts
              owed by HSBC undertakings (falling due after more than 1 year)</font></div></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 1,680</font></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> (1,680</font></TD>
        <TD align=left valign="bottom" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=center>&nbsp;</TD>
        <TD align=center>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> other
    debtors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    57</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (57</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,578</font></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Cash at bank and in hand</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    balances with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (246</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,824</font></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    76,717</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Total assets</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
370</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p371"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>HSBC
          Holdings balance sheet at 31 December 2004 under IFRSs (except IAS
    32 and IAS 39) (continued)</i> </font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>IFRSs
    numbers in UK GAAP format</b></font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD width=2% align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Reclassification</B>
        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>IFRSs numbers in IFRSs format</B></font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>LIABILITIES AND EQUITY</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Creditors:
    amounts falling due within 1 year</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Liabilities</B></font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD width=6% align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Amounts
    owed to HSBC undertakings</font></TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    858</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,494</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=9% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,352</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width=25% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Other
    creditors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    191</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (191</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Dividends
    declared</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,189</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,198</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other liabilities</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    172</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Accruals and deferred income</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    64</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    64</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Deferred taxation</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=center>&nbsp;</TD>
        <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 2,238</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
    <TD align=center bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Net
    current assets</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10,586</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Total
    assets less current liabilities</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    74,479</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Creditors:
    amounts falling due after more than 1 year</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
    liabilities</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    17,812</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    17,812</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Subordinated liabilities</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">owed
    to third parties</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,669</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (9,669</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">owed
    to HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,143</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (8,143</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Amounts
    owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,494</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,494</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Provisions
    for liabilities and charges</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Deferred
    taxation</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    64</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (64</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    26,608</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total liabilities</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Net
    assets</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>Capital
    and reserves</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Equity</B></font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Called
    up share capital</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Called up share capital</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Share
    premium account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Share premium account</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Revaluation
    reserve</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Merger reserve and other reserves</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reserve
    in respect of obligations under subsidiary share options</font></div></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,740</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,740</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other reserves</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Profit
    and loss account</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,959</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,959</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Retained earnings</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total equity</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    76,717</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total equity and liabilities</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
371</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p372"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD width=2% align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="6" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>HSBC
        Holdings balance sheet at 1 January 2004 under IFRSs (except IAS 32 and
    IAS 39)</i> </font></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>IFRSs numbers in UK GAAP format</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Reclassification</B>
        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>IFRSs numbers in IFRSs format</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><B>ASSETS</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>ASSETS</B></font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>Fixed assets</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Cash
    at bank and in hand &#8211; balances with HSBC undertakings</font></div></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD width=6% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Tangible assets</font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD width=2% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width=9% align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (2</font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD width=9% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD width=2% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD width=25% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD width=2% align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    743</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    743</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,781</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    14,781</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Loans and advances to HSBC undertakings</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Investments:</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,175</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,175</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial investments</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> shares
    in HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51,914</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51,914</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investments in subsidiaries</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    loans to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,812</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (4,812</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    debt securities of HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,175</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,175</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other investments other than loans</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    537</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (537</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Property, plant and equipment</font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    588</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    588</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other assets</font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    58,440</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <B>Current assets</B></font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      Debtors:</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    money market deposits with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,995</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,995</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    other amounts owed by HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,305</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,305</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">amounts
    owed by HSBC undertakings (falling due after more than 1 year)</font></div></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 2,412</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> (2,412</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> other
    debtors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (51</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10,763</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Cash at bank and in hand</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    balances with HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    901</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (901</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    11,664</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;

        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    70,104</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Total assets</B></font></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;</font></TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
372</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p373"></a><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
<p><a href="#contents">Back to Contents</a></p>
</font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <I>HSBC
        Holdings balance sheet at 1 January 2004 under IFRSs (except IAS 32 and
    IAS 39) (continued)</I> </font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD width="2%" align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>IFRSs numbers in UK GAAP format</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Reclassification</B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>IFRSs numbers in IFRSs format</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>LIABILITIES AND EQUITY</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Creditors: amounts falling due within 1 year</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Liabilities</B></font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD width="6%" align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
        <TD width="9%" align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    700</font></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="9%" align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,479</font></TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width="9%" align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,179</font></TD>
        <TD width="2%" align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="25%" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
    <TD width="2%" align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other creditors</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    261</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (261</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    38</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Dividends declared</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,309</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,309</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other liabilities</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    223</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    223</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Accruals and deferred income</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    82</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    82</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Deferred taxation</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR valign="top">
        <TD align=center>&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 2,270</font></TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Net current assets</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    9,394</font></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Total assets less current liabilities</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    67,834</font></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Creditors: amounts falling due after more than 1 year</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Subordinated liabilities</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,815</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    12,815</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Subordinated liabilities</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">     owed to third parties</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,970</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,970</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">     owed to HSBC undertakings</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    6,845</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (6,845</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,479</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (5,479</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=center>&nbsp;</TD>
  <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> 18,294</font></TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=center bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Provisions for liabilities and charges</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Deferred taxation</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    82</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (82</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    20,646</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total liabilities</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Net assets</B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left valign="top">&nbsp;</TD>
  <TD colspan="2" align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top"><hr size="1" noshade></TD>
  <TD align=left valign="top"></TD>
  <TD align=left valign="top"></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left valign="top">&nbsp;</TD>
  <TD colspan="2" align=left valign="top" bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Capital and reserves</B></font></TD>
        <TD align=left valign="top" bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left valign="top" bgcolor="#eeeeee"></TD>
        <TD align=left valign="top" bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Equity</B></font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Called up share capital</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,481</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,481</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Called up share capital</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Share premium account</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,406</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,406</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Share premium account</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Revaluation reserve</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Merger reserve and other reserves</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Reserve
    in respect of obligations under subsidiary share options</font></div></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,659</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,659</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other reserves</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Profit and loss account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,970</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,970</font></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Retained earnings</font></TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    49,458</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total equity</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left></TD>
  <TD align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    70,104</font></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total equity and liabilities</font></TD>
    <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
373</font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p374"></a>
<p><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents">Back
to Contents</a></font></p>
</font>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></p>
<P><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes on the Financial
      Statements </FONT></B><FONT size=2 face="Arial, Helvetica, sans-serif">(continued)</FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <b>Key
        impact analysis of adopting IAS 32 and IAS 39 on HSBC Holdings&#146; opening
    balance sheet as at 1 January 2005</b></font><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Reconciliation
        of previously reported shareholders&#146; funds under UK GAAP to total
        shareholders&#146; equity
under IFRSs at 1 January 2005</i></font><font size="2">&nbsp;</font></TD>
  <TD align=right><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="2" rowspan="4" align=left><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font><font size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    </TD>
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    At</font></TD>
        <TD rowspan="4" align=left><font size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1 January</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2005</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=6% align=left><font size="2">&nbsp;</font></TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Shareholders&#146; funds as previously reported under UK GAAP</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    86,623</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Non IAS 32, and IAS 39 adjustments</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (36,514</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total shareholders&#146; equity under IFRSs excluding IAS 32 and IAS 39</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>IAS 32 and IAS 39 adjustments</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investment securities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    464</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Fair value option</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (317</font></TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total shareholders&#146; equity under IFRSs</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,256</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left><font size="2">&nbsp;</font></TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><hr size="1" noshade>      <font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> For
      an explanation of the items included in the above reconciliation, see Note
    (e).</font></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Reconciliation
        of HSBC Holdings&#146; balance sheets at 31 December 2004 and 1 January
    2005</i></font></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Adjustments
      to HSBC Holdings&#146; balance sheet under IFRSs at 31 December 2004 to
      incorporate its accounting policies under IFRSs at 1 January 2005 are set
    out below:</font></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD colspan="3" rowspan="3" align=left>&nbsp;</TD>
  <TD rowspan="3" align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
      at</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
      <br>
31 December</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2004</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <br>
US&#36;m</font></TD>
        <TD rowspan="3" align=right></TD>
        <TD colspan=7 align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Effect
    of adopting IAS 32 and IAS 39</font><font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    </TD>
        <TD rowspan="3" align=left><font size="2">&nbsp;</font>   <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD rowspan="3" align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
            at</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
        <br>
1 January</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2005</font><font face="TimesNewRoman,Times New Roman,Times,serif"><br>
    <FONT size=2>US&#36;m</FONT></font></TD>
    <TD rowspan="3" align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=right><hr size="1" noshade></TD>
  </TR>
<TR valign="bottom">
  <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investment</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    securities</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    US&#36;m</font></TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Fair</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <br>
value</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <br>
US&#36;m</font></TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Reclassifi-</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    cations</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <br>
US&#36;m</font></TD>
        <TD align=left><font size="2">&nbsp;</font>       <font size="2">&nbsp;</font>    <font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Total</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <br>
US&#36;m</font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>ASSETS</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Cash at bank and in hand:</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=6% align=left>&nbsp;</TD>
  <TD width=3% align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">balances
    with HSBC undertakings</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    246</font></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,643</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    491
        </font></TD>
        <TD align=left valign="top"><font size="2">&nbsp;</font>

          <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    491</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,134</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances to HSBC </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    16,636</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    16,636</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Financial investments</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,885</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,244</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,728</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,972</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,857</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Investment in subsidiaries</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    55,668</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,728</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (1,728</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    53,940</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Property, plant and equipment</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other assets</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    632</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (581</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (581</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    51</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Prepayments and accrued income</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total assets</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    76,717</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    663</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    491</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,154</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    77,871</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>LIABILITIES AND EQUITY</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Liabilities</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Amounts owed to HSBC undertakings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,352</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    7,352</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Derivatives</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    10</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    72
        </font></TD>
        <TD align=left valign="top"><font size="2">&nbsp;</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>1</sup></font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    72</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    82</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other liabilities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,198</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,198</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Accruals and deferred income</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    172</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    172</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Deferred taxation</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    64</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    199</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (136</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    63</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    127</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Financial
    liabilities designated at</font><FONT size=2> fair value</FONT></font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    13,908
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"><sup>2</sup></font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    13,908</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    13,908</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Subordinated liabilities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    17,812</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (13,036</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
)<SUP>2</SUP>&nbsp;
        </font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (13,036</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,776</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total liabilities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    26,608</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    199</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    808</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,007</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    27,615</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    <B>Equity</B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
    <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Called up share capital</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    5,587</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Share premium account</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4,881</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Merger reserve and other reserves</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    28,942</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Other reserves</font></TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,740</font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    464</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    464</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2,204</font></TD>
    <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Retained earnings</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,959</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (317</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (317</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    8,642</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total equity</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,109</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    464</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    (317</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    )</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    147</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    50,256</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    Total equity and liabilities</font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    76,717</font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    663</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    491</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    &#8211;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1,154</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    77,871</font></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">1</font></TD>
  <TD align=left><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Derivatives
    and hedge accounting.</i> </font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="1" face="TimesNewRoman,Times New Roman,Times,serif">2</font></TD>
  <TD align=left><font size="1" face="TimesNewRoman,Times New Roman,Times,serif"> <i>Fair
    value option</i>.</font></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<P align="center"><font size="2" face="UniversLT55,Arial,Helvetica,sans-serif">
374</font></P>

<hr noshade align="center" width="100%" size="2">



<div style="page-break-before:always"></div><page><a name="p375"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">47</font></b></td>
    <td colspan="2" valign="top"><p><b><font size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Differences
    between IFRSs and US GAAP</font></b></p></td>
  </tr>
  <tr>
    <td colspan="3"><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The consolidated
        financial statements of HSBC are prepared in accordance with IFRSs which
        differ in certain significant respects from US GAAP. The following is
        a summary of the
significant differences applicable to HSBC.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Shareholders&#146; interest
    in the long-term assurance fund</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRS
        4 permits entities to continue to account for insurance contracts under
        guidance issued under previous GAAP until a comprehensive standard relating
    to the measurement of insurance assets and liabilities is developed.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under UK
        GAAP and, hence, current IFRSs, the value placed on HSBC&#146;s interest
        in long-term assurance business includes a valuation of the discounted
        future earnings expected to emerge from business currently in force,
        using appropriate assumptions in assessing factors such as recent experience
        and general economic conditions, together with the surplus retained in
        the long-term assurance funds. The assumptions are determined annually
    in consultation with independent actuaries.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Movements
        in the value of in-force long-term assurance business are included in &#145;Other
    operating income&#146; on a gross of tax basis.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><p><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
      GAAP</font></b></p>
    </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The net
        present value of future earnings is not recognised. Acquisition costs
        and fees are deferred and amortised in accordance with Statement of Financial
        Accounting Standard (&#145;SFAS&#146;) 97 &#145;Accounting and Reporting
        by Insurance Enterprises for Certain Long-duration Contracts and for
        Realised Gains and Losses
from the Sale of Investments&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        US GAAP, shareholders' equity is lower than under IFRSs because the present
    value of in-force long-term assurance business is not recognised.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">This
        effect is partly offset by the treatment of acquisition costs, which
        are
deferred and amortised under US GAAP but are written off immediately as an expense
    of long-term assurance business under IFRSs.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Long-term
    assurance assets and liabilities</font></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term
        assurance fund assets, excluding own shares held, are classified according
        to the nature of the asset, for example, financial investments, unless
        designated at fair value. The accounting for these assets is consistent
    with other holdings of similar assets.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
        attributable to policyholders under insurance contracts are recognised
        in accordance
with IFRS 4 and appropriate actuarial principles as &#145;Liabilities under insurance
contracts issued&#146;. Liabilities attributable to policyholders under linked
investment contracts are recognised at fair value as
financial liabilities under &#145;Financial liabilities designated at fair value&#146;.
Prior to 1 January 2005, both types of contract were recognised as &#145;Liabilities
to policyholders under long-term assurance business&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
      GAAP</font></b></p>
    </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        the Statement of Position issued by the American Institute of Certified
        Public Accountants (&#145;AICPA&#146;) 03-1 (&#145;SOP 03-1&#146;), &#145;Accounting
        and Reporting by Insurance Enterprises for Certain Non-traditional and
        Long-duration Contracts and for Separate Accounts&#146;, which became
        fully effective in 2004, when long-term assurance assets qualify for
        separate accounting they are measured at fair value and are reported
        in the financial statements as a summary total, with an equivalent summary
        total for related liabilities. Otherwise, assets that do not qualify
        for separate accounting and that represent policyholders&#146; funds
        are accounted for and recognised as general account assets, that is consistent
        with other holdings of similar assets. Any related liability is accounted
        for as a
general account liability.</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">375</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p376"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term
        assurance assets that are recorded in accounts meeting the definition
        of &#145;separate accounts&#146; in SOP</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">03-1 are measured at fair value through net income and disclosed
        in a single line, &#145;Other assets&#146;, in the US</font>      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAAP balance
    sheet.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Pension costs</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS 19 &#145;Employee
        Benefits&#146; (&#145;IAS 19&#146;) requires pension liabilities to be
        assessed on the basis of current actuarial</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">valuations performed on each plan, and pension assets to be
        measured at fair value. The net pension surplus or</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">deficit,
        representing the difference between plan assets and liabilities, is recognised
    on the balance sheet.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In accordance
        with IAS 19 (revised 2004), HSBC has elected to record all actuarial
        gains and losses on the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">pension
        surplus or deficit in the year in which they occur within the &#145;Consolidated
        statement of recognised</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
    and expense&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFAS 87, &#145;Employers&#146; Accounting
        for Pensions&#146;, prescribes a similar method of actuarial valuation
        for pension</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">liabilities and requires the measurement of plan assets at
    fair value.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When the
        value of benefits accrued based on employee service up to the balance
        sheet date (the accumulated</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">benefit
        obligation) exceeds the value of plan assets, HSBC recognises an additional
        minimum pension liability to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        extent that the excess is greater than any accrual already established
    for unfunded pension costs.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFAS 87
        does not permit recognition of all actuarial gains and losses in a statement
        other than the primary</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
        statement. As permitted by US GAAP, HSBC uses the 'corridor method',
        whereby actuarial gains and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">losses
        outside a certain range are recognised in the income statement in equal
        amounts over the remaining</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">service
        lives of current employees. That range is 10 per cent of the greater
        of plan assets and plan liabilities. The</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">remaining additional minimum
        pension liability is recognised directly in &#145;Other comprehensive
    income&#146;.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income
        under US GAAP is lower than under IFRSs as a result of the amortisation
        of the amount by which</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">actuarial
    losses exceed gains beyond the 10 per cent 'corridor'.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders'
        equity under US GAAP is higher than under IFRSs because deficits recognised
        under IFRSs (to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        extent they exceed surpluses) are greater than the minimum pension liability
    recognised under US GAAP.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Stock-based
    compensation</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRS
        2, &#145;Share-based Payment&#146;, requires that when annual bonuses
        are paid in restricted shares and the</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">employee must remain with the employer for a fixed period
        in order to receive the shares, the award is expensed</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">over
    that period.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
        awards made before 1 July 2005, SFAS 123, &#145;Accounting for Stock-based
        Compensation&#146;, (&#145;SFAS 123&#146;)</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">requires that compensation cost be recognised over the period(s)
        in which the related employee services are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">rendered.
        HSBC has interpreted this service period as the period to which the bonus
    relates.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For
        2005 bonuses awarded in early 2006, HSBC will follow SFAS 123 (revised
        2004) &#145;Share-based Payment&#146;</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">(&#145;SFAS 123R&#146;). SFAS 123R is consistent with IFRS
        2 in requiring that restricted bonuses are expensed over the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">period
        the employee must remain with HSBC. However, SFAS 123R only applies to
        awards made after the date</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
    adoption, which for HSBC is 1 July 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Some
        of the bonuses awarded in respect of 2002, 2003 and 2004 were recognised
        over the relevant vesting</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">period
        and
were, therefore, expensed in &#145;Net income&#146; under IFRSs during 2005.
Under US GAAP, these awards</font></td>
  </tr>
</table>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">376</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p377"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">were expensed
        in the years for which they were granted. 2005 bonuses will be expensed
        over the vesting period</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">under
        both IFRSs and US GAAP. Net income was, therefore, higher under US GAAP
    in 2005.</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs and
        US GAAP are now largely aligned and this transition difference will be
    eliminated over the next few</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">years.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Goodwill,
    purchase accounting and intangible assets</font></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prior
        to 1998, goodwill under UK GAAP was written off against equity. HSBC
        did not elect to reinstate this</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">goodwill
        on its balance sheet upon transition to IFRSs. From 1 January 1998 to
        31 December 2003, goodwill</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">was
        capitalised and amortised over its useful life. The carrying amount of
        goodwill
existing at 31 December</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003
under UK GAAP was carried forward under the transition rules of IFRS 1 from 1
January 2004, subject to</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">certain adjustments.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRS 3 &#145;Business
        Combinations&#146; requires that goodwill should not be amortised but
        should be tested for</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">impairment at least annually at the reporting unit level by
    applying a test based on recoverable amounts.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Quoted
        securities issued as part of the purchase consideration are valued for
        the purpose of determining the cost</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        the acquisition at their market price on the date the transaction is
    completed.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Up to
        30 June 2001, goodwill acquired was capitalised and amortised over its
        useful life, which could not exceed</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">25
        years. The amortisation of previously acquired goodwill ceased with effect
    from 31 December 2001.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Quoted
        securities issued as part of the purchase consideration are fair valued
        for the purpose of determining the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost
        of acquisition at their average market price over a reasonable period
        before and after the date on which the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">terms
    of the acquisition are agreed and announced.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total goodwill
        and shareholders&#146; equity are both higher under US GAAP than under
        IFRSs because, under US</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAAP,
        (i) pre-1998 goodwill is included on the balance sheet and (ii) the amortisation
        of goodwill ceased on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">31
    December 2001 compared with 31 December 2003 under IFRSs.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">However,
        goodwill on the acquisition of HSBC Finance in March 2003 is lower under
        US GAAP than under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs.
        This is principally the result of differences in the accounting for securitisations
        and intangibles. Under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs,
        previously recognised gains on the sale of assets to securitisation vehicles
        are eliminated and the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">securitised
        assets are recognised on balance sheet. However, because HSBC elected
        not to restate business</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">combinations prior to 1 January
        2004 on transition to IFRSs, a significant amount of intangible assets
        arising on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">acquisition
        were not recognised for IFRSs purposes. Under US GAAP, recognition of
    these assets was required.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Offsetting
        this was the recognition of a deferred tax liability under US GAAP in
    respect of these intangibles and</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">gains on sale of securitised assets.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effect
        of these items was further offset by the higher value under US GAAP of
        HSBC shares issued as part</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        the purchase consideration. The HSBC share price fell between the time
        of the announcement of the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">acquisition
        in November 2002 and its completion in March 2003, so the average price
        under US GAAP</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">exceeded
    the price on the date of acquisition under IFRSs.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Property</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        the transition rules of IFRS 1, HSBC elected to freeze the value of all
        its properties held for its own use at</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">their 1 January 2004 valuations, their &#145;deemed cost&#146; under
        IFRSs. They will not be revalued in the future. Assets</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">held
        at historical or deemed cost are
depreciated except for freehold land.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
        properties are carried at current market values with gains or losses
        thereon recognised in net income</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
    the period. Investment properties are not depreciated.</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">377</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p378"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></p>
<p> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td colspan="2" valign="top"><p><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US GAAP
        does not permit revaluations of property, including investment property,
        although it requires</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">recognition
        of asset impairment. Any realised surplus or deficit is, therefore, reflected
        in net income upon</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">disposal
        of the property. Depreciation is charged on all properties based on
cost.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        IFRSs, the value of property held for own use reflects revaluation surpluses
        recorded prior to 1 January</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004.
        Consequently, the values of tangible fixed assets and shareholders' equity
        are lower under US GAAP than</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">under
    IFRSs.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">There is
        a correspondingly lower depreciation charge and higher net income under
        US GAAP, partially offset by</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">higher
    gains (or smaller losses) on the disposal of fixed assets.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For investment
        properties, net income under US GAAP does not reflect the gain or loss
        recorded under IFRSs</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        the
period.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Derivatives
    and hedge accounting</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives are recognised initially, and are subsequently remeasured, at fair value. Fair values of exchange- traded derivatives are obtained from quoted market prices. Fair values of
OTC derivatives are obtained using valuation techniques, including discounted cash flow models and option pricing models.</FONT>        </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In the normal course of business, the fair value of a derivative on initial recognition is considered to be the transaction price (that is the fair value of the consideration given or
received). However, in certain circumstances the fair value of an instrument will be evidenced by comparison with other observable current market transactions in the same instrument (without modification or repackaging) or will be based on a
valuation technique whose variables include only data from observable markets, including interest rate yield curves, option volatilities and currency rates. When such evidence exists, HSBC recognises a trading gain or loss on inception of the
derivative. When unobservable market data have a significant impact on the valuation of derivatives, the entire initial change in fair value indicated by the valuation model is not recognised immediately in the income statement but is recognised
over the life of the transaction on an appropriate basis or recognised in the income statement when the inputs become observable, or when the transaction matures or is closed out.</FONT>      </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives may be embedded in other financial instruments; for example, a convertible bond has an embedded conversion option. An embedded derivative is treated as a separate derivative
when its economic characteristics and risks are not clearly and closely related to those of the host contract, its terms are the same as those of a stand-alone derivative, and the combined contract is not held for trading or designated at fair
value. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement.</FONT>      </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives are classified as assets when their fair value is positive, or as liabilities when their fair value is negative. Derivative assets and liabilities arising from different
transactions are only netted if the transactions are with the same counterparty, a legal right of offset exists, and the cash flows are intended to be settled on a net basis.</FONT>   </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226; </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The method of recognising the resulting fair value gains or losses depends on whether the derivative is held for trading, or is designated as a hedging instrument and, if so, the nature
of the risk being hedged. All gains and losses from changes in the fair value of derivatives held for trading are recognised in the income statement.
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When derivatives
are designated as hedges, HSBC classifies them as either: (i) hedges of the change
in fair value of recognised assets or liabilities or firm commitments (&#145;fair
value
hedge&#146;); (ii) hedges of the variability in highly probable future cash flows
attributable to a recognised asset or liability, or a forecast transaction (&#145;cash
flow hedge&#146;); or (iii) hedges of net investments in a foreign operation
(&#145;net investment hedge&#146;). Hedge accounting is applied to derivatives
designated as hedging instruments in a fair value, cash flow or net investment
hedge provided certain criteria are met.</FONT> </FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR>
<TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2>
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Hedge accounting</FONT></I>     </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD width="3%" valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">It is HSBC&#146;s policy to document, at the inception of a hedge, the relationship between the hedging instruments and hedged items, as well as the risk management objective and strategy
for undertaking the</FONT>      </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR></TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">378</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p379"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedge.
        The policy also requires documentation of the assessment, both at hedge
        inception and on an ongoing basis, of whether the derivatives used in
        the hedging transaction are highly effective in offsetting changes in
        fair values or cash flows of hedged items attributable to the hedged
        risks. Interest on designated qualifying hedges is included in &#145;Net
    interest income&#146;.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Fair
    value hedge</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Changes
        in the fair values of derivatives that are designated and qualify as
        fair value hedging instruments</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">are
        recorded in the income statement, together with changes in the fair values
        of the assets or liabilities or</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">groups
    thereof that are attributable to the hedged risks.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">If the
        hedging relationship no longer meets the criteria for hedge accounting,
        the cumulative adjustment to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        carrying amount of a hedged item is amortised to the income statement
        based on a recalculated effective</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">interest
        rate over the residual period to maturity, unless the hedged item has
        been derecognised whereby it is</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">released
    to the income statement immediately.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Cash
    flow hedge</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The effective
        portion of changes in the fair values of derivatives that are designated
        and qualify as cash flow</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedges
        are recognised in equity. Any gain or loss relating to an ineffective
        portion is recognised</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">immediately
    in the income statement.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts
        accumulated in equity are recycled to the income statement in the periods
        in which the hedged</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">item
        will affect the income statement. However, when the forecast transaction
        that is hedged results in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">recognition
        of a non-financial asset or a non-financial liability, the gains and
        losses
previously deferred in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">equity
are transferred from equity and included in the initial measurement of the cost
of the asset or liability.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When a
        hedging instrument expires or is sold, or when a hedge no longer meets
        the criteria for hedge</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting,
        any cumulative gain or loss existing in equity at that time remains in
        equity until the forecast</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">transaction
        is ultimately recognised in the income statement. When a forecast transaction
        is no longer</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">expected
        to occur, the cumulative gain or loss that was reported in equity is
    immediately transferred to the</font> <font size=2 face="TimesNewRoman,Times
New Roman,Times,serif">income statement.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Net
    investment hedge</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hedges
        of net investments in foreign operations are accounted for in a similar
        manner to cash flow hedges.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Any
        gain or loss on the hedging instrument relating to the effective portion
        of the hedge is recognised in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">equity;
        the gain or loss relating to the ineffective portion is recognised immediately
        in the income statement.</font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains and losses
accumulated in equity are included in the income statement on the disposal of
the foreign</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">operation.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Hedge
    effectiveness testing</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS 39
        requires that at inception and throughout its life, each hedge must be
        expected to be highly effective</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">(prospective effectiveness) to qualify for hedge accounting.
        Actual effectiveness (retrospective</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">effectiveness)
        must also be demonstrated on an ongoing
basis.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The documentation
        of each hedging relationship sets out how the effectiveness of the hedge
        is assessed. The</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">method
        HSBC entities adopt for assessing hedge effectiveness will depend on
    their risk management</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">strategies.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For prospective
        effectiveness, the hedging instrument must be expected to be highly effective
        in achieving</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">offsetting
        changes in fair value or cash flows attributable to the hedged risk during
        the period for which the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedge
        is designated. For retrospective effectiveness, the changes in fair value
        or cash flows must offset each</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
        in the range of 80 per cent to 125 per cent for the hedge to be deemed
    effective.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Derivatives
    that do not qualify for hedge accounting</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8211; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All gains
        and losses from changes in the fair value of any derivatives that do
        not qualify for hedge</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting
        are recognised immediately in the income statement. These gains and losses
        are reported in &#145;Net</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">trading
        income&#146;, except where derivatives are managed in conjunction with
    financial instruments designated</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">379</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p380"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">at fair
        value, in which case gains and losses are reported in &#145;Net income
        from financial instruments designated at fair value&#146;, other than
        interest settlements on derivatives used to hedge issues of own debt
    which are reported in &#145;Interest expense&#146;.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">From
    1 January 2004 to 31 December 2004</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Derivative
          financial instruments comprised futures, forward, swap and option transactions
          undertaken by HSBC</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">in the foreign exchange, interest rate, equity, credit derivative,
          and commodity markets that were held off</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">balance
          sheet. Netting was applied
where a legal right of set-off existed.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Accounting
          for these instruments was dependent upon whether the transactions were
    undertaken for trading or</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">non-trading purposes.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    transactions</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Trading
          transactions included transactions undertaken for market-making, to
    service customers&#146; needs and for</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">proprietary purposes, as well as any related hedges.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Transactions
          undertaken for trading purposes were marked to market and the net present
          value of any gain or</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">loss arising was recognised in the income statement as &#145;Trading
          income&#146;, after appropriate deferrals for</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">unearned
          credit margins and future servicing costs. Derivative trading transactions
          were valued by reference to</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">an
          independent liquid price where this was available. For those transactions
          with
no readily available quoted</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">prices,
predominantly over the counter transactions, market values were determined by
reference to</font></i> <i><font size=2
face="TimesNewRoman,Italic,Times New Roman,Times,serif">independently sourced
rates, using valuation models. If market observable data was not available, the
initial</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">increase in fair value indicated by the valuation model, but
based on unobservable inputs, was not recognised</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">immediately
in the income statement. This amount was held back and recognised over the life
of the transaction</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">where
appropriate, or released to the income statement when the inputs became observable,
or
when the</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">transaction
matured or was closed out. Adjustments were made for illiquid positions when
appropriate.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Assets,
          including gains, resulting from derivative exchange rate, interest
          rate, equities, credit derivative and</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">commodity contracts which were marked to market were included
          in &#145;Derivatives&#146; on the asset side of the</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">balance
          sheet. Liabilities, including losses, resulting from such contracts,
          were included in &#145;Derivatives&#146; on the</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">liability
    side of the balance sheet.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-trading
    transactions</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Non-trading
          transactions, which were those undertaken for hedging purposes as part
          of HSBC&#146;s risk</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">management strategy against cash flows, assets, liabilities
    or positions, were measured on an accrual basis.</font> <font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Non-trading
    transactions included qualifying hedges and positions that synthetically
    altered the characteristics</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">of specified financial instruments.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Non-trading
          transactions were accounted for on an equivalent basis to the underlying
          assets, liabilities or net</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">positions. Any gains or losses arising were recognised on
          the same basis as those arising from the related assets,</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">liabilities
          or
positions.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">To
          qualify as a hedge, a derivative was required effectively to reduce
          the price, foreign exchange or interest rate</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times
New Roman,Times,serif">risk of the asset, liability or anticipated transaction
          to which it was linked and be capable of designation as a</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">hedge
          at inception of the derivative contract. Accordingly, changes in the
          market value of the derivative were</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">required
          to be highly correlated to changes in the market value of the underlying
          hedged item at inception of the</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">hedge
          and over the life of the hedge contract. If these criteria were met,
          the derivative was accounted for on the</font></i> <i><font
size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">same basis as
          the underlying hedged item. Derivatives used for hedging purposes included
          swaps, forwards and</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">futures. Interest rate swaps were also used to alter synthetically
          the interest rate characteristics of financial</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">instruments.
          In order to qualify for synthetic alteration, a derivative instrument
          had to be linked to specific</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">individual,
          or pools of similar, assets or liabilities by the notional principal
          and
interest rate risks of the</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">associated
instruments, and had to achieve a result that was consistent with defined risk
management objectives.</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">If
these criteria were met, accruals based accounting was applied, i.e. income or
expense
was recognised and</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">accrued to the next settlement date in accordance with the
contractual terms of the agreement.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Any
          gain or loss arising on the termination of a qualifying derivative
          was deferred and amortised to earnings</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">over the original life of the terminated contract. Where the
    underlying asset, liability or position was sold or</font></i></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">380</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p381"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><p> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">terminated,
            the qualifying derivative was immediately marked to market and any
    gain or loss arising was taken to the income statement.</font></i></p></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        accounting under SFAS 133 &#145;Accounting for derivative instruments
        and hedging activities&#146; is generally</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">consistent with that under IAS 39, which HSBC has followed
        in its IFRSs reporting from 1 January 2005, as</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">described
        above. However, specific assumptions regarding hedge effectiveness under
        US GAAP are not</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">permitted
    by IAS 39.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    requirements of SFAS 133 have been effective from 1 January 2001.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        US GAAP &#145;shortcut method&#146; permits an assumption of zero ineffectiveness
        in hedges of interest rate risk</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">with an interest rate swap provided specific criteria have
        been met. IAS 39 does not permit such an assumption,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">requiring
        a measurement of actual ineffectiveness at each designated effectiveness
    testing date.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In
        addition, IFRSs allow greater flexibility in the designation of the hedged
        item. Under US GAAP, all</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">contractual
        cash flows must form part of the designated relationship, whereas IAS
        39 permits the designation of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">identifiable
    benchmark interest cash flows only.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain
        issued structured notes are classified as trading liabilities under IFRSs,
        but not under US GAAP. Under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs,
        these notes will be held at fair value, with changes in fair value reflected
        in the income statement. Under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
        GAAP, if the embedded derivative is not &#145;clearly and closely
related&#146; to the host contract, the embedded</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">derivative
will be bifurcated and measured at fair value, the host contract will be measured
at amortised cost, and</font> <font
size=2 face="TimesNewRoman,Times New Roman,Times,serif">changes in both will
be reflected in the income statement. If the embedded derivative is clearly and
closely</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">related
to the host contract, the issued note will be held at amortised cost in its entirety,
with changes in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">amortised
cost reflected in the income statement.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        US GAAP, derivatives receivable and payable with the same counterparty
        may be reported net on the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance
        sheet when there is an executed ISDA Master Netting Arrangement covering
        enforceable jurisdictions.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">These
        contracts do not meet the requirements for offset under IAS 32 and hence
        are presented
gross on the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance
sheet under IFRSs.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
        North American subsidiaries continue to follow the &#145;shortcut method&#146; of
        hedge effectiveness testing for</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">certain transactions in their US GAAP reporting. Alternative
        hedge effectiveness testing methodologies are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">sought
        under IFRSs for these hedging
relationships.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Apart
        from certain subsidiaries in North America, HSBC has chosen not to adopt
        hedge accounting for US</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAAP
        purposes as this would require a designated hedged item inconsistent
        with the approach adopted under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs.
        Qualifying IAS 39 hedging derivatives have been measured at fair value
        with the
gain or loss recognised</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">in
net income for US GAAP purposes.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Designation
        of financial assets and liabilities at fair value through profit and
    loss</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></p></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
        <TD width="3%" valign=top>&#8226;
</TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under IAS 39, a financial instrument, other than one held for trading, is classified in this category if it meets the criteria set out below, and is so designated by management. An entity
may designate financial instruments at fair value where the designation:</FONT> </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="3%">&nbsp;</TD>
<TD>&nbsp;</TD> <TD width="3%" valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring financial assets or financial liabilities or recognising the gains
and losses on them on different bases; or</FONT>        </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">applies to a group of financial assets, financial liabilities or a combination of both that is managed and its performance evaluated on a fair value basis, in accordance with a documented
risk management or investment strategy, and where information about that group of financial instruments is provided internally on that basis to management; or</FONT>   </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those financial instruments.</FONT>  </TD>
</TR></TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">381</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p382"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&#8226;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        assets and financial liabilities so designated are recognised initially
        at fair value, with transaction costs</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">taken directly to the income statement, and are subsequently
        remeasured at fair value. The designation, once</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">made,
        is irrevocable in respect of the financial instruments to which it relates.
        Financial assets and financial</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">liabilities
    are recognised using trade date accounting.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
        and losses from changes in the fair value of such assets and liabilities
        are recognised in the income</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">statement
        as they arise, together with related interest income and expense and
        dividends, within &#145;Net income</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">from
        financial instruments designated at fair value&#146;, except for interest
        on own debt issued by HSBC, and related</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">derivatives,
    which is reported in &#145;interest expense&#146;.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">There
        are no provisions in US GAAP to make an election similar to that in IAS
    39.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Generally,
        for financial assets to be measured at fair value with gains and losses
        recognised immediately in the</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">income statement, they must meet the definition of trading
        securities in SFAS 115 &#145;Accounting for Certain</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investments
        in Debt and Equity Securities&#146; (&#145;SFAS 115&#146;). Financial
        liabilities are usually reported at amortised</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">cost
    under US GAAP.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC has principally used the fair value designation in the following cases:</FONT>       </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="3%">&nbsp;</TD>
<TD width="3%" valign="top">&nbsp;</TD>
<TD width="3%" valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">for certain fixed rate long-term debt issues whose interest rate characteristic has been changed to floating through interest rate swaps as part of a documented interest rate management
strategy. Approximately US&#36;51 billion of the Group&#146;s debt issues have been accounted for using the option. The movement in fair value of these debt issues includes the effect of changes in own credit spread and any ineffectiveness in the
economic relationship between the related swaps and own debt. Such ineffectiveness arises from the different credit characteristics of the swap and own debt coupled with the sensitivity of the floating leg of the swap to changes in short-term
interest rates. In addition, the economic relationship between the swap and own debt can be affected by relative movements in market factors, such as bond and swap rates, and the relative bond and swap rates at inception. The size and direction of
the accounting consequences of changes in own credit spread and ineffectiveness can be volatile from period to period, but do not alter the cash flows envisaged as part of the documented interest rate management strategy.</FONT>    </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD valign="top">&nbsp;</TD>    <TD valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">certain financial assets held by insurance operations and managed at fair value to meet liabilities under insurance contracts (approximately US&#36;4 billion of assets);</FONT>  </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD valign="top">&nbsp;</TD>    <TD valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">financial liabilities under investment contracts and the related financial assets, when the change in value of the assets is correlated with the change in value of the liabilities to
policyholders (approximately US&#36;8 billion of liabilities and related assets).</FONT>        </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under US GAAP, debt issues are reported at amortised cost. An offsetting derivative providing an economic hedge for an asset or liability results in asymmetrical accounting, which in US
GAAP is reflected in net income except for some transactions in certain subsidiaries in North America where the relationship is usually elected as a fair value hedge under SFAS 133.</FONT>    </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under US GAAP, assets held to meet insurance/investment contracts are reported as available-for-sale, with gains and losses taken directly to &#145;Other comprehensive income&#146;. When
the corresponding liability is reported at fair value, with movements reported immediately in net income, this also results in asymmetrical accounting being reflected in US GAAP net income.</FONT>    </TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">All these adjustments are included as &#145;Derivatives and hedge accounting&#146; in the reconciliations below.</FONT>   </TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=3 valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Financial
    investments</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=3 valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&#8226; </TD>
  <TD colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Treasury
      bills, debt securities and equity shares intended to be held on a continuing
      basis are classified as</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">available-for-sale securities unless designated at fair value
    (see above) or classified as held-to-maturity.</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&#8226; </TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale
      securities are initially measured at fair value plus direct and incremental
      transaction costs.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">They
      are subsequently remeasured at fair value. Changes in fair value are recognised
      in equity until the securities</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">are
      either sold or impaired. On the sale of available-for-sale securities,
    cumulative gains or losses previously</font></TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">382</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p383"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">recognised
        in equity are recognised through the income statement and classified
        as &#145;Gains less losses from</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">financial investments&#146;. Interest income is recognised
        on such securities using the effective interest rate method,</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">calculated
        over the asset&#146;s expected life. When dated investment securities
        are purchased at a premium or a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">discount,
        the premiums and discounts are included in the calculation of the effective
        interest
rate.</font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">If an
        available-for-sale security is determined to be impaired, the cumulative
        loss (measured as the difference</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">between the acquisition cost and the current fair value, less
        any impairment loss on that financial asset</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">previously
        recognised in the income statement) is removed from equity and recognised
        in the income statement.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">If,
        in a subsequent period, the fair value of a debt instrument classified
        as available-for-sale
increases and the</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">increase can be objectively related to an event occurring
after the impairment loss was recognised in the income</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">statement,
the impairment loss is reversed through the income statement. Impairment losses
recognised in the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
statement on equity instruments are not reversed through the income statement.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
        exchange differences on available-for-sale securities denominated in
        foreign currency are recognised in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">net
        income to the extent that they relate to the translation of the amortised
    cost of the security.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1
    January 2004 to 31 December 2004</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Debt
          securities and equity shares intended to be held on a continuing basis
          were classified as financial</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">investments and included in the balance sheet at cost less
          provision for any permanent diminution in value.</font></i>       <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Other
      participating interests were accounted for on the same basis. Premiums
      or discounts on dated investment</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">securities purchased at other than face value were amortised
      through the income statement over the period from</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">date
      of purchase to date of maturity
and included in &#145;Interest income&#146;. Any gain or loss on realisation
of these</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">securities
was recognised in the income statement as it arose and included in &#145;Gains
less losses from financial</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">investments&#146;.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Foreign
          exchange differences on foreign currency-denominated monetary items,
    including securities, were</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">recognised in the income statement.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">All debt
        securities and equity shares with a readily determinable fair value are
        classified and disclosed within</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">one
        of the following three categories: held-to-maturity; available-for-sale;
    or trading (SFAS 115).</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Held-to-maturity
        debt securities are measured at amortised cost less any provision other
    than for temporary</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">impairment.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Available-for-sale
        securities are measured at fair value with unrealised holding gains and
        losses excluded from</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">earnings and reported net of applicable taxes and minority
        interests as a separate component of shareholders&#146;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">funds.
        Foreign exchange differences on available-for-sale securities denominated
        in foreign currency are also</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">excluded
        from earnings and recorded as part of the same separate component of
    shareholders&#146; funds.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A decline
        in fair value below the cost of an available-for-sale or held-to-maturity
        security is treated as a realised</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">loss and included in earnings if it is considered &#145;other
        than temporary&#146;. The reduced fair value is then treated as</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        cost basis for the security. A decline in fair value is generally considered
        other than temporary when</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">management
        does not intend or expect to hold the investment for sufficient time
        to enable the fair value to
rise</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">back
to the original cost of the investment.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity
        shares that do not have a readily determinable fair value are measured
        at cost, less any provisions for</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">impairment, and are reported within &#145;Other assets&#146;.
        Under SFAS 115, the fair value of an equity share is &#145;readily</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">determinable&#146; if
        quotations
are currently available on a recognised exchange.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2004,
        available-for-sale securities, excluding equity shares that do not have
        a readily determinable fair value,</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">were recorded at fair value in the US GAAP balance sheet.
        This value was higher than cost in the comparative</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
    balance sheet.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226; </td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2005,
        certain assets have been reported as designated as at fair value for
        IFRSs purposes (see above). Under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
        GAAP, equity shares that do not have a readily determinable fair value
        as defined in SFAS 115 are recorded</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">at
    cost rather than at fair value under IFRSs.</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">383</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<page><a name="p384"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
        exchange differences on available-for-sale securities denominated in
        foreign currency are recognised in</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">&#145;Net income&#146; under IFRSs. Under US GAAP, they are
        not reflected in net income but are deferred and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">recognised
        on maturity or sale of the
security.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subsequent
        recoveries in the value of an impaired debt security are not reported
    in net income for US GAAP</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">purposes.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Interests
    in own shares held</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In accordance
        with IAS 32, long positions in HSBC Holdings&#146; shares are deducted
    from shareholders&#146; funds. No</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">gains or losses are recognised on own shares held.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS 32
        also applies to derivatives over HSBC&#146;s own shares, when they meet
        the definition of an equity</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">instrument,
        and HSBC shares held to meet liabilities under insurance and investment
    contracts.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">AICPA Accounting
        Research Bulletin 51, &#145;Consolidated Financial Statements&#146; (&#145;ARB
        1&#146;), requires a reduction</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">in shareholders&#146; equity for own shares held. The rules
    in ARB 51 do not extend to derivatives over own shares.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">AICPA Accounting
        Research Bulletin 43 &#145;Restatement and Revision of Accounting Research
        Bulletins&#146; also</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">requires a reduction in shareholders&#146; equity for own
        shares held. HSBC shares held within &#145;Long-term assurance</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">assets
        attributable to
policyholders&#146; are classified as an asset when the criteria for classification
as &#145;separate</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounts&#146; are
met.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain
        HSBC insurance operations hold shares in HSBC as part of policyholder
        funds that qualify for</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">classification
        as &#145;separate accounts&#146;. These shares represent an addition
        to shareholders&#146; equity for US GAAP</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">purposes
        and are reported within &#145;Other assets&#146; with gains and losses
        during the period reported in &#145;Other</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income&#146;,
        where they are matched with corresponding movements in the amounts attributable
        to policyholders.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">No
        such gains and losses are recognised under IFRSs and the cost of the
        shares is deducted from
shareholders&#146;</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">equity.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Loan
    origination</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">From
    1 January 2005</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain
        loan fee income and incremental directly attributable loan origination
        costs are amortised to the income</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">statement over the life of the loan as part of the effective
    interest calculation under IAS 39.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1
          January 2004 to 31 December 2004</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Prior
          to 1 January 2005, fee and commission income was accounted for in the
          period when receivable, except</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New
Roman,Times,serif">when charged to cover the costs of a continuing service to,
          or risk borne for, the customer, or was interest in</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">nature.
          In these cases, income was recognised on an appropriate basis over
          the relevant period. Loan costs</font></i> <i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">associated
    with origination were generally expensed as incurred.</font></i></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certain
        loan fee income and direct but not necessarily incremental loan origination
        costs, including an</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">apportionment
        of overheads, are amortised to the income statement account over the
        life of the loan as an</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">adjustment
        to interest income (SFAS 91, &#145;Accounting for Non-refundable Fees
        and
Costs Associated with</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Originating
or Acquiring Loans and Initial Direct Costs of Leases&#146;.)</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">More costs
        are deferred and amortised under US GAAP, such as an apportionment of
        base salaries, than under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs.
        Base salaries are neither incremental nor directly attributable to a
        specific loan origination, and so are</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">written
        off in the period they are incurred under IFRSs. This difference in treatment
    results in increased net</font></td>
  </tr>
</table>
<p align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">384</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p385"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">income
          and shareholders&#146; equity under US GAAP because, in the years presented,
          the extra cost deferral under US GAAP exceeds the amortisation of previously
    deferred costs.</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Securitisations</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="3" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The recognition of securitised assets is governed by a three-step process, which may be applied to the whole asset, or a part of an asset:</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="3%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="3%" valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If the rights to the cash flows arising from securitised assets have been transferred to a third party, and all the risks and rewards of the assets have been transferred, the assets
concerned are derecognised.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If the rights to the cash flows are retained by HSBC but there is a contractual obligation to pay them to another party, the securitised assets concerned are derecognised if certain
conditions are met such as, for example, when there is no obligation to pay amounts to the eventual recipient unless an equivalent amount is collected from the original asset.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD valign=top>&#8211;
        </TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If some significant risks and rewards of ownership have been transferred, but some have also been retained, it must be determined whether or not control has been retained. If control has
been retained, HSBC continues to recognise the asset to the extent of its continuing involvement; if not, the asset is derecognised.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR>
<TR>
  <TD><b></b></TD>
  <TD colspan=3><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=3>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFAS 140, &#145;Accounting for Transfers and Servicing of Finance Assets and Extinguishments of Liabilities&#146;, requires that receivables that are sold to a special purpose entity
(&#145;SPE&#146;) and securitised can only be derecognised and a gain or loss on sale recognised if the originator has surrendered control over the securitised assets.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Control is surrendered over transferred assets if and only if all of the following conditions are met:</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="3%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="3%" valign=top>&#8211;</TD>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The transferred assets are put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD valign=top>&#8211;</TD>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Each holder of interests in the transferee (i.e. holder of issued notes) has the right to pledge or exchange their beneficial interests, and no condition constrains this right and
provides more than a trivial benefit to the transferor.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD valign=top>&#8211;</TD>
        <TD valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The transferor does not maintain effective control over the assets through either an agreement that obligates the transferor to repurchase or to redeem them before their maturity, or
through the ability to unilaterally cause the holder to return specific assets other than through a clean-up call.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If these conditions are not met the securitised assets continue to be consolidated.</FONT></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top>&#8226;
        </TD>
        <TD colspan=2>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When HSBC retains an interest in securitised assets, such as a servicing right or the right to residual cash flows from the special purpose entity, HSBC recognises this interest at fair
value on sale of the assets to the SPE.</FONT></TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=3 valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b> </TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&#8226; </TD>
  <TD colspan=2 valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
      on sale of assets to securitisation vehicles are recognised under US GAAP
      in cases when no such gain is</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">recognised under IFRSs. This results in higher US GAAP net
      income in periods in which there is significant</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">securitisation
      activity. Since early 2004, HSBC has reduced securitisation activity that
      results in &#145;gain on sale&#146;</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accounting
      under US GAAP. As a result, net income is lower under US GAAP because the
      amortisation of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      retained interest in previous securitisations exceeds the gains on new
      transactions where a gain is</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">recognised. The new transactions largely replenish short-term
    loan assets held by existing vehicles.</FONT></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=3 valign="top"><p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Consolidation
    of Special Purpose Entities or Variable Interest Entities</font></p></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=3 valign="top"><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></p></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="top">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD valign="top">&#8226; </TD>
  <TD colspan=2 valign="top"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
      the IASB&#146;s Standards Interpretations Committee (&#145;SIC&#146;) Interpretation
      12 (&#145;SIC-12&#146;), an SPE should be</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">consolidated when the substance of the relationship between
      an enterprise and the SPE indicates that the SPE is</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">controlled
    by that entity.</FONT></TD>
  </TR>
</TABLE>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">385</FONT>
</p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p386"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">FASB Interpretation
        No. 46 (revised December 2003), &#145;Consolidation of Variable Interest
        Entities&#146; (&#145;FIN 46R&#146;),</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">requires consolidation of variable interest entities (&#145;VIE&#146;s)
        in which HSBC is the primary beneficiary and</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">disclosures
        in respect of all other VIEs in
which it has a significant variable interest.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A VIE is
        an entity in which equity investors hold an investment that does not
        possess the characteristics of a</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">controlling financial interest or does not have sufficient
        equity at risk for the entity to finance its activities.</font>       <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        is the primary beneficiary of a VIE if its variable interests absorb
        a majority
      of the entity&#146;s expected</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">losses. Variable interests are contractual, ownership or other
      pecuniary interests in an entity that change with</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">changes
      in the fair value of an entity&#146;s net assets exclusive of variable
      interests. If no party absorbs a majority of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
      entity&#146;s expected losses, HSBC consolidates the VIE if it receives
      a majority of the expected
residual returns</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
the entity.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When HSBC
        is deemed the primary beneficiary under US GAAP, but does not consolidate
        the vehicle under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs,
        the assets and liabilities of that vehicle are consolidated on the US
        GAAP balance sheet. This results in a</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">grossing
        up of the balance sheet but does not have a material impact on net income
        for the period or on</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">shareholders'
    equity.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When HSBC
        is deemed not to be the primary beneficiary under US GAAP of a vehicle
        that is consolidated</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">under
        IFRSs, the assets and liabilities of that vehicle are de-consolidated
        in the US GAAP balance sheet. This</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">results
        in a reclassification in the 2004 balance sheet but does not have a material
        impact on shareholders' equity</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">or
    on net income for 2004 or 2005.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Restructuring
    provisions</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In accordance
        with IAS 37, &#145;Provisions, Contingent Liabilities and Contingent
        Assets&#146;, provisions are made for</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">any direct costs and net future operating losses arising from
        a business that management is committed to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">restructure,
        sell or terminate; has a detailed formal plan to exit; and has raised
        a valid expectation of carrying out</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">that
    plan.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFAS 146, &#145;Accounting
        for Costs Associated with Exit or Disposal Activities&#146;, requires
        that the fair value of a</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">liability for a cost associated with an exit or disposal activity
        be recognised when the liability is incurred.</font>      <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accordingly,
      provisions are recognised upon the implementation of the restructuring
    plan.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The recognition
        of costs associated with plans to restructure and streamline operations
        is earlier under IFRSs</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">than
        under US GAAP, for example, where there is a time lag between developing
        and communicating a formal</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">plan,
        and putting it into practice. This resulted in marginally higher net
        income and shareholders&#146; equity under</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
    GAAP in 2005.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Loan
    impairment</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When statistical
        models, using historic loss rates adjusted for economic conditions, provide
        evidence of</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">impairment
        in portfolios of loans, their values are written down to their net recoverable
        amount. The net</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">recoverable
        amount is the present value of the estimated future recoveries discounted
        at
the portfolio&#146;s original</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">effective
interest rate. The calculations include a reasonable estimate of recoveries on
loans individually</font> <font size=2
face="TimesNewRoman,Times New Roman,Times,serif">identified for write-off pursuant
to HSBC&#146;s credit guidelines.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When the
        delinquency status of loans in a portfolio is such that there is no realistic
        prospect of recovery, the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">loans
        are written off in full, or to recoverable value where collateral exists.
        Delinquency depends on the number</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        days payments is overdue. The delinquency status is applied consistently
        across similar loan products in</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">accordance
        with HSBC&#146;s credit guidelines. When local regulators mandate the
    delinquency status at which</FONT></TD>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">386</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p387"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">write-off
        must occur for different retail loan products and these regulations reasonably
        reflect estimated recoveries on individual loans, this basis of measuring
        loan impairment is reflected in US GAAP accounting. Cash recoveries relating
        to pools of such written-off loans, if any, are reported as loan recoveries
    upon collection.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under both
        IFRSs and US GAAP, HSBC&#146;s policy and regulatory instructions mandate
        that individual loans</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">evidencing
        adverse credit characteristics which indicate no reasonable likelihood
        of recovery, are written off.</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When,
        on a portfolio basis, cash flows can reasonably be estimated in aggregate
        from these written-off
loans, an</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">asset
equal to the present value of the future cash flows is recognised under IFRSs.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">No asset
        for future recoveries arising from written-off assets was recognised
        in the balance sheet under IFRSs</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">prior
    to 1 January 2005.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Interest
    recognition</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><p><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">IFRSs</font></b></p></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The calculation
        and recognition of effective interest rates under IAS 39 requires an
        estimate of &#145;all fees and</font> <font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">points paid or received between parties to the contract&#146; that
    are an integral part of the effective interest rate be</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">included.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
    GAAP</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">FAS 91
        also generally requires all fees and costs associated with originating
        a loan to be recognised as interest</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">but,
        when the interest rate increases during the term of the loan, it prohibits
        the recognition of interest income to</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">the
        extent that the net investment in the loan would increase to an amount
        greater than the amount at which the</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">borrower
    could settle the obligation.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Impact</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&#8226;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When HSBC
        provides introductory incentives in the form of either a low or nil interest
        rate for the early period</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">of
        a loan, interest income on such products is recognised under IFRSs on
        the basis of the overall effective</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">interest
        rate over the expected life of the product. No interest income is recognised
        during the incentive period</font> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">under
    US GAAP.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><p> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Reconciliation
      of net income and shareholders&#146; equity under IFRSs and US GAAP</font></b></p>
    </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top"><p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
          following tables summarise the significant adjustments to consolidated
          net income and shareholders&#146; equity which would result from the
    application of US GAAP</font><i><font
size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">:</font></i></p></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>&nbsp;</TD>
    <TD colspan=3 align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Year
      ended 31 December</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> <font size="2">&nbsp;</font>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan=3 align=center><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
      </FONT></TD>
    <TD align=left><font size="2"><FONT face="TimesNewRoman,Times New Roman,Times,serif"><SUP>1</SUP></FONT></FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Net
      income</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
      attributable to shareholders of the parent company of HSBC (IFRSs)</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15,081</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,918</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146;
      interest in long-term assurance fund</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">88</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(102</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pension
      costs</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(175</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(125</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Stock-based
      compensation</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">225</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(83</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
      assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(325</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(323</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Purchase
      accounting adjustments<SUP>1</SUP></FONT>&nbsp; </FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(520</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,239</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
      and hedge accounting</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,144</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">244</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
      exchange differences on available-for-sale securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,235</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,069</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      origination</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">249</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Securitisations<SUP>1</SUP></FONT>&nbsp;
      </FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(237</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(33</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">20</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      recognition</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(131</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(44</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">74</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taxation,
      including taxation on reconciling items</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">578</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(77</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interest in reconciling items</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(197</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">40</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income (US GAAP)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,703</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,506</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD valign="top"> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004
      figures for &#145;Securitisations&#146; and &#145;Purchase accounting adjustments&#146;
      have been restated to reflect the split between securitisation activity
      before and after the acquisition of HSBC Finance Corporation in 2003. There
    is no overall impact on US GAAP net income or shareholders&#146; equity.</FONT></I></TD>
</TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">387</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p388"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font> </p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Per
      share amounts (US GAAP)</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basic
      earnings per ordinary share</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.33</FONT></B>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.15</FONT></TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Diluted
      earnings per ordinary share</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.32</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.13</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
</table>

<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <TR valign="bottom">
    <TD rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left><font size="2">&nbsp;</font> &nbsp;</TD>
    <TD colspan="3" align=center> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD rowspan="4" align=left><font size="2">&nbsp;</font> &nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=center><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">2004<SUP>1</SUP></FONT>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Shareholders&#146;
      equity</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      shareholders&#146; equity (IFRSs)</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">92,432</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">85,522</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146;
      interest in long-term assurance fund</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,077</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,600</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pension
      costs</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,585</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,557</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value adjustment for available-for-sale securities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(597</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,969</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,048</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,594</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Revaluation
      of property</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,530</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,269</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Purchase
      accounting adjustments<SUP>1</SUP></FONT>&nbsp; </FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">155</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">389</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
      assets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,127</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,437</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
      and hedge accounting</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(58</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">356</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      origination</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">717</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">375</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2"> <FONT face="TimesNewRoman,Times New Roman,Times,serif">Securitisations<SUP>1</SUP></FONT>&nbsp;
      </FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">158</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">395</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
      impairment</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(327</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      recognition</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(259</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">112</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(385</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taxation
      including taxation on reconciling items</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,213</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,196</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interest in reconciling items</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">251</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(62</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      shareholders&#146; equity (US GAAP)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93,524</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,082</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Movement
      in shareholders&#146; equity (US GAAP)</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      1 January</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">90,082</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80,251</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,703</FONT></B>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12,506</FONT></TD>
    <TD width=2% align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,750</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(6,932</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
      options</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">450</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">234</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
      issued in lieu of dividends</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,811</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,607</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New
      share capital subscribed net of costs</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,405</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">581</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other,
      including movements in own shares held</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">94</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(148</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        change in net unrealised losses on available-for-sale securities,</font>
        net of tax effect</font></font></div></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,716</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(837</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee">
      <div style="margin-left:3%; text-indent:-3%"><font size="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
        change in net unrealised gains on derivatives classified as cash flow
        hedges, </font><font face="TimesNewRoman,Times New Roman,Times,serif">net
        of tax effect</font></font></div></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(349</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minimum
      pension liability adjustment, net of tax effect</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(236</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(195</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
      differences and other movements</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4,320</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,364</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      other comprehensive income</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(7,271</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">983</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93,524</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,082</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top> <FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD>
<I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004 figures for &#145;Securitisations&#146; and &#145;Purchase accounting adjustments&#146; have been restated to reflect the split between securitisation activity before and
after the acquisition of HSBC Finance Corporation in 2003. There is no overall impact on US GAAP net income or shareholders&#146; equity.</FONT></I>    </TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">388</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p389"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td colspan="2"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Consolidated
    US GAAP balance sheet</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        following table provides an estimated summarised consolidated balance
        sheet for HSBC which incorporates the adjustments arising from the application
        of US GAAP. The format of the US GAAP balance sheet, including comparatives,
        has been aligned with that of the format for the consolidated balance
    sheet under IFRSs which was adopted in 2005.</FONT></TD>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="4" align=left>&nbsp;</TD>
    <TD rowspan="4" align=left><font size="2">&nbsp;</font> &nbsp;</TD>
    <TD colspan=3 align=center><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December</FONT></TD>
    <TD rowspan="4" align=right><font size="2">&nbsp;</font>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan=3 align=center><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Assets</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      and balances at central banks</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13,712</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9,893</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of collection from other banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">11,300</FONT></B></TD>
    <TD width=2% align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,352</FONT></TD>
    <TD width=2% align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong Government certificates of indebtedness</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">193,312</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">114,202</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      assets which may be repledged or resold by counterparties</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">42,652</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,295</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,611</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to banks</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125,751</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">143,077</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
      and advances to customers</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">689,414</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">660,493</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      investments</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182,596</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">191,471</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
      investments which may be repledged or resold by counterparties</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,041</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      in associates and joint ventures</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,163</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3,366</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
      and intangible assets</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35,081</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">36,307</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property,
      plant and equipment</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,891</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15,655</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      assets (including prepayments and accrued income)</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43,182</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23,060</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,406,944</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,266,365</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Liabilities</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
      Kong currency notes in circulation</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12,554</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,878</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits
      by banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">69,895</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">83,539</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
      accounts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">704,647</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">700,948</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Items
      in the course of transmission to other banks</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,022</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,301</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">148,451</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46,460</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">29,410</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">47,353</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
      securities in issue</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">225,681</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">190,766</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retirement
      benefit liabilities</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,217</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,892</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      liabilities (including accruals and deferred income)</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">39,385</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18,724</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
      under insurance contracts issued</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14,157</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities
      to policyholders under long-term assurance business</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,289</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,285</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,201</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subordinated
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45,612</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">37,685</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,304,316</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,174,036</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Equity</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      shareholders&#146; equity</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">93,524</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">90,082</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
      interests</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">9,104</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,247</FONT></TD>
    <TD align=right><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      equity</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">102,628</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">92,329</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
      equity and liabilities</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,406,944</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,266,365</FONT></TD>
    <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      assets arising due to reverse repo transactions of US&#36;47,207 million
      (2004: US&#36;36,543 million) and US&#36;43,282 million (2004: US&#36;29,346
      million) are included in &#145;Loans and advances to banks&#146; and &#145;Loans
      and advances to customers&#146; respectively.</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      liabilities arising due to repo transactions of US&#36;24,113 million (2004:
      US&#36;11,590 million) and US&#36;51,633 million (2004: US&#36;32,137 million)
      are included in &#145;Deposits by banks&#146; and &#145;Customer accounts&#146;
      respectively. Average repo liabilities during the year were US&#36;74,143
      million (2004: US&#36;46,229 million). The maximum quarter-end repo liability
      outstanding during the year was US&#36;78,590 million (2004: US&#36;53,188
      million).</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At
      31 December 2005, collateral received under reverse repo transactions which
      HSBC had the right to sell or repledge amounted to US&#36;103,977 million
      gross (2004: US&#36;84,767 million). Approximately US&#36;79 billion (2004:
      approximately US&#36;36 billion) of the collateral obtained from reverse
      repo transactions had been sold or repledged by HSBC in connection with
      repo transactions and securities sold not yet purchased.</FONT></TD>
  </TR>
</TABLE>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">389</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p390"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></p>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td colspan="2" valign="top"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        also enters into stock lending and borrowing transactions by which either
        cash or other securities may be received in exchange for stock. At 31
        December 2005, stock borrowing transactions where the securities borrowed
        were subject to sale or repledge amounted to US&#36;25,783 million (2004:
    US&#36;28,354 million).</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(a)</FONT></TD>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Pension and
    post-retirement costs</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Pensions</font></b></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For the
        purpose of the above reconciliations, the provisions of SFAS 87 &#145;Employers&#146; accounting
        for pensions&#146; have been applied to HSBC&#146;s main defined benefit
        pension
plans, which make up approximately 96 per cent of all HSBC&#146;s schemes by
plan assets. For non-US schemes, HSBC has applied SFAS 87 with effect from 30
June 1992 as it was not feasible to apply it as at 1 January 1989, the date specified
in the
standard.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">When a
        pension plan&#146;s accumulated benefit obligation (the value of the
        benefits accrued based on employee service up to the balance sheet date)
        exceeds the fair value of its assets, an additional minimum pension liability
        equal to this excess is recognised by the employer to the extent that
        the excess is greater than any accrual which has already been established
        for unfunded pension costs. Simultaneously, an intangible asset is established
        equal to the lower of the liability recognised for the unfunded benefit
    obligation and the amount of any unrecognised prior service cost.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
        2005, HSBC recognised an additional minimum pension liability of US&#36;3,206
        million (2004: US&#36;3,261 million) in respect of its unfunded accumulated
        benefit obligation. This liability was partially offset in 2004 by an
        intangible asset of US&#36;12 million. The net effect of these items
        was to increase HSBC&#146;s total shareholders&#146; equity under US
        GAAP by US&#36;1,585 million (2004:
US&#36;1,557million) compared with the net pension surplus or deficit recognised
under IFRSs.</FONT></TD>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Estimated
    pension costs for these plans computed under SFAS 87 are as follows:</FONT></TD>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Components
      of net periodic benefit cost</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Service
      cost</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">666</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">573</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      cost</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,314</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,247</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      return on plan assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,355</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,309</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of prior service cost</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of recognised net actuarial loss</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">165</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">142</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Curtailment</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(4</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">225</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      periodic pension cost</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">793</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">885</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="4" align=left><p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        US GAAP pension cost of US&#36;793 million (2004: US&#36;885 million)
    compares with US&#36;618 million under IFRSs (2004: US&#36;760 million).</font></p></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Funded
      status as per IFRSs balance sheet note 7</FONT></TD>
        <TD width="10%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,941</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,573</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised net actuarial loss</FONT></TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,756</FONT></B>
    </TD>
        <TD width=2% align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,757</FONT></TD>
        <TD width=2% align=left><font size="2">&nbsp;</FONT></TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised
      prior service cost</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">35</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">49</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accrued
      pension cost</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">850</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(767</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additional minimum liability</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,206</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,261</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
      assets</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      amount recognised under US GAAP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,356</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,016</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Amounts recognised under US GAAP in the balance sheet consist of:</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      </FONT></font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">prepaid
      benefit cost</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,434</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">783</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; </FONT></font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">accrued benefit liability</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(584</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(1,550</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150;
      </FONT></font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">additional
      minimum liability</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,206</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(3,261</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&#150; </FONT></font><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">intangible assets</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B>
        </TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,356</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,016</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US GAAP adjustment</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
        <TD align=left><font size="2">&nbsp;</FONT></TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amount
      recognised under US GAAP</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(2,356</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(4,016</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amounts recognised for these schemes under IFRSs</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,941</FONT></B>
        </TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5,573</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,585</FONT></B>
    </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,557</FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">390</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p391"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><p><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In 2005,
          plans with an aggregate accumulated benefit obligation of US&#36;21,098
          million </font><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2004:
          US&#36;20,566 million) and assets with an aggregate fair value of US&#36;18,444
          million (2004: US&#36;16,128 million) had an accumulated benefit obligation
          in excess of plan assets. Plans with an aggregate projected benefit
          obligation of US&#36;22,595 million (2004: US&#36;22,914 million) and
          assets with an aggregate fair value of US&#36;18,795 million (2004:
          US&#36;17,422 million) had a projected benefit obligation in excess
          of plan assets. </font></p>
    </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The projected
        benefit obligations at 31 December 2005 and 2004 for HSBC&#146;s main
        pension plans have been calculated using the same financial assumptions
    as detailed in note 7.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      accumulated benefit obligation in respect of the above schemes was:</FONT></TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank (UK) Pension Scheme</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">19,709</FONT></B>
    </TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD width="10%" align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19,063</FONT></TD>
    <TD width="2%" align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      schemes</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5,241</FONT></B>
    </TD>
    <TD width=2% align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,829</FONT></TD>
    <TD width=2% align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Post-retirement
      benefits</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      components of post-retirement expense for HSBC&#146;s schemes were as follows:</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Components
      of net periodic post-retirement benefit cost</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Service
      cost</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
      cost</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">63</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expected
      return on plan assets</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(10</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(8</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of prior service cost</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(2</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      of transition obligation</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">8</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net
      periodic post-retirement benefit cost</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">66</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">77</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Funded
      status of plan</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Funded
      status at 31 December per IFRSs note 7</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(928</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(903</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised
      net actuarial (gain)/loss</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">43</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(5</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Unrecognised
      net transition obligation</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">24</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accrued
      post-retirement benefit obligation US GAAP</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(861</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(876</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
      projected benefit obligations at 31 December 2005 and 2004 for HSBC&#146;s
      main post-retirement healthcare plans have been calculated using the same
      financial assumptions as detailed in note 7.</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="5" align=left>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%" valign=top>&nbsp;</TD>
    <TD width="3%" valign=top> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(b)</FONT></TD>
    <TD> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Goodwill</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill
      arises on the acquisition of subsidiary or associated undertakings when
      the cost of acquisition exceeds the fair value of HSBC&#146;s share of the
      identifiable assets, liabilities and contingent liabilities acquired.</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under IFRSs
      (and before them, UK GAAP), goodwill arising on acquisitions made on or
      after 1 January 1998 is included in the balance sheet in &#145;Goodwill
      and intangible assets&#146; in respect of subsidiary undertakings, and in
      &#145;Interests in associates and joint ventures&#146; in respect of associates
      and joint ventures. Capitalised goodwill was amortised over its estimated
      useful life on a straight-line basis until the adoption of IFRSs on 1 January
      2004, since then it is not amortised but is subject to annual impairment
      testing. Goodwill arising on acquisitions prior to 1 January 1998 was charged
      against reserves in the year of acquisition. This goodwill was not reinstated
      on the balance sheet upon adoption of IFRSs.</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under US
      GAAP, goodwill on acquisitions made before 1 July 2001, including those
      made before 1 January 1998, would have been capitalised and amortised over
      its useful economic life. Goodwill on acquisitions made after 1 July 2001
      is capitalised but not amortised, and is subject to annual impairment testing.
      Goodwill on acquisitions made before 1 July 2001 ceased to be amortised
      on 1 January 2002 and is subject to annual impairment testing.</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31 December
      2005, the cost of goodwill arising on the acquisition of subsidiary undertakings
      on a US GAAP basis was US&#36;34,147 million (2004: US&#36;36,084 million)
      and the accumulated amortisation of goodwill was US&#36;3,873 million (2004:
      US&#36;4,385 million).</FONT></TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">391</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p392"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></p>
<p><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT><FONT face="Arial, Helvetica, sans-serif">
  </FONT></B><FONT size=2
face="Arial, Helvetica, sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%" valign=top>&nbsp;</TD>
    <TD width="3%" valign=top> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(c)</FONT></TD>
    <TD> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Intangible
      assets</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
      intangible assets were recognised under US GAAP:</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
    </TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance
      brought forward at 1 January</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,608</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,421</FONT></TD>
    <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additions</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">580</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">532</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On
      acquisition of subsidiaries</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">271</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">572</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      charge</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(905</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(836</FONT></TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision
      for impairment</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">34</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(102</FONT></TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">)</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
      differences and other movements</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">114</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance
      carried forward at 31 December</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,702</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,608</FONT></TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Since 1
      January 2004, the accounting treatment for intangible assets has been consistent
      between IFRSs and US GAAP. The additional intangible assets recognised under
      US GAAP represent those acquired in business combinations during the period
      between SFAS 141 &#145;Business combinations&#146; becoming effective on
      30 June 2001 and IFRSs being adopted on 1 January 2004. They primarily comprise
      credit card and other loan relationships, merchant relationships and other
      intangibles assumed on the acquisition of HSBC Finance.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provision
      for impairment in 2004 relates to the write-down of mortgage servicing rights,
      as a low interest rate environment has encouraged consumers to refinance
      mortgages at a faster rate than initially expected. Part of this provision
      was released in 2005 as prepayment rates slowed.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC conducts
      an annual impairment test of intangible assets which are not subject to
      annual amortisation since HSBC determines these assets have indefinite lives.
      As a result of this testing, an impairment charge of US&#36;13 million was
      recorded related to a trade name in the United Kingdom.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% rowspan="3" align=left><font size="2">&nbsp;</font></TD>
    <TD width=3% rowspan="3" align=left><font size="2">&nbsp;</font></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
    <TD colspan="5" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">At
      31 December 2005</FONT></B></TD>
    <TD rowspan="3" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="2" align=right> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Weighted
      average<br>
      </font> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">amortisation<br>
      </FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">period<br>
      </FONT> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Months</FONT></TD>
    <TD colspan="5" align=left><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cost</FONT></B><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif"><br>
      US&#36;m</FONT></B></TD>
    <TD align=right><font size="2">&nbsp;</font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Accumulated<br>
      </FONT></B> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">amortisation<br>
      </FONT></B> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B>
    </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Carrying</FONT></B>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">value<br>
      </FONT></B> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;m</FONT></B></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Intangible
      assets subject to annual amortisation</FONT></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Purchased
      credit card relationships and related</font> <FONT face="TimesNewRoman,Times New Roman,Times,serif">programmes</FONT></font></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">111</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,039</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(462</FONT></B>
    </TD>
    <TD width=2% align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1,577</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Retail
      services merchant relationship</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">270</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(149</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
      loan related relationships</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">110</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">326</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(104</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">222</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mortgage
      servicing rights</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">66</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">985</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(567</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">418</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Technology,
      customer lists and other contracts</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">60</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2,514</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(1,554</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">960</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Core
      deposit relationships</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">215</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">237</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(127</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">110</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">67</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">436</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(39</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">397</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6,807</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,002</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3,805</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Intangible
      assets not subject to annual</FONT> <FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">amortisation</FONT></B></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trade
      name</FONT></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">910</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(13</FONT></B>
    </TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">897</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD height="21" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">7,717</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">(3,015</FONT></B>
    </TD>
    <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">)</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">4,702</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The intangible
      asset amortisation expense under US GAAP for the next five years is estimated
      to be:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD width=3% rowspan="2" align=left>&nbsp;</TD>
    <TD rowspan="2" align=left>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2006</FONT></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2007</FONT></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2008</FONT></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2009</FONT></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2010</FONT></TD>
    <TD rowspan="2" align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;m</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation
      charge</FONT></TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">701</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">662</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">605</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">562</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=10% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">423</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD width="3%" valign=top>&nbsp;</TD>
    <TD width="3%" valign=top> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(d)</FONT></TD>
    <TD> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Derivatives
      and hedge accounting</FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Under
        IFRS,  all derivatives are recorded at fair value, consistent with US
        GAAP. Under
      IFRS, HSBC has elected either hedge accounting or fair value option for
         certain hedging relationships. With the exception of US operating subsidiaries,

      HSBC has not elected hedge accounting in its US GAAP financial statements. <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      US operating subsidiaries designate certain derivative financial  instruments
      as qualifying hedges of under SFAS 133.</FONT></FONT></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">When the
      critical terms of the hedge instrument are identical to those of the hedged
      item at the hedge inception date, HSBC's US subsidiaries make use of the
      assumption of no ineffectiveness in its fair value hedge accounting</FONT></TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">392</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p393"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(commonly
      referred to as the &#8216;shortcut&#8217; method) for certain of these hedging relationships.
      As a result, no retrospective or prospective assessment of effectiveness
      is required and no hedge ineffectiveness is recognised. If any one of the
      criteria for utilising the shortcut method was not met, the hedging relationship
      was either accounted for under the 'long-haul' method whereby effectiveness
      is assessed and ineffectiveness on effective hedges is recorded in the income
      statement, or the hedge relationship was determined to be ineffective for
      accounting purposes and the derivative was marked to market with gains and
      losses recorded directly in net income.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
      2005, new designations of hedges have generally been designated using the
      long-haul method of accounting under SFAS 133 and certain relationships
      have been re-designated using this method. As a result, there were no longer
      any cash flow hedges using the shortcut method of accounting at 31 December
      2005, and HSBC&#146;s US operating subsidiaries have significantly reduced
      the number of fair value hedges using the shortcut method of accounting
      at this date.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following
      table summarises HSBC&#8217;s hedges of financial instruments that have been designated
      and qualify as effective hedges under SFAS 133 at the end of the period</font><i><font
size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">.</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="3%" rowspan="6" align=left>&nbsp;</TD>
    <TD width="3%" rowspan="6" align=left>&nbsp;</TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD colspan="7" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Nominal
      values</FONT></B></TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
    <TD colspan="7" align=center><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number
      of derivatives</FONT></B></TD>
    <TD rowspan="6" align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="7" align=right><hr size="1" noshade></TD>
    <TD colspan="7" align=right><hr size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
      value</FONT></B></TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash
      flow</FONT></B></TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value</FONT></TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      flow</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fair
      value</FONT></B></TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash
      flow</FONT></B></TD>
    <TD rowspan="4" align=center>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fair
      value</FONT></TD>
    <TD rowspan="4" align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
      flow</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedges</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedges</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedges</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedges</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedges</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">hedges</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedges</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">hedges</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;bn</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;bn</FONT></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;bn</FONT></B></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;bn</FONT></TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;bn</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Financial</FONT>
      <FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">investments:</FONT></B></font></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">Available
        for <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">sale
        debt </font></b></font></font></b><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">securities</font></b></font></div></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Shortcut</FONT></font></TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">38</FONT></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD width=7% align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif">Long-haul</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.2</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">10</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Customer</FONT>
      <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">deposits</font></b></font></B></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;Shortcut</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.0</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.4</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2">&nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;Long-haul</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">6.8</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.8</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><div style="margin-left:3%; text-indent:-3%"> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Debt
        securities <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">in
        issue and <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">subordinated</font>
        <font size="2"><b><font face="TimesNewRoman,Bold,Times New Roman,Times,serif">liabilities</font></b></font></b></font></font></b></font></font></b></div></TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size="2">&nbsp;</font> </TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif">Shortcut</FONT></font></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">3.0</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.5</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.6</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#150;</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">119</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">106</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif"></FONT><FONT face="TimesNewRoman,Times New Roman,Times,serif">Long-haul</FONT></font></TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">18.2</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">46.8</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.3</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.6</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">45</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">165</FONT></B></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">29</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="1" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">21.4</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">53.6</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27.8</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34.4</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">73</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">182</FONT></B></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">194</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
    <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">150</FONT></TD>
    <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><hr size="2" noshade></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Fair
      value hedges</font></i> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      US operating subsidiaries designate certain derivative financial instruments
      as qualifying fair value hedges of certain fixed rate assets and liabilities
      under SFAS 133. In order to qualify initially, hedge effectiveness is assessed
      and demonstrated on a prospective basis utilising statistical regression
      analysis</font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">.</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">During
      2004, the short-cut method of accounting could not be utilised for a small
      number of fair value hedges of fixed rate liabilities. Ineffectiveness of
      such fair value hedges recognised in 2004 in net income under US GAAP (but
      not under IFRS) was a gain of US&#36;1 million.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      US mortgage bank has historically hedged fixed rate closed residential mortgage
      loans held for sale with forward sale commitments. In 2004, ineffectiveness
      on these hedging activities recognised in net income under US GAAP (but
      not under IFRS) was a gain of US&#36;2 million. Such hedging activity was
      ceased on 30 September 2005.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2005</FONT></I></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Since
        1 January 2005, almost all derivatives designated as fair value hedges
        under US GAAP in HSBC&#146;s US operating subsidiaries have been reported
        under the fair value option for IFRSs purposes, with movements in fair
        value reported as &#145;Net income from financial instruments designated
        as at fair value&#146;.</FONT></P></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">393</FONT></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p394"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><font size=1 face="UniversLT55,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font></p>
<p><B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
  on the Financial Statements</FONT><FONT face="Arial, Helvetica, sans-serif">
  </FONT></B><FONT size=2
face="Arial, Helvetica, sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reporting
      of these arrangements as fair value hedges under US GAAP resulted in decreased
      net income for 2005 of US&#36;179 million, including US&#36;7 million arising
      from elimination of losses due to movements in own credit spread recorded
      in IFRSs net income and reduced ineffectiveness of US&#36;172 million on
      shortcut fair value hedges for US GAAP purposes.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In addition,
      there were US&#36;102 million of losses on such derivatives that did not
      qualify for hedging accounting under US GAAP.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">On electing
      to report under the fair value option under IAS 39, unamortised purchase
      accounting adjustments on HSBC Finance Corporation's own debt were eliminated
      through retained earnings upon transition to IAS 39 on 1 January 2005. As
      a result, a US&#36;409 million benefit to 2005 US GAAP net income was not
      recognised under IFRS.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Cash
      flow hedges</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s
      US operating subsidiaries designate under SFAS 133 certain derivative financial
      instruments, including interest rate swaps and future contracts, as qualifying
      cash flow hedges of the forecast repricing of certain deposit liabilities
      and issues of debt. A number of variable rate commercial loans were also
      subject to cash flow hedges up until 2004.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">In order
      to qualify initially, hedge effectiveness is assessed and demonstrated on
      a prospective basis utilising both statistical regression analysis and the
      cumulative dollar offset method. The latter is used in order to satisfy
      the retrospective assessment of effectiveness for SFAS 133, and subsequent
      ineffectiveness is recognised in the income statement on a monthly basis.
      The time value component of the derivative contracts is excluded from the
      assessment of hedge effectiveness.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ineffectiveness
      of cash flow hedging activities resulted in a loss of US&#36;1 million being
      recognised in net income reported under US GAAP for 2004. Shareholders&#146;
      equity at 31 December 2004 increased by US&#36;133 million under US GAAP
      as a result of these hedges.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2005</FONT></I></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><P> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Since
        1 January 2005, such hedging arrangements have been recognised as cash
        flow hedges for IFRSs purposes. US GAAP net income for 2005 was lower
        than that under IFRSs by US&#36;6 million, relating to unrecorded ineffectiveness
        on shortcut cash flow hedges for US GAAP purposes.</FONT></P></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><p> </p>
      <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Trading
      derivatives</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2004</font></i></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">All other
      IFRSs hedging derivatives were marked to market in 2004 for US GAAP purposes
      with the gain or loss recognised in net income for the period. This gave
      rise to an increase in US GAAP reported net income for 2004 of US&#36;210
      million. The other principal effect of applying SFAS 133 at 31 December
      2004 was to reduce &#145;Other assets&#146; by US&#36;5,487 million and
      &#145;Other liabilities&#146; by US&#36;5,754 million. Under IFRSs, prior
      to 2005, internal derivatives used to hedge banking book transactions could
      be accruals accounted but, under US GAAP, all derivatives were held at fair
      value.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2005</FONT></I></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">From 1
      January 2005, certain hedging relationships outside North America were elected
      and qualified as fair value hedges, were designated under the fair value
      option, or were elected and qualified as cash flow hedges under IAS 39,
      but were not elected as hedges under SFAS 133. The mark to market for these
      derivatives has been reported directly in net income for US GAAP purposes.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">For fair
      value hedges recognised under IFRSs, no corresponding, offsetting fair value
      movement of the hedged item with respect to the hedged risk has been recorded
      for US GAAP purposes. For hedging relationships designated as at fair value
      for IFRSs purposes, no fair value movement in respect of own debt is recorded
      under US GAAP.</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">394</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p395"></a><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>The
      effect of this was to decrease US GAAP net income by US&#36;1,266 million,
      net of elimination of a loss under IFRS of US&#36;76 million of own credit
      spread, outside North America.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <b><font size=2>Fair
      value option</font></b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <i><font size=2>2005
      only</font></i></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>HSBC
      has also applied the fair value option under IFRSs to groups of financial
      assets and liabilities which are managed and evaluated on a fair value basis,
      and to financial instruments containing embedded derivatives (see note 3).
      In addition, movements in the fair value of certain liabilities which meet
      the definition of &#145;held for trading&#146; under IAS 39 are taken through
      net income. US GAAP does not include a fair value election and does not
      generally permit liabilities to be reported at fair value. The elimination
      of such accounting reduced US GAAP net income for 2005 by US&#36;733 million.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(e)</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> Foreign
      exchange gains on available-for-sale securities</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>HSBC
      holds, in a number of different currencies, securities which are classified
      as available-for-sale within individual legal entities. For example, in
      the private bank in Switzerland, for which the US dollar is the reporting
      currency, the Group holds euro-denominated bonds funded in euros and Swiss
      franc securities funded in Swiss francs. No foreign exchange exposure arises
      from this because, although the value of the assets in US dollars changes
      with the exchange rate, there is an identical offsetting change in the US
      dollar value of the related funding. Under IFRSs both the assets and the
      liabilities are translated at closing exchange rates and the differences
      between historical book value and current value are reflected in foreign
      exchange dealing profits. This reflects the economic substance of holding
      currency assets financed by currency liabilities.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>However,
      under US GAAP, SFAS 115 and Emerging Issues Task Force (&#145;EITF&#146;)
      Abstract 96-15 &#145;Accounting for the Effects of Changes in Foreign Currency
      Exchange Rates on Foreign-currency-denominated Available-for-sale Debt Securities&#146;
      the change in value of the investments classified as available-for-sale
      is taken directly to reserves while the offsetting change in US dollar terms
      of the borrowing is taken to earnings. This leads to an accounting result
      which, although in compliance with US GAAP, does not necessarily reflect
      either the underlying risk position or the economics of the transactions.
      It is also a situation that will reverse on maturity of the asset or earlier
      sale. A similar difference arises when foreign currency exposures on foreign
      currency assets are covered using forward contracts but HSBC does not manage
      these hedges to conform with the detailed hedge designation requirements
      of SFAS 133.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The result
      is that for 2005, US GAAP net income increased by US&#36;2,235 million (2004:
      increased by US&#36;1,069 million) compared with IFRSs net income. There
      was no difference in total shareholders&#146; equity between IFRSs and US
      GAAP as a result of this reconciling item.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>The
      adjustment for 2005 and 2004 largely reflects the reversal of adjustments
      in prior periods on the maturity or disposal of securities. The impact in
      2005 also included increased US GAAP net income as a result of a strengthening
      of the US and Hong Kong dollar against the principal currencies in which
      HSBC hold available for sale securities. The impact in 2004 was offset by
      the effect of a weakening in the US and Hong Kong dollar against these principal
      currencies.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(f)</font></td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>
      Investment securities</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Under
      US GAAP, HSBC&#146;s financial investments with a readily determinable market
      value are classified as available-for-sale securities, except for certain
      securities held by Republic New York Corporation at acquisition, which were
      classified as held-to-maturity. All other securities are categorised as
      trading securities.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>HSBC
      has taken advantage of the exemption within IFRS 1 from presenting comparative
      information for 2004 in accordance with IAS 32 and IAS 39. Consequently,
      comparative IFRSs information has been prepared in accordance with HSBC&#146;s
      previous accounting policies, disclosed separately in Note 46(g).</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>In
      2005, the IFRSs to US GAAP adjustment to financial instruments reduces shareholders&#146;
      equity by US&#36;597 million because under US GAAP equity shares that do
      not have a readily determinable fair value (as defined in SFAS 115) are
      measured at cost less provision for any permanent diminution in value. This
      is lower than the fair value at which they are measured under IAS 39, which
      is determined by comparison to similar equity investments which are quoted,
      or by using discounted cash flow calculations.</font></font></font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">395</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p396"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P><font face="Arial, Helvetica, sans-serif">
</font><font size=1 face="Arial, Helvetica, sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font><font face="Arial, Helvetica, sans-serif"> </font></P>
</font>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>In
            2004, all financial investments were reported under IFRSs at cost
            less provision for any permanent diminution in value. The increase
            in the US GAAP balance sheet of US&#36;1,969 million represents the
            excess of fair value over cost (less provisions for permanent diminution
            in value) for debt securities and equity shares with a readily determinable
    fair value.</font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>The
            amortised cost of available-for-sale investment securities which
            are subject to the provisions of SFAS 115 was US&#36;188,868 million
            (2004: US&#36;173,607 million) under US GAAP. During the year, excluding
            the effects of foreign exchange, US&#36;899 million (2004: gains
            of US&#36;376 million) of net unrealised losses on available-for-sale
            securities were included in &#145;Other comprehensive income&#146;.
            US&#36;626 million (2004: gains of US&#36;476 million) of net gains
            were reclassified out of &#145;Other comprehensive income&#146; and
    recognised as part of income for the year. </font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>During
            2004, HSBC recorded net losses under US GAAP of US&#36;127 million
            in respect of impairments of available-for-sale securities which
            were considered to be other than temporary. These losses were treated
            as realised items and included in net income. Since 1 January 2005,
            the recording of impairments of available-for-sale securities has
    been consistent between IFRSs and US GAAP.</font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>Available-for-sale</font></b>          </font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><i><font size=2>Unrealised
    losses on investment securities</font></i><font face="TimesNewRoman,Times New Roman,Times,serif"></font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>The
            following investment securities that had unrealised losses at 31
            December 2005 were not considered &#145;other-than-temporarily&#146; impaired
    under US GAAP:</font><font face="TimesNewRoman,Times New Roman,Times,serif"></font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
        <TD align=center>&nbsp;</TD>
    <TD colspan="7" align=center><b><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Period
    investment has been in an unrealised loss position</font></font></b></TD>
    <TD align=center><b></b></TD>
    <TD align=center><b></b></TD>
    <TD align=center>&nbsp;</TD>
    <TD align=center><b></b></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="7" align=left><hr size="1" noshade>
        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=center><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Less than one year</FONT>
        </font><font size="2">&nbsp;</font></b></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=center><b><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">&nbsp; </font><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Greater
    than or equal to one</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">year</font><font size="2">&nbsp;</font>  </b></TD>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=center><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Total</FONT></font><font size="2">&nbsp;</font>        </b></TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=left><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Unrealised</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Unrealised</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Unrealised</FONT>
        </font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Fair value</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>losses</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Fair value</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>losses</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Fair value</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>losses</FONT>
        </font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT>
        </font></b></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US Treasury</FONT></font></TD>
        <TD width="10%" align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,136</FONT></font></b></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="10%" align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(22</FONT>
        </font></b></TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD width="10%" align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>78</FONT></font></b></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="10%" align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(1</FONT>
        </font></b></TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD width="10%" align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,214</FONT></font></b></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="10%" align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(23</FONT>
        </font></b></TD>
        <TD width="2%" align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US Government agencies</FONT></font></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,385</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(28</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>570</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(24</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,955</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(52</FONT>
        </font></b></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>US
    Government sponsored</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">entities</font></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>8,955</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(192</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2,811</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(100</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>11,766</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(292</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>UK Government</FONT></font></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>56</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>225</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(1</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>281</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(1</FONT>
        </font></b></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Hong Kong Government</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,259</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(23</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>126</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,385</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(23</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Other governments</FONT></font></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>3,457</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(33</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>6,187</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(54</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>9,644</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(87</FONT>
        </font></b></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Asset-backed securities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,522</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(7</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>367</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(5</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,889</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(12</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Corporate
    debt and other</font></font> <FONT size=2>securities</FONT></font></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>32,423</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(284</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>8,726</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(131</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>41,149</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(415</FONT>
        </font></b></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Debt securities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>50,193</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(589</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>19,090</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(316</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>69,283</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(905</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Equity securities</FONT></font></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>52</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(6</FONT>
        </font></b></TD>
        <TD align=left><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT>
        </font></b></TD>
        <TD align=left><b><font size="2">&nbsp;</font>

        </b></TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>52</FONT></font></b></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(6</FONT>
        </font></b></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
      <font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2>Total</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>50,245</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(595</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>19,090</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(316</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>69,335</FONT></font></b></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><b><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(911</FONT>
        </font></b></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Under
          US GAAP, 3,615 debt security investments and 15 investments in equity
    shares had unrealised losses at 31 December 2005.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Under
          both IFRSs and US GAAP, HSBC recognises in the income statement
an &#145;other-than-temporary&#146; impairment if the market value of an investment
security has been significantly below its carrying value for a period exceeding
six months. The only exception to this policy is in respect of debt securities
whose decline in market value is due solely to an increase in underlying interest
rates, and which HSBC has the ability to hold until maturity. None of the securities
disclosed in the table above were considered &#145;other-than-temporarily&#146; impaired
at 31 December 2005.</font></font></td>
  </tr>
</table>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">396</FONT></font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p397"></a><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">(g)</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taxation</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>The
              components of the net deferred tax liability calculated under SFAS
    109 &#145;Accounting for income taxes&#146;, were as follows:</font></font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif"> </FONT><font face="TimesNewRoman,Times New Roman,Times,serif"></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2005</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2004</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>US&#36;m</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Deferred tax liabilities</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Leasing transactions</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2,533</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,924</FONT>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Capital allowances</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>138</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>280</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Provision for additional UK tax on overseas dividends</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>18</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>107</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Reconciling items</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2,163</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2,661</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Other</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2,004</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,101</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Total deferred tax liabilities</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>6,856</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>6,073</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Deferred tax assets</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Loan impairment allowances</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>1,974</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2,530</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Tax losses</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>587</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>827</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Reconciling items</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>1,050</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>3,066</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Other</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>4,981</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2,254</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Total deferred tax assets before valuation allowance</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>8,592</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>8,677</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Less: valuation allowance</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(794</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(1,062</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Deferred tax assets less valuation allowance</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>7,798</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>7,615</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Net deferred tax asset under SFAS 109</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>942</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1,542</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade>
  </TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Included within &#145;other assets&#146; under US GAAP</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2,717</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>3,272</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Included within &#145;deferred tax liabilities&#146; under US
    GAAP</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(1,775</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(1,730</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The valuation allowance against deferred tax assets principally relates to trading and capital losses carried forward, which have not been recognised due to uncertainty over their
utilisation. A valuation allowance is established to reduce deferred tax assets if, based on available evidence, it is considered more likely than not that any of the deferred tax assets will not be realised.</FONT> </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>At 31 December 2005, HSBC had recognised deferred tax assets in
respect of tax losses (net of valuation allowances) totalling US&#36;223 million (2004: US&#36;115 million), of which
US&#36;4 million (2004: US&#36;7 million) expire within two to five years and US&#36;219 million (2004: US&#36;108
million) expire in 5 years or more.</FONT>      </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>(h)</FONT></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Loans and advances</FONT>      </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>Loans assessed under SFAS 114 &#145;Accounting by creditors for
impairment of a loan&#146;</FONT></B>   </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>SFAS 114 was amended by SFAS 118 &#145;Accounting by creditors for impairment of a loan &#150; income recognition and disclosures&#146;. SFAS 114 addresses accounting by creditors for
impairment of a loan by specifying how allowances for credit losses for certain loans should be determined. A loan is impaired when it is probable that the creditor will be unable to collect all amounts in accordance with the contractual terms of
the loan agreement. Impairment is measured based on the present value of expected future cash flows discounted at the loan&#146;s effective rate or, as an expedient, at the fair value of the loan&#146;s
collateral. Leases, smaller-balance homogeneous loans and debt securities are
excluded from the scope of SFAS 114.</FONT>     </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>At 31 December 2005, HSBC estimated that the difference between
the carrying value of its loan portfolio on the basis of SFAS 114 and its value
in HSBC&#146;s IFRSs financial statements
was such that no adjustment to net income or total shareholders&#146; equity
was required.</FONT>    </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The value of impaired loans at 31 December 2005 was US&#36;11,535 million (2004: US&#36;12,453 million). Of this total, loans which were included within the scope of SFAS 114 and for
which a provision had been established amounted to US&#36;5,082 million (2004: US&#36;6,780 million). The impairment reserve in respect of these loans estimated in accordance with the provisions of SFAS 114 was US&#36;2,675 million (2004:
US&#36;3,981 million). During the year ended 31 December 2005, impaired loans, including those excluded from the scope of SFAS 114, averaged US&#36;11,289 million (2004: US&#36;13,739 million) and interest income recognised on these loans was
US&#36;120 million (2004: US&#36;184 million).</FONT>   </font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">397</FONT></font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p398"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P>
<font size=1 face="Arial, Helvetica, sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font><font face="Arial, Helvetica, sans-serif"> </font></P>
</font>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"></font></font></font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>Loans
    outside the scope of SFAS 114</font></b></font></font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan=2><font size=2 face="Times New Roman, Times, serif">For smaller-balance homogeneous loans for which
      future cash flows from written-off balances can reasonably be estimated
      on a portfolio basis, an asset equal to the present value of the cash flows
      is recognised under IFRSs as it was previously under UK GAAP. This asset
      is not recognised for US GAAP purposes. This divergence resulted in higher
      net income in 2005 of US&#36;20 million under US GAAP compared with IFRSs,
      and a reduction in the carrying value of loans and advances to customers
      and shareholders&#146; equity at 31 December 2005 of US&#36;327 million.
      There was no difference in reported net income or shareholders&#146; equity
    for 2004.</font></TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD valign=top>&nbsp;</TD>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>(i)</FONT></font></TD>
        <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Earnings per share</FONT>      </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Basic earnings per share under US GAAP, SFAS 128 &#145;Earnings per Share&#146;, is calculated by dividing net income of US&#36;14,703 million (2004: US&#36;12,506
million) by the weighted average number of ordinary shares in issue in 2005 of
11,042 million (2004: 10,916 million).</FONT>   </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Diluted earnings per share under US GAAP is calculated by dividing net income, which requires no adjustment for the effects of dilutive ordinary potential shares, by the weighted average
number of shares outstanding plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares in 2005 of 11,334 million (2004: 11,063 million).</FONT>      </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>(j)</FONT></font></TD>
        <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Variable interest entities (&#145;VIEs&#146;)</FONT>   </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>Nature, purpose and activities of VIEs with which HSBC is involved</FONT></B>   </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC uses VIE structures in the normal course of business in a variety
of activities (outlined below), but primarily to facilitate client needs. HSBC&#146;s involvement in VIEs is,
therefore, commercially driven. VIEs are only used after careful consideration is given to the most appropriate structure to achieve HSBC&#146;s
objectives from control, risk allocation, taxation and regulatory perspectives.
The main VIEs are
discussed below.</FONT> </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD width="3%" valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<I><FONT size=2>(i)</FONT></I></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <I><FONT size=2>Asset-backed conduits (&#145;ABCs&#146;) and securitisation
    vehicles</FONT></I> </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD><TD>&nbsp;</TD>  <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>ABCs and securitisation vehicles are structures in which interests in consumer and commercial receivables are sold to investors. ABCs generally consist of entities which purchase assets
from clients to meet their financing needs, while securitisation vehicles generally acquire assets originated by HSBC itself and thereby provide HSBC with a cost-effective source of financing. Under both structures, commercial paper, notes, or
equity interests are issued to investors to fund the purchase of receivables, and cash received from the receivables is used to service the finance provided by the investors. In certain instances, HSBC receives fees for providing liquidity facility
commitments and for acting as administrator of the vehicle.</FONT>      </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD><TD>&nbsp;</TD>  <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC&#146;s exposure to loss generally arises from commitments to
provide back-up liquidity facilities for the vehicles; interest-rate swaps in
which HSBC is the counterparty; retained or acquired interests in the receivables
sold; or acquired interests in the vehicles themselves. In certain vehicles,
the risk of loss to HSBC is reduced by credit enhancements provided by the originator
of the receivables or other
parties.</FONT> </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD><TD>&nbsp;</TD>  <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>In addition to these securitisation vehicles, HSBC (primarily through its North American subsidiaries) securitises assets through entities that are not considered VIEs, including
government-sponsored financing vehicles and vehicles considered qualifying special-purpose entities under US GAAP. These entities are not consolidated under US GAAP although certain of them are consolidated under IFRSs.</FONT>      </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<I><FONT size=2>(ii)</FONT></I></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <I><FONT size=2>Infrastructure projects and funds</FONT></I></font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD><TD>&nbsp;</TD>  <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC acts as an arranger for both public and private infrastructure
projects and funds. The use of VIE structures in such projects is common as a
method of attracting a wider class of investor by dividing into tranches the
risk associated with such projects. HSBC&#146;s exposure to loss generally arises
from the provision of subordinated or mezzanine debt finance to projects, either
directly or through a consolidated investment fund investing in infrastructure
projects.</FONT>        </font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD><TD>&nbsp;</TD>  <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC is deemed to be the primary beneficiary of an infrastructure
project or fund when its investment in a project&#146;s equity, subordinated
debt or mezzanine debt, or its interest in a fund, is at a level at which it
absorbs the majority of the expected losses or residual returns of the project
or fund.</FONT> </font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">398</FONT></font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p399"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>Application
    of FIN 46R</font></b></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>FIN
              46R requires the consolidation of VIEs in which HSBC is the primary
              beneficiary, and disclosures in respect of other VIEs in which
    HSBC has a significant variable interest.</font></font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Under
              IFRSs, HSBC consolidates entities in which it has a controlling
              interest. As IFRSs normally require a risk and rewards approach
              to consolidation, HSBC&#146;s interests in entities deemed to be
              VIEs may result in differences in accounting and disclosure treatment
    under US GAAP.</font></font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>The
          following table analyses HSBC&#146;s total consolidated VIE assets
    in a US GAAP balance sheet:</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center><font face="TimesNewRoman,Times New Roman,Times,serif"><B><FONT size=2>At 31 December</FONT></B></font></TD>
        <TD align=left>&nbsp;

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2005</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>2004</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>US&#36;m</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Classification</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Loans and advances to customers</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>23,843</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>12,256</FONT></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Debt securities and equity shares</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>4,403</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>1,996</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Tangible fixed assets</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2,017</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>1,865</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Other assets</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>256</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>599</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>30,519</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>16,716</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Of the 2005 total, US&#36;23,843 million (2004: US&#36;12,256 million) represented asset-backed commercial paper conduits and securitisation vehicles, and US&#36;2,017 million (2004:
US&#36;1,612 million) represented infrastructure projects and funds. The remaining balance consisted of guaranteed pension funds, investment funds, and other entities. Certain of these entities with assets of approximately US&#36;19,475 million at
31 December 2005 (2004: US&#36;12,256 million) were consolidated by HSBC in its
IFRSs financial statements. There was no significant impact on net income under
US GAAP for the year ended 31 December 2005 as a result of consolidating these
VIEs.</FONT>    </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC also had significant involvement in, but was not the primary
beneficiary of, VIEs with total assets of approximately US&#36;86.2 billion (2004:
US&#36;32.8 billion), including
asset-backed commercial paper conduits and securitisation vehicles with assets
of approximately US&#36;14.7 billion (2004: US&#36;15.8 billion), infrastructure
projects and funds of approximately US&#36;6.2 billion (2004: US&#36;4.5 billion),
and  interests in investment funds, low income housing tax credit partnerships,
guaranteed pension funds, government debt restructuring programmes and other
entities. HSBC&#146;s maximum exposure to loss in relation to these entities
was estimated at
US&#36;9.7 billion (2004: US&#36;10.7 billion) which arose from guarantees, retained
interests and recourse liabilities. HSBC was also involved in other investment
funds and similar entities that are considered VIEs for which its involvement
was
limited to that of administrator, investment adviser, or other service provider.</FONT> </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>In addition, HSBC had an interest in certain capital funding vehicles
that are consolidated under IFRSs. However, under US GAAP, these vehicles were
not recognised on HSBC&#146;s balance
sheet because it was not the primary beneficiary. HSBC&#146;s deconsolidation of these vehicles resulted in non-equity minority interests under IFRSs of US&#36;10,114
million being reclassified as subordinated liabilities under US GAAP at 31 December
2004.</FONT>    </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD width="3%" valign=top>&nbsp;</TD>
        <TD width="3%" valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>(k)</FONT></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Consolidated cash flow statement</FONT>        </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>HSBC prepares its cash flow statement in accordance with IAS 7 &#145;Cash Flow Statements&#146;, which is consistent with the objectives and principles of SFAS 95 &#145;Statement of Cash
Flows&#146; as amended by SFAS 104 &#145;Statement of Cash Flows &#150; Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions&#146;.</FONT>       </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD valign=top>&nbsp;</TD>
        <TD valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>(l)</FONT></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Securitisations</FONT> </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>HSBC Finance</FONT></B> </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>Following the acquisition of HSBC Finance Corporation in 2003, HSBC
increased its securitisation activity and the following discussion relates only
to HSBC Finance Corporation&#146;s
securitisation activities including securitised credit card receivables transferred to HSBC Bank USA. In other HSBC entities such activities do not represent a significant part of HSBC&#146;s
business and retained interests in securitisations are
not significant.</FONT> </font></TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD>&nbsp;</TD>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>In the third quarter of 2004, HSBC began to structure all new collateralised
funding transactions as secured financings. In a secured financing, the underlying
receivables and debt remain
on HSBC&#146;s balance sheet. HSBC</FONT>       </font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">399</FONT></font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p400"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P>
  <font size=1 face="Arial, Helvetica, sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font><font face="Arial, Helvetica, sans-serif"> </font></P>
</font><font face="Arial, Helvetica, sans-serif">
</font>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></p>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>does
          not recognise a gain in a secured financing transaction. At 31 December
          2005, secured financings of US&#36;18.2 billion included in long-term
    debt were secured by US&#36;25.6 billion of customer loans.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Prior
            to the third quarter of 2004, HSBC sold MasterCard and Visa private
            label, personal non-credit card and vehicle finance loans in various
            securitisation transactions. HSBC continues to service and receive
            servicing fees on the outstanding balance of these securitised loans
            and retains rights to future cash flows arising from the loans after
            the investors receive their contractual return. HSBC has also, in
            certain cases, retained other subordinated interests in these securitisations.
            These transactions result in the recording of interest-only strip
            receivables, which represent the value of the future residual cash
            flows from securitised loans. The investors and the securitisation
            trusts have only limited recourse to HSBC assets for failure of debtors
            to pay. That recourse is limited to HSBC&#146;s rights to future
            cash flows and any subordinated interest retained. Servicing assets
            and liabilities are not recognised in conjunction with securitisations
            since HSBC receives adequate compensation relative to current market
            rates to
service the loans sold.</font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Securitisation-related
            revenue includes income associated with the current and prior period
            securitisation of loans with limited recourse structured as sales
            under US GAAP. Such income includes gains on sales, net of the estimate
            of probable credit losses under the recourse provisions, servicing
    income and excess spread relating to those loans.</font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>The
    following table provides a summary of securitisation revenue:</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2005</FONT></B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>2004</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>US&#36;m</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Net initial gains</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>25</FONT></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Net replenishment gains from revolving securitisations</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>154</FONT></B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>414</FONT></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Servicing revenue and excess spread</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>212</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>569</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Other</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>6</FONT></B></font></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Total securitisation revenue</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>372</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>1,008</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=left><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Interest-only
        strip receivables, net of the related losses and excluding the fair value
        adjustment recorded in accumulated &#145;Other comprehensive income&#146; decreased
        by US&#36;258
million in 2005 (2004: US&#36;466 million). </font></font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=left><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Net
        initial gains, which represent
gross initial gains net of management&#146;s estimate of probable credit losses
under the recourse provisions, and the key economic assumptions used in measuring
the net initial gains from securitisations,
were as follows:</font></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="5" align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Personal</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Vehicle</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>MasterCard/</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Private</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>non-credit</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2005</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>finance</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Visa</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>label</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>card</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>Total</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Net initial gains (US&#36; millions)</FONT></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2004</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Net initial gains (US&#36; millions)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>6<SUP>1</SUP></FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>14</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>5</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>25</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
Key economic assumptions<SUP>2</SUP>&nbsp;
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp; &nbsp;Weighted average life (in years)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2.1</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>0.3</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>0.4</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp; &nbsp;Payment speed</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>35.0</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>93.5</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>93.5</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp; &nbsp;Expected
    credit losses (annual rate)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>5.7</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>4.9</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>4.8</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp;  &nbsp;Discount
    rate for future cash flows</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>10.0</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>9.0</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>10.0</FONT>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> &nbsp; &nbsp;Cost of funds</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>3.0</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1.5</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1.4</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>%</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font> </TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="3%" valign=top>&nbsp;</TD>
  <TD width="3%" valign=top>&nbsp;</TD>
  <TD width="3%" valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
  <TD valign=top><font size="1">&nbsp;</font></TD>
  <TD valign=top><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=1>1</FONT></font></TD>
  <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"> <I><FONT size=1>In
          2004, vehicle finance was involved in a securitisation which later
          was restructured as a secured financing. The initial gain reflected
          above was the gain on the initial transaction that remained after the
          securitisation was restructured.</FONT></I></font></TD>
</TR>
<TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
  <TD valign=top><font size="1">&nbsp;</font></TD>
  <TD valign=top><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=1>2</FONT></font></TD>
  <TD valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"> <I><FONT size=1>Weighted
          average rates for securitisations entered into during the year for
          securitisations of loans with similar characteristics.</FONT></I></font></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan=2><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Certain
        revolving securitisation trusts, such as credit cards, are established
        at fixed levels and require frequent sales of new loan balances into
        the trusts to replace loans as they run off. These replenishments totalled
        US&#36;17.5 billion in 2005 (2004: US&#36;30.3 billion). Net gains (gross
        gains less estimated credit losses under the recourse provisions) related
        to these replenishments were calculated using weighted average assumptions
        consistent with those used for calculating gains on initial securitisations,
        and totalled US&#36;154<b> </b>million
in 2005 (2004: US&#36;414 million).</font></font></TD>
  </TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">400</FONT></font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p401"></a><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
</font></font></font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Cash
    flows received from securitisation trusts were as follows:</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Personal</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Real estate</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Vehicle</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>MasterCard/</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Private</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>non-credit</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>secured</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>finance</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Visa</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>label</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>card</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>Total</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>US&#36;m</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>US&#36;m</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2005</FONT></B></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Proceeds
    from initial</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">securitisations</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=8% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD width=2% align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Servicing fees received</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>45</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>97</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>50</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>99</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>291</FONT></B></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Other
              cash flows received on</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">retained
              interests<SUP>1</SUP></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(30</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>239</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>109</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <B><FONT size=2>316</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left></TD>
  <TD align=left></TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>2004</FONT></font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Proceeds
    from initial</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">securitisations</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>550</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>190</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>&#150;</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>740</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Servicing fees received</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>1</FONT></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>86</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>185</FONT></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>93</FONT></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>161</FONT>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>526</FONT></font></TD>
        <TD align=right><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Other
              cash flows received on</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">retained
              interests<SUP>1</SUP></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>4</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>(9</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>705</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>252</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>80</FONT>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"> <FONT size=2>1,032</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font size="2">&nbsp;</font></TD>
</TR>
<TR valign="bottom">
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left><font size="2">&nbsp;</font></TD>
</TR>
</TABLE>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="3%" valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=1>1</font></font></td>
    <td valign="top"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=1><i>Other
            cash flows included all cash flows from interest-only strip receivables,
            excluding servicing
fees.</i></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>At
          31 December 2005, the sensitivity of the current fair value of the
          interest-only strip receivables to an immediate 10 per cent and 20
          per cent unfavourable change in assumptions are presented in the table
          below. These sensitivities are based on assumptions used to value interest-only
    strip receivables at 31 December 2005.</font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Personal</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Vehicle</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>MasterCard/</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Private</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>non-credit</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>finance</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Visa</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>label</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>card</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;
    </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>Carrying
              value (fair value) of interest-only strip</font></font> <font size="2" face="TimesNewRoman,Times New Roman,Times,serif">receivables
    (US&#36; millions)</font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(13</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>20</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>15</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=10% align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>16</FONT></B>
        </font></TD>
        <TD width=2% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Weighted average life (in years)</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>1.2</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>0.3</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>0.5</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>0.5</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Payment speed assumption (annual rate)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>55.8</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>96.3</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>82.8</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>86.9</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 10% adverse change (US&#36; millions)</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(1</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(1</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 20% adverse change (US&#36; millions)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(4</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Expected credit losses (annual rate)</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>10.6</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>4.6</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>4.9</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>9.4</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 10% adverse change (US&#36; millions)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(12</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(3</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(4</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 20% adverse change (US&#36; millions)</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(25</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(3</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(6</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(8</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Discount rate for residual cash flows (annual rate)</FONT></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>10.0</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>9.0</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>10.0</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>11.0</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 10% adverse change (US&#36; millions)</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 20% adverse change (US&#36; millions)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(3</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <FONT size=2>Variable returns to investors (annual rate)</FONT></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>2.9</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>5.1</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>5.7</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>%</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 10% adverse change (US&#36; millions)</font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(1</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(4</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left bgcolor="#eeeeee"><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">  &nbsp; &nbsp;Impact
    on fair value of 20% adverse change (US&#36; millions)</font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>&#150;</FONT></B>
        </font></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(2</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(7</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
        <TD align=right><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>(5</FONT></B>
        </font></TD>
        <TD align=left><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>)</FONT></B></font></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>These
        sensitivities are hypothetical and should not be considered to be predictive
        of future performance. As the figures indicate, the change in fair value
        based on a 10 per cent variation in assumptions cannot necessarily be
        extrapolated because the relationship of the change in assumption to
        the change in fair value may not be linear. Also, in this table, the
        effect of a variation in a particular assumption on the fair value of
        the residual cash flow is calculated independently from any change in
        another assumption. In reality, changes in one factor may contribute
        to changes in another (for example, increases in market interest rates
        may result in lower prepayments) which might magnify or counteract the
        sensitivities. Furthermore, the estimated fair values as disclosed should
    not be considered indicative of future earnings on these assets.</font></font></TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="9" align=left><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Static
        pool credit losses are calculated by summing actual and projected future
        credit losses and dividing them by the original balance of each pool
        of asset. Due to the short-term revolving nature of MasterCard, Visa,
    and</font></font></TD>
</TR>
</TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">401</FONT></font></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div>
<font face="TimesNewRoman,Times New Roman,Times,serif"><page><a name="p402"></a>
<p><font face="TimesNewRoman,Times New Roman,Times,serif"><a href="#contents"><font size="2">Back to Contents</font></a></font></p>
<P>
<font size=1 face="Arial, Helvetica, sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
O L D I N G S&nbsp;&nbsp;&nbsp;P L C</font><font face="Arial, Helvetica, sans-serif"> </font></P>
</font>
<p><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"> <B><FONT size="3" face="Arial, Helvetica, sans-serif">Notes
        on the Financial Statements</FONT></B><font face="Arial, Helvetica, sans-serif"> (continued)</font></FONT></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<font face="TimesNewRoman,Times New Roman,Times,serif">
<P><font face="TimesNewRoman,Times New Roman,Times,serif">
</font></P>
</font>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font size=2>private
            label loan balances, the weighted average percentage of static pool
            credit losses is not considered to be materially different from the
            weighted average charge-off assumptions used in determining the fair
            value of interest-only strip receivables in the table above. At 31
            December 2005, static pool credit losses for vehicle finance loans
            securitised in 2003 were estimated to be 10.6 per cent and for vehicle
            finance loans securitised in 2002 were estimated to be 14.8 per cent
    (2004: 14.7 per cent).</font></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><b><font size=2>Activities
    of other North American subsidiaries</font></b></font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"><font face="TimesNewRoman,Times New Roman,Times,serif"> <font size=2>Through
              its subsidiaries, HSBC Markets (USA) Inc. and HSBC Bank USA, N.A.,
              HSBC began acquiring residential mortgage loans from unrelated
              third parties in the middle of 2005 with the intention to sell
              these loans to securitisation trusts. HSBC received US&#36;540
              million in proceeds from the initial securitisation transaction
              under this program and recorded a gain on sale of US&#36;6 million.
              HSBC does not service these loans and at 31 December 2005 held
              no residual interests resulting from this transaction. In addition,
              HSBC securitised the net interest margin (&#145;NIM&#146;) associated
              with the initial securitisation. A NIM securitisation is a structured
              finance transaction backed by the residual cash flows from an Asset
              Backed Security (&#145;ABS&#146;) deal. NIMs are collateralised
              by the excess spread left after absorbing the realised losses and
              satisfying the required over-collateralisation levels in the underlying
              ABS deals. HSBC received US&#36;39 million in proceeds from this
              securitisation transaction and recorded no gain on sale. HSBC holds
              a residual interest of US&#36;14 million resulting from the NIM
              securitisation. The residual interest is recorded in trading assets
              and is measured at fair value in accordance with SFAS 115. As the
              NIM securitisation occurred late in 2005, HSBC received no income
    from the residual interest in 2005.</font></font></font></font></td>
  </tr>
</table>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>48</FONT></B></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Approval of accounts</FONT></B></font></TD>
</TR>
<TR><TD colspan=2><hr size="1" noshade></TD></TR><TR>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>These accounts were approved by the Board of Directors on 6 March 2006.</FONT>     </font></TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD valign=top><font face="TimesNewRoman,Times New Roman,Times,serif">
<B><FONT size=2>49</FONT></B></font></TD>
        <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
    <B><FONT size=2>Non-statutory accounts</FONT></B>   </font></TD>
</TR>
<TR><TD colspan=2><hr size="1" noshade></TD></TR><TR>
<TD>&nbsp;</TD> <TD><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2>The information set out in these accounts does not constitute the
company&#146;s statutory accounts for the years ended 31 December 2005 or 2004. Those accounts have been reported on by
the company&#146;s auditors: their reports were unqualified and did not contain
a statement under section 237(2) or (3) of the Companies Act 1985. The accounts
for 2004 have been delivered to the Registrar of Companies and those for 2005
will be
delivered in due course.</FONT> </font></TD>
</TR></TABLE>
<P align="center"><font face="TimesNewRoman,Times New Roman,Times,serif">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">402</FONT></font></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p403"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <b><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Taxation
  </font></b><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif"><b>of
  Shares and Dividends</b> </font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Taxation</FONT></B></td>
  </tr>
  <tr>
    <td><hr align="left" size="2" noshade></td>
  </tr>
</table>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following is a summary, under current law, of the principal UK tax considerations that are likely to be material to the ownership and disposition of shares. The summary does not
purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of shares. In particular, the summary deals principally with shareholders who are resident in the United Kingdom for UK tax purposes and only
with holders who hold the shares as investments and who are the beneficial owners of the shares, and does not address the tax treatment of certain classes of holders such as dealers in securities. Holders and prospective purchasers should consult
their own advisers regarding the tax consequences of an investment in shares in light of their particular circumstances, including the effect of any national, state or local laws.</FONT></P>
<P><b>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Taxation of dividends</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Currently no tax is withheld from dividends paid by HSBC Holdings. However, dividends are paid with an associated tax credit which is available for set-off by certain shareholders against
any liability they may have to UK income tax. Currently, the associated tax credit is equivalent to 10 per cent of the combined cash dividend and tax credit, i.e. one-ninth of the cash dividend.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For individual shareholders who are resident in the United Kingdom for taxation purposes and liable to UK income tax at the basic rate, no further UK income
tax liability arises on the receipt of a dividend from HSBC Holdings. Individual shareholders who are liable to UK income tax at the higher rate on UK dividend income (currently 32.5 per cent) are taxed on the combined amount of the dividend and the
tax credit. The tax credit is available for set-off against the higher rate liability, leaving net higher rate tax to pay equal to 25 per cent of the cash dividend. Individual UK resident shareholders are not entitled to any tax credit
repayment.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Although non-UK-resident shareholders are generally not entitled to any repayment of the tax credit in respect of any UK dividend received, some such
shareholders may be so entitled under the provisions of a double taxation agreement between their country of residence and the United Kingdom. However, in most cases no amount of the tax credit is, in practice, repayable.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Information on the taxation consequences of the HSBC Holdings scrip dividends offered in lieu of the 2004 fourth interim dividend and the first,
second</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and third interim dividends for 2005 was set out in the Secretary&#146;s letters to shareholders of 31 March, 1 June, 31 August and 6 December 2005. In each case, the market value of the
scrip dividend was not substantially different from the dividend forgone and, accordingly, the price of HSBC Holdings US&#36;0.50 ordinary shares (the &#145;shares&#146;) for UK tax purposes for the dividends was the cash dividend
foregone.</FONT></P>
<P><b>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Taxation of capital gains</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The computation of the capital gains tax liability arising on disposals of shares in HSBC Holdings by shareholders subject to UK capital gains tax can be complex, partly depending on
whether, for example, the shares were purchased since April 1991, acquired in 1991 in exchange for shares in The Hongkong and Shanghai Banking Corporation Limited, or acquired subsequent to 1991 in exchange for shares in other companies.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">For capital gains tax purposes, the acquisition cost for ordinary shares is adjusted to take account of subsequent rights and capitalisation issues. Further
adjustments apply where an individual shareholder has chosen to receive shares instead of cash dividends, subject to scrip issues made since 6 April 1998 being treated for tax as separate holdings. Any capital gain arising on a disposal may also be
adjusted to take account of indexation allowance and, in the case of individuals, taper relief. Except for gains made by a company chargeable to UK corporation tax, any such indexation allowance is calculated up to 5 April 1998 only.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If in doubt, shareholders are recommended to consult their professional advisers.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares or ADSs held by an individual whose domicile is determined to be the United States for the purposes of the United States-United Kingdom Double
Taxation Convention relating to estate and gift taxes (the &#145;Estate Tax Treaty&#146;) and who is not for such purposes a national of the United Kingdom will not, provided any US Federal estate or gift tax chargeable has been paid, be subject to
UK inheritance tax on the individual&#146;s death or on a lifetime transfer of shares or ADSs except in certain cases where the shares or ADSs (i) are comprised in a settlement (unless, at the time of the settlement, the settlor was domiciled in the
United States and was not a national of the United Kingdom), (ii) is part of the business property of a UK permanent establishment of an enterprise, or (iii) pertains to a UK fixed base of an individual used for the performance of independent
personal services. In such cases, the Estate Tax Treaty generally provides</FONT></P>
</div><br clear="all">
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">403</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p404"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C&nbsp;&nbsp;&nbsp;H
  O L D I N G S&nbsp;&nbsp;&nbsp;P L C</FONT></P>
<P> <b><font size="3" face="Univers,Bold,Arial,Helvetica,sans-serif">Taxation
      of Shares  and Dividends </font></b><font size="2" face="Univers,Arial,Helvetica,sans-serif">(continued)</font></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="float: left; width: 48%">

<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">a credit against US Federal tax liability for the amount of any tax paid in the United Kingdom in a case where the shares or ADSs are subject to both UK inheritance tax and to US Federal
estate or gift tax.</FONT></P>
<P><b>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Stamp duty and stamp duty reserve tax</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Transfers of shares by a written instrument of transfer generally will be subject to UK stamp duty at the rate of 0.5 per cent of the consideration paid for the transfer, and such stamp
duty is generally payable by the transferee.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">An agreement to transfer shares, or any interest therein, normally will give rise to a charge to stamp duty reserve tax at the rate of 0.5 per cent of the
consideration. However, provided an instrument of transfer of the shares is executed pursuant to the agreement and duly stamped before the date on which the stamp duty reserve tax becomes payable, under current UK Inland Revenue practice it will not
be necessary to pay the stamp duty reserve tax, nor to apply for such tax to be cancelled. Stamp duty reserve tax is generally payable by the transferee.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Paperless transfers of shares within CREST, the United Kingdom&#146;s paperless share transfer system, are liable to stamp duty reserve tax at the rate of
0.5 per cent of the consideration. In CREST transactions, the tax is calculated and payment made automatically. Deposits of shares into CREST generally will not be subject to stamp duty reserve tax, unless the transfer into CREST is itself for
consideration.</FONT></P>
<table width="100%%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Taxation &#150; US
    residents</FONT></B></td>
  </tr>
  <tr>
    <td><hr size="2" noshade></td>
  </tr>
</table>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following is a summary, under current law, of the principal UK tax and US Federal tax considerations that are likely to be material to the ownership and disposition of shares or ADSs
by a holder that is a resident of the United States for the purposes of the income tax convention between the United States and the United Kingdom (the &#145;Treaty&#146;), and is fully eligible for benefits under the Treaty (an &#145;eligible US
holder&#146;). The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of shares or ADSs. In particular, the summary deals only with eligible US holders that hold shares or
ADSs as capital assets, and does not address the tax treatment of holders that are subject to special tax rules, such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies, persons that hold shares or ADSs as part
of an integrated investment (including a &#145;straddle&#146;) comprised of a share or ADS and one or more other</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">positions, and persons that own, directly or indirectly, 10 per cent or more of the voting stock of HSBC Holdings. This discussion is based on laws, treaties, judicial decisions and
regulatory interpretations in effect on the date hereof, all of which are subject to change. A new income tax treaty (the &#145;new Treaty&#146;) between the United Kingdom and the United States entered into effect on 1 May 2003 with respect to
withholding taxes on dividends superseding the previous tax treaty (the &#145;old Treaty&#146;). Following entry into effect of the new Treaty, eligible US holders are no longer entitled to claim a special foreign tax credit in respect of dividends
that was available under the terms of the old Treaty, except for a limited period of time during which such holders may have elected to apply the old Treaty in its entirety in preference to the new Treaty.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares or ADSs in light of their
particular circumstances, including the effect of any national, state or local laws.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">In general, the beneficial owner of a share or ADS will be entitled to benefits under the new Treaty (and, therefore, will be an eligible US holder) if it is
(i) an individual resident of the United States, a US corporation meeting ownership criteria specified in the new Treaty or other entity meeting criteria specified in the new Treaty; and (ii) not also resident in the United Kingdom for UK tax
purposes. Special rules, including a limitation of benefits provision, may apply. The Treaty benefits discussed below generally are not available to US holders that hold shares or ADSs in connection with the conduct of a business through a permanent
establishment, or the performance of personal services through a fixed base, in the United Kingdom.</FONT></P>
<b><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Taxation of dividends</FONT><BR>
</b>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">An eligible US holder must include cash dividends paid on the shares or ADSs in ordinary income on the date that such holder or the ADS depositary receives them, translating dividends
paid in UK pounds sterling into US dollars using the exchange rate in effect on the date of receipt. Subject to certain exceptions for positions that are hedged or held for less than 61 days, and subject to a foreign corporation being considered a
&#145;qualified foreign corporation&#146; (which includes not being classified for US federal income tax purposes as specified types of foreign investment companies), certain dividends (&#145;qualified dividends&#146;) received by an individual
eligible US holder before 2009 generally will be subject to US taxation at a maximum rate of 15 per</FONT></P>
</div><br clear="all">
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">404</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p405"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<div style="float: left; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cent. Based on the company&#146;s audited financial statements and relevant market and shareholder data, HSBC Holdings believes that it was not treated as a passive foreign investment
company, foreign personal holding company, or foreign investment company for US federal income tax purposes with respect to its 2004 or 2005 taxable year. In addition, based on the company&#146;s audited financial statements and current expectations
regarding the value and nature of its assets, and the sources and nature of its income, HSBC Holdings does not anticipate being classified as a passive foreign investment company for its 2006 taxable year. Accordingly, dividends paid on the shares
or ADSs generally should be treated as qualified dividends.</FONT></P>
<P><b>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Taxation of capital gains</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains realised by an eligible US holder on the sale or other disposition of shares or ADSs normally will not be subject to UK taxation unless at the time of the sale or other disposition
the holder carries on a trade, profession or vocation in the United Kingdom through a branch or agency or permanent establishment and the shares or ADSs are or have been used, held or acquired for the purposes of such trade, profession, vocation,
branch or agency or permanent establishment. Such gains will be included in income for US tax purposes, and will be long-term capital gains if the shares or ADSs were held for more than one year. A long-term capital gain realised by an individual
holder generally is subject to US tax at a maximum rate of 5 or 15 per cent.</FONT></P>
<P><b>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Stamp duty and stamp
duty reserve tax &#150; ADSs</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">If shares are transferred
into a clearance service or depository receipt (&#145;ADR&#146;) arrangement
(which will include a transfer of shares to the Depository) UK stamp duty and/or
stamp
duty
reserve
 tax will be payable. The stamp duty or stamp duty reserve tax is generally payable
on the consideration for the transfer and is payable at the aggregate rate of
1.5 per cent.</FONT></P>
</div>
<div style="float: right; width: 48%">

<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The amount of stamp duty reserve tax payable on such a transfer will be reduced by any stamp duty paid in connection with the same transfer.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">No stamp duty will be payable on the transfer of, or agreement to transfer, an ADS, provided that the ADR and any separate instrument of transfer or written
agreement to transfer remain at all times outside the United Kingdom, and provided further that any such transfer or written agreement to transfer is not executed in the United Kingdom. No stamp duty reserve tax will be payable on a transfer of, or
agreement to transfer, an ADS effected by the transfer of an ADR.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">On a transfer of shares from the Depository to a registered holder of an ADS upon cancellation of the ADS, a fixed stamp duty of &#163;5 per instrument of
transfer will be payable by the registered holder of the ADR cancelled.</FONT></P>
<P><b>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">US backup withholding tax and information reporting</FONT></b></P>
<P>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Distributions made on shares and proceeds from the sale of shares or ADSs that are paid within the United States, or through certain financial intermediaries to US holders, are subject to
information reporting and may be subject to a US &#145;backup&#146; withholding tax unless, in general, the US holder complies with certain certification procedures or is a corporation or other person exempt from such withholding. Holders that are
not US persons generally are not subject to information reporting or backup withholding tax, but may be required to comply with applicable certification procedures to establish that they are not US persons in order to avoid the application of such
information reporting requirements or backup withholding tax to payments received within the United States or through certain financial intermediaries.</FONT></P>
</div><br clear="all">
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">405</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page><a name="p406"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<p> <B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Shareholder
Information</FONT></B></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Fourth
    interim dividend for 2005</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr align="center" width="100%" size="2" noshade></td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Directors
        have declared a fourth interim dividend of US&#36;0.31 per ordinary share
        (in lieu of a final dividend) which, together with the first, second
        and third interim dividends,
each of US&#36;0.14, already paid, will make a total distribution for the year
of US&#36;0.73 per share, an increase of 11 per cent on 2004. Information on
the scrip dividend scheme and currencies in which shareholders may elect to have
the cash dividend paid will be sent to shareholders on or about 4 April 2006.
The timetable for the dividend is:</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006</FONT></B>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        quoted ex-dividend in London, Hong Kong and Bermuda; ADSs quoted ex-dividend
    in New York</font></div></TD>
        <TD width=8% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 March</FONT>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Record
        date and closure of Hong Kong Overseas Branch Register of shareholders
    for one day</font></div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 March</FONT>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
    quoted ex-dividend in Paris</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 March</FONT>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><div style="margin-left:3%; text-indent:-3%"><font size="2"> <font face="TimesNewRoman,Times New Roman,Times,serif">Mailing
          of </font><i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">Annual
          Report and Accounts 2005 </font></i><font face="TimesNewRoman,Times New
Roman,Times,serif">and/or </font><i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">Annual
          Review 2005</font></i><font face="TimesNewRoman,Times New Roman,Times,serif">,
          Notice of Annual General Meeting and</font>&nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">dividend
    documentation</font></font></div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 April</FONT>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Final
        date for receipt by registrars of forms of election and revocations of
    standing instructions for scrip dividends</font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 April</FONT>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><div style="margin-left:3%; text-indent:-3%"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
    rate determined for payment of dividends in sterling and Hong Kong dollars</font></div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May</FONT>
        </TD>
  </TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee"><div style="margin-left:3%; text-indent:-3%"><font size="2"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Payment
          date: dividend warrants, new share certificates or transaction advices
          and notional tax vouchers mailed and</font> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">shares
    credited to stock accounts in CREST</font></font></div></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11 May</FONT>
        </TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Shareholder
    profile</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade width="100%" size="2"></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">At 31
    December 2005 the register of members recorded the following details:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Number of</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Ordinary shares held</FONT></B></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Shareholders</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Shares Held</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width="3%" align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1-100</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">28,090</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">914,508</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101-400</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">33,477</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,526,648</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">401-500</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,923</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,039,341</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">501-1,000</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,077</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24,013,213</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,001-5,000</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68,843</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159,388,080</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,001-10,000</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16,134</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">114,017,890</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,001-20,000</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,853</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122,663,721</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">20,001-50,000</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,204</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">159,257,896</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50,001-200,000</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2,635</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">246,983,711</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">200,001-500,000</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">658</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">208,276,567</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">500,001 and above</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">927</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10,285,522,367</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="1" noshade></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">205,821</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,333,603,942</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right><hr size="2" noshade></TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Memorandum
    and Articles of Association</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade width="100%" size="2"></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The discussion
        under the caption &#147;Memorandum and Articles of Association&#148; contained
        in HSBC Holdings Annual Reports on Form 20-F for the years ended 31 December
        2000 and 2001 is
incorporated by reference herein.</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">406</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p407"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Annual
    General Meeting</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade width="100%" size="1"></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The 2006
        Annual General Meeting will be held at the Barbican Hall, Barbican Centre,
    London EC2 on 26 May 2006 at 11 am.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The results
        of the polls on the resolutions considered at the 2005 Annual General
    Meeting were:</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="5" align=center valign="top">
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Total votes</FONT></B></TD>
  </TR>
<TR>
  <TD colspan=4 align=left valign="bottom">&nbsp;</TD>
  <TD colspan="5" align=right valign="top"><hr size="1" noshade></TD>
  </TR>
<TR>
        <TD align=left valign="bottom">&nbsp;</TD>
        <TD colspan=3 align=left> <b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Resolution</font></b></TD>
        <TD align=right valign="top"><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">For</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD align=right valign="top">&nbsp;</TD>
        <TD align=right valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Against</FONT></B></TD>
        <TD align=right valign="top">&nbsp;</TD>
        <TD align=right valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Abstain</FONT></B></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
  <TD valign="bottom">&nbsp;</TD>
  <TD colspan=2 align=left valign="bottom">&nbsp;</TD>
  <TD align=right valign="bottom">&nbsp;</TD>
  <TD align=right valign="bottom">&nbsp;</TD>
  <TD align=right valign="bottom">&nbsp;</TD>
  <TD align=right valign="bottom">&nbsp;</TD>
  <TD align=right valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</FONT>
        </TD>
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To receive the Report and Accounts for 2004</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,188,264,091</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6,118,493</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">88,050,257</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To re-elect the following as Directors:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD width=3% align=left valign="bottom">&nbsp;</TD>
        <TD width=3% align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD width=3% align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(i)</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir John Bond</FONT></TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,087,518,427</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">35,336,901</FONT></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=10% align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">158,770,790</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ii)</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">R K F Ch'ien</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,119,809,500</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">32,967,572</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128,710,109</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iii) </FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">J
    D Coombe</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,273,656,415</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,019,850</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">926,894</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(iv)</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Baroness Dunn</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,254,966,533</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,192,450</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">444,808</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(v)</FONT></TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">D J Flint</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,269,214,839</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11,740,518</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">651,058</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(vi)</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">J W J Hughes-Hallett</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,273,852,389</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,090,408</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">648,766</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(vii) </FONT></TD>
        <TD align=left bgcolor="#eeeeee"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sir
    Brian Moffat</font></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,272,730,719</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,065,251</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">883,817</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(viii)</FONT></TD>
        <TD align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">S
    W Newton</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,273,404,835</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7,323,052</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">898,632</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">(ix)</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">H Sohmen</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,259,449,879</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13,998,760</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8,208,565</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.</FONT></TD>
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To reappoint the Auditor</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,189,566,522</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,267,063</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">58,565,560</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To approve the Directors&#146; Remuneration Report for 2004</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,042,390,563</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">238,935,100</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,001,043</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.</FONT>
        </TD>
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To authorise the Directors to allot shares</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,248,533,662</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">34,530,610</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">775,383</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To disapply pre-emption rights (Special Resolution)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,237,314,079</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">45,636,207</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">807,662</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.</FONT>
        </TD>
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To authorise the Company to purchase its own Ordinary Shares</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,277,201,897</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5,720,170</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">890,586</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To amend the HSBC Holdings Savings-Related Share Option Plan</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,256,919,733</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,915,186</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,695,692</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To amend the HSBC Holdings Savings-Related Share Option Plan:</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=2 bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;International</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,256,986,127</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21,917,140</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,613,955</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To approve the HSBC US Employee Stock Plan</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,252,360,655</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26,756,715</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,402,810</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.</FONT>
        </TD>
        <TD colspan=2 align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To approve The HSBC Share Plan</FONT></TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,139,629,417</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">125,440,646</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17,238,305</FONT></TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.</FONT>
        </TD>
        <TD colspan=2 align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">To alter the Articles of Association (Special Resolution)</FONT></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,276,758,493</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4,704,696</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1,642,885</FONT></TD>
</TR>
<TR>
  <TD colspan=4 align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD colspan="3" align=left valign="top"><font size="2"><font size=1 face="TimesNewRoman,Times New Roman,Times,serif">1<i>&nbsp;</i></font><i><font size="1"><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Includes
    discretionary votes.</font>&nbsp; </font></i></font> </TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Interim
    results</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr width="100%" size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The interim
        results for the six months to 30 June 2006 will be announced on 31 July
    2006.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Interim
    dividends for 2006</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr width="100%" size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Board
        has adopted a policy of paying quarterly dividends. Under this policy
        it is intended to have a pattern of three equal interim dividends with
        a variable fourth interim dividend. It is envisaged that the first interim
        dividend in respect of 2006 will be US&#36;0.15 per ordinary share. The
    proposed timetables for the dividends in respect of 2006 are:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="4" align=center valign="bottom"><font size="2">&nbsp;</font>
      <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Interim dividends for 2006</FONT></B><font size="2">&nbsp;</font>   </TD>
  </TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="4" align=right valign="bottom"><hr size="1" noshade></TD>
  </TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD align=right valign="bottom">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">First</FONT></B></TD>
        <TD align=right valign="bottom">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Second</FONT></B></TD>
        <TD align=right valign="bottom">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Third</FONT></B></TD>
        <TD align=right valign="bottom">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Fourth</FONT></B></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD width="3%" align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Announcement</FONT></TD>
        <TD width=12% align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2 May 2006</FONT></TD>
        <TD width=12% align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">31 July 2006</FONT></TD>
        <TD width=12% align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 November 2006</FONT></TD>
        <TD width=12% align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5 March 2007</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ADSs quoted ex-dividend in New York</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17 May 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 August 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 November 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 March 2007</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee"> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
    quoted ex-dividend in London, Hong Kong </font><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">and
    Bermuda</font></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17 May 2006</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16 August 2006</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 November 2006</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 March 2007</FONT></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
        <TD><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Record
              date and closure of Hong Kong Overseas Branch Register of shareholders
    for one day</font></div></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">19 May 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18 August 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">24 November 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">23 March 2007</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares quoted ex-dividend in Paris</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">22 May 2006</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">21 August 2006</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">27 November 2006</FONT></TD>
        <TD align=right valign="bottom" bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">26 March 2007</FONT></TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Payment date</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 July 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4 October 2006</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">18 January 2007</FONT></TD>
        <TD align=right valign="bottom">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10 May 2007</FONT></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">407</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p408"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>



<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<p> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Shareholder
      Information<font size="2"> </font></FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td> <b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Shareholder
    enquiries and communications</font></b></td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><hr width="100%" size="2" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b>Enquiries</b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Any enquiries
        relating to your shareholding, for example transfers of shares, change
        of name or address, lost share certificates or dividend cheques, should
        be sent to the
Registrars:</font></td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">Principal Register</FONT></I>&nbsp;
        </font></TD>
        <TD align=left><font size="2">
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">Hong Kong Overseas Branch Register:</FONT></I>&nbsp;
        </font></TD>
        <TD align=left><font size="2">
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">Bermuda Overseas Branch Register:</FONT></I>&nbsp;
        </font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD width="33%" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Computershare Investor Services PLC</FONT></TD>
        <TD width="32%" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Computershare Hong Kong Investor</FONT></TD>
        <TD width="32%" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate Shareholder
Services </FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PO Box 1064, The Pavilions</FONT></TD>
        <TD align=left><font size="2"> &nbsp;&nbsp;&nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Services Limited</FONT></font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Bank of Bermuda Limited</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bridgwater Road</FONT></TD>
        <TD align=left><font size="2">
    <FONT face="TimesNewRoman,Times New Roman,Times,serif">Hopewell Centre, 46th </FONT><FONT face="TimesNewRoman,Times New
Roman,Times,serif">Floor</FONT></font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6 Front Street</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bristol BS99 3FA</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">183 Queen&#146;s Road East</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hamilton HM 11</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Wan Chai</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Any
    enquiries relating to ADSs should be sent to the depositary:</font></TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    Bank of New York</font></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">101
    Barclay Street</font></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Floor
    22W</font></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">New
    York, NY 10286</font></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">USA</font></TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="2" align=left>&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Any
      enquiries relating to shares held through Euroclear France, the settlement
      and central depositary system for Euronext Paris, should be sent to the
    paying agent:</font></TD>
  </TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    France</font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">103,
      avenue des
Champs Elys&eacute;es</font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">75419,
    Paris Cedex 08</font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">France</font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Further
      copies of this </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Annual
    Report and Accounts 2005</font></i><font size=2 face="TimesNewRoman,Times New
Roman,Times,serif"> may be obtained by writing to the following departments.</font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width=3% align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">For those in Europe, the Middle East and</FONT></I>&nbsp;
<i><font face="TimesNewRoman,Italic,Times New Roman,Times,serif">Africa</font></i>&nbsp;        </font></TD>
        <TD align=left valign="bottom"><font size="2">
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">For those in Asia-Pacific:</FONT></I>&nbsp;
        </font></TD>
        <TD align=left valign="bottom"><font size="2">
<I><FONT face="TimesNewRoman,Italic,Times New Roman,Times,serif">For those in the Americas:</FONT></I>&nbsp;
        </font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;
</font></TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
        <TD align=left valign="bottom"><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD width=33% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group Corporate Affairs</FONT></TD>
        <TD width=32% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group Public Affairs</FONT></TD>
        <TD width=32% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employee Communications</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings plc</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC-North America</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Canada Square</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;Corporation Limited</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2700 Sanders Road</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London E14 5HQ</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Queen&#146;s Road Central</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prospect Heights</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Illinois 60070</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">USA</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b>Electronic communications</b></FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan="3" align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders
      may at any time choose to receive corporate communications in printed form
      or electronically. To register online to receive electronic communications,
      or revoke or amend an instruction to receive electronic communications,
      go to www.hsbc.com/ecomms. If you received this document electronically
      and would like to receive a printed copy or would like to receive future
      shareholder communications in printed form, please write to the appropriate
      Registrars at the address given above. Printed copies will be provided
    without charge.</font></TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">408</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p409"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif"><b>Chinese
    translation</b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A Chinese
    translation is available on request after 4 April 2006 from the Registrars:</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Computershare
    Hong Kong Investor Services Limited</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hopewell
    Centre, 46th Floor</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">183 Queen&#146;s
    Road East</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Wan Chai</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Computershare
    Investor Services PLC</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">PO Box
    1064, The Pavilions</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bridgwater
    Road</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bristol
    BS99 3FA</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Please
        also contact the Registrars if you wish to receive Chinese translations
        of future documents or if you have received a Chinese translation of
        this document and do not wish to
receive such translations in future.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><img src="b822899-30x4x1.jpg" border=0></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width=3% align=left valign="bottom">&nbsp;</TD>
        <TD colspan="3" align=left valign="bottom">
<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Investor relations</FONT></B>  </TD>
  </TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD colspan=3 align=left valign="bottom"><hr size="1" noshade></TD>
  </TR>
<TR>
        <TD align=left>&nbsp;</TD>
        <TD colspan=3 align=left> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Enquiries
    relating to HSBC&#146;s strategy or operations may be directed to:</font><font size="2">&nbsp;</font>       </TD>
  </TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Senior Manager
Investor Relations</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Director &#150; Corporate
Finance and</FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Investor
Relations</font></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Senior Manager External </FONT><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">Relations</font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;</font></TD>
        <TD align=left><font size="2">&nbsp; </font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD width="33%" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings plc</FONT></TD>
        <TD width="32%" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance Corporation</FONT></TD>
        <TD width="32%" align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and Shanghai Banking</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8 Canada Square</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2700 Sanders Road</FONT></TD>
        <TD align=left><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Corporation Limited</FONT></font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London E14 5HQ</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prospect Heights, IL 60070</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 Queen&#146;s Road Central</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">USA</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone: &nbsp;&nbsp;+44 (0)20 7991 8041</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 847 564 6478</FONT></TD>
        <TD align=left><font size="2">
 &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">852 2822 4929</FONT></font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Facsimile: &nbsp;&nbsp;&nbsp;&nbsp;+44 (0)20 7991 4663</FONT></TD>
        <TD>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1 847 205 7538</FONT></TD>
        <TD align=left><font size="2">
 &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">852 2845 0113</FONT></font></TD>
</TR>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">E-mail: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;investorrelations@hsbc.com</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">investor.relations@us.hsbc.com</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">investorrelations@hsbc.com.hk</FONT></TD>
</TR>
</TABLE>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Where
    more information about HSBC is available</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="1" noshade></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">This </font><i><font size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Annual
          Report and Accounts 2005</font></i><font size=2 face="TimesNewRoman,Times New
Roman,Times,serif">, and other information on HSBC, may be viewed on our web
    site: www.hsbc.com.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
        Investors may read and copy the reports, statements or information that
        HSBC Holdings files with the Securities Exchange Commission at its public
        reference room in Washington, DC, which is located at Judiciary Plaza,
        450 Fifth Street, N.W., Room 1024, Washington, DC 20549. These documents
        will also be available at the Commission&#146;s regional offices located
        at the Woolworth Building, 233 Broadway, New York, NY 10279 and at Citicorp
        Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Investors
        should call the Commission at 1-800-SEC-0330 for further information
        on the operation of the public reference rooms. Investors can request
        copies of these documents upon payment of a duplicating fee, by writing
        to the Commission at 450 Fifth Street, N.W., Washington, DC 20549. Investors
        may also obtain the reports and other information HSBC Holdings files
        at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
    New York, NY 10005.</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">409</FONT></P>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p410"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<p> <B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Shareholder
      Information </FONT></B><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Dividends
    on the ordinary shares of HSBC Holdings</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
  </tr>
</table>
<p> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
    has paid dividends on its ordinary shares every year without interruption
    since it became the HSBC Group holding company by a scheme of arrangement
    in 1991. The dividends declared, per ordinary share, for each of the last
five years were:</font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">First</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Second</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Third</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fourth</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font> </TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interim</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interim</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interim</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interim</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right><font size="2" face="TimesNewRoman,Times New Roman,Times,serif"> Total<SUP>2</SUP></font></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left bgcolor="#eeeeee"><font size="2">
    <B><FONT face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B><SUP><FONT face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></SUP></font></TD>
        <TD width="12%" align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US&#36;</FONT></B></TD>
        <TD width=2% align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=12% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.140</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=12% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.140</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=12% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.140</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width=12% align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.310</FONT></B></TD>
        <TD width="2%" align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD width="12%" align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.730</FONT></B></TD>
        <TD width=2% align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">&#163;</FONT></B></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.077</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.079</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.079</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.180</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">0.415</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">HK&#36;</FONT></B></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.088</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.086</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">1.085</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2.404</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">5.663</FONT></B></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.270</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.660</FONT></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.071</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.072</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.069</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.140</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.352</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.013</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.014</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.013</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.104</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.144</FONT></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.240</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.120</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.240</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.600</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.146</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.065</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.134</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.345</FONT></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.860</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.931</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.863</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.654</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002</FONT></TD>
        <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.205</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.325</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.530</FONT></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.130</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.202</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.332</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.600</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.534</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.134</FONT></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2001</FONT></TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.190</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.290</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.480</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
<TR>
  <TD align=left><font size="2">&nbsp;</font>

    </TD>
        <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#163;</FONT></TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.129</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.200</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">0.329</FONT></TD>
        <TD align=right>&nbsp;</TD>
  </TR>
<TR>
  <TD align=left bgcolor="#eeeeee"><font size="2">&nbsp;</font>

    </TD>
        <TD align=left bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=left bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.482</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.261</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
        <TD align=right bgcolor="#eeeeee"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.743</FONT></TD>
        <TD align=right bgcolor="#eeeeee">&nbsp;</TD>
  </TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD><i><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The
              fourth interim dividend for 2005 of US&#36;0.31 per share has been translated
              into pounds sterling and Hong Kong dollars at the closing rate on 31 December
              2005. The
dividend will be paid on 11 May 2006.</FONT></i></TD>
</TR><TR>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD><i><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">The above dividends declared are accounted for as disclosed in Note 11 on the Financial Statements.</FONT></i></TD>
</TR></TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong
Kong dollars, or satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.</FONT></P>
<BR>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Nature
    of trading market</font></b></td>
  </tr>
  <tr>
    <td><hr size="1" noshade></td>
  </tr>
</table>
<P><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
    ordinary shares are listed or admitted to trading on the London Stock Exchange,
    the Hong Kong Stock Exchange (&#145;HKSE&#146;), Euronext Paris, NYSE and the Bermuda Stock
  Exchange. HSBC Holdings maintains its principal share register in London and overseas branch share registers in Hong Kong and Bermuda (collectively, the &#145;share register&#146;).</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As at 31 December 2005, there were a total of 205,821 holders of record of HSBC Holdings ordinary shares.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As at 31 December 2005, a total of 13,403,975 of
the HSBC Holdings ordinary shares were registered in the HSBC Holdings share register in the name of 9,188 holders of record with addresses in the United States. These shares represented 0.12 per cent of the total HSBC Holdings ordinary shares in
issue.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">As at 31 December 2005, there were 11,642 holders of record of ADSs holding approximately 105 million ADSs, representing approximately 525 million HSBC
Holdings ordinary shares. 11,411 of these holders had addresses in the United States, holding approximately 104.8 million ADSs, representing 524 million HSBC Holdings ordinary shares. As at 31 December 2005, approximately 4.6 per cent of the HSBC
Holdings ordinary shares were represented by ADSs held by holders of record with addresses in the United States.</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The following table shows, for the years, calendar quarters and months indicated, the highest and lowest prices for the HSBC Holdings ordinary shares and
ADSs. These are based on mid-market prices at close of business on the London Stock Exchange, HKSE, Euronext Paris, NYSE and the Bermuda Stock Exchange.</FONT></P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Past share price performance should not be regarded as a guide to future performance.</FONT></P>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">410</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p411"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;<b>&nbsp;High
      and low mid-market
closing prices</b></font></p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left valign="bottom"></TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London</FONT><font size="2">&nbsp;</font> </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong</font></font></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center><font size="2">
 &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">New York</FONT></font><font size="2">&nbsp;</font>        </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Paris</FONT><font size="2">&nbsp;</font>  </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center><font size="2"> &nbsp; &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Bermuda<SUP>2</SUP></FONT></font></TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR>
  <TD align=left valign="bottom"></TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    ADSs<SUP>1</SUP></font><font size="2">&nbsp;</font> </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom"></TD>
  <TD align=left></TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom"></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=left valign="bottom"></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pence</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pence</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">euro</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">euro</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
  <TD align=right>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD width=3% align=right valign="bottom">&nbsp;</TD>
        <TD align=right>
      <div align="left"><B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B>
      </div></TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">950</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">825</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">133.5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120.1</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">85.8</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77.5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.9</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.0</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.1</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.7</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=right>
      <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT>
      </div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">954</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">784</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87.8</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.6</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=right>
      <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2003</FONT>
      </div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">914</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">631</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">122.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">80.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">51.1</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR>
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=right>
      <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2002</FONT>
      </div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">866</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">643</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">97.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">78.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">64.4</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">50.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.9</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.2</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD align=right valign="bottom">&nbsp;</TD>
        <TD align=right>
      <div align="left"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2001</FONT>
      </div></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">1092</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">608</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">121.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">68.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79.7</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">44.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.3</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#150;</FONT></TD>
        <TD align=right>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan=4 align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=center>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London</FONT><font size="2">&nbsp;</font> </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center><font size="2">
 &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></font></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center><font size="2">
 &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">New York</FONT></font><font size="2">&nbsp;</font>        </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Paris</FONT><font size="2">&nbsp;</font>  </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda</FONT></TD>
        <TD align=center><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan="3" align=center><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    ADSs<SUP>1</SUP></font><font size="2">&nbsp;</font> </TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD colspan=3 align=center>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
    <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
  <TD colspan="3" align=center><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pence</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pence</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">euro</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">euro</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4<SUP>th </SUP>Quarter</font></TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">950</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">873</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">126.5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120.1</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81.6</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77.5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.9</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.8</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.5</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.7</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3<SUP>rd </SUP>Quarter</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">936</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">885</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">129.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">123.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.6</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.6</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.0</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2<SUP>nd </SUP>Quarter</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">895</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">825</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">122.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81.4</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.5</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.8</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1<SUP>st </SUP>Quarter</font></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">907</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">832</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">133.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">122.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">85.8</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.3</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.1</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.9</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">2004</FONT></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    4<SUP>th </SUP>Quarter</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">954</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">860</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">136.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">124.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">87.8</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.6</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.4</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">17.3</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.0</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    3<SUP>rd </SUP>Quarter</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">888</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">784</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">124.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">114.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">79.8</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">72.7</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.1</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.9</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.6</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    2<SUP>nd </SUP>Quarter</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">836</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">789</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">118.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">109.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">76.5</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">70.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.6</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.8</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.3</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.5</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    1<SUP>st </SUP>Quarter</font></TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">893</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">802</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">128.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">115.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">82.5</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">73.5</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.2</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.0</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.5</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.7</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=center valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=center valign="bottom">&nbsp;</TD>
  <TD align=center valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=center valign="bottom">&nbsp;</TD>
  <TD align=center valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
  <TD align=left valign="bottom">&nbsp;</TD>
</TR>
<TR align="center">
  <TD>&nbsp;</TD>
        <TD><font size="2">&nbsp;</font>

        </TD>
        <TD colspan="3">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London</FONT></TD>
        <TD>&nbsp;</TD>
        <TD colspan=3><font size="2"> &nbsp;<font face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong</font></font> </TD>
        <TD>&nbsp;</TD>
        <TD colspan="3"><font size="2">
 &nbsp;<FONT face="TimesNewRoman,Times New Roman,Times,serif">New York</FONT></font><font size="2">&nbsp;</font>        </TD>
        <TD>&nbsp;</TD>
        <TD colspan="3">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Paris</FONT><font size="2">&nbsp;</font>  </TD>
        <TD>&nbsp;</TD>
        <TD colspan="3">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda</FONT></TD>
        <TD><font size="2">&nbsp;</font>

        </TD>
</TR>
<TR align="center">
  <TD>&nbsp;</TD>
        <TD><font size="2">&nbsp;</font>

        </TD>
        <TD colspan=3>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50 shares</FONT></TD>
        <TD>&nbsp;</TD>
        <TD colspan=3> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50
    shares</font></TD>
        <TD>&nbsp;</TD>
        <TD colspan="3"><font size="2" face="TimesNewRoman,Times New Roman,Times,serif">
    ADSs<SUP>1</SUP></font><font size="2">&nbsp;</font> </TD>
        <TD>&nbsp;</TD>
        <TD colspan=3> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50
    shares</font></TD>
        <TD>&nbsp;</TD>
    <TD colspan=3> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;0.50
    shares</font></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=right>&nbsp;</TD>
  <TD colspan="3" align=right><hr size="1" noshade></TD>
  <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">High</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Low</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pence</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">pence</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HK&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">euro</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">euro</FONT></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US&#36;</FONT></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD width=3% align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2006</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">January</FONT></TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">969</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">924</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">131.3</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124.5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">85.5</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80.5</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">14.2</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.4</FONT></B></TD>
        <TD width=2% align=right>&nbsp;</TD>
        <TD width=6% align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">17.1</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
        <TD width=6% align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.4</FONT></B></TD>
        <TD width=2% align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">2005</FONT></B></TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=left><font size="2">&nbsp;</font>

        </TD>
        <TD align=left>&nbsp;</TD>
        <TD align=right><font size="2">&nbsp;</font> </TD>
        <TD align=left>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">December</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">937</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">910</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">126.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81.5</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.9</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.5</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">November</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">950</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">891</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125.7</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">121.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81.6</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">78.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.9</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.3</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.1</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">October</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">923</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">873</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">126.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">120.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">77.5</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.6</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">12.8</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">15.7</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">September</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">921</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">885</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">125.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">82.3</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">80.6</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.5</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.6</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR bgcolor="#eeeeee">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">August</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">932</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">888</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">129.2</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">124.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">83.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79.9</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.5</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.5</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.1</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
<TR>
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">July</FONT></TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">936</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">896</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">127.3</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">123.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">81.8</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">79.0</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.6</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">13.1</FONT></B></TD>
        <TD align=right>&nbsp;</TD>
        <TD align=right>
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.2</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
        <TD align=right> <B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">16.0</FONT></B></TD>
        <TD align=center>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2" valign=top>&nbsp;</TD>
</TR>
<TR>
  <TD valign=top>&nbsp;</TD>
  <TD colspan="2"><i><font size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Notes</font></i></TD>
  </TR>
<TR>
  <TD width="3%" valign=top><font size="1">&nbsp;</font></TD>
        <TD width="3%" valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">1</FONT></TD>
        <TD><i><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">In New York each ADS represents 5 underlying ordinary shares.</FONT></i></TD>
</TR><TR>
  <TD valign=top><font size="1">&nbsp;</font></TD>
        <TD valign=top>
<FONT size=1 face="TimesNewRoman,Times New Roman,Times,serif">2</FONT></TD>
        <TD><i><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Shares were not listed on the Bermuda Stock Exchange prior to 18 February 2004.</FONT></i></TD>
</TR>
<TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2><font size=2 face="UniversLT55,Arial,Helvetica,sans-serif">Stock Symbols</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2> <font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
    ordinary shares trade under the following stock symbols:</font></TD>
  </TR>
<TR>
  <TD>&nbsp;</TD>
  <TD colspan=2>&nbsp;</TD>
</TR>
</TABLE>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=30% align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London Stock Exchange</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBA</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Stock Exchange</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">5</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New York Stock Exchange (ADS)</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HBC</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Euronext Paris</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSB</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda Stock Exchange</FONT></TD>
        <TD align=left>
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC</FONT></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">411</FONT></P>

<hr noshade align="center" width="100%" size="2">

<page><a name="p412"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p><FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT> </p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td><b><font face="Arial,Bold,Arial,Helvetica,sans-serif">Organisational </font></b><b><font face="Arial,Bold,Arial,Helvetica,sans-serif">Structure</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="10%" bgcolor="#c0c0c0">&nbsp;</td>
    <td bgcolor="#dddddd">&nbsp;</td>
  </tr>
</table>
<P align="left">&nbsp;</P>
<P align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">The
  HSBC Group<br>
  </FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Structure</FONT></B><B><FONT size=2
face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif"> of </FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Principal</FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">
  </FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Operating</FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">
  </FONT></B><B><FONT size=2
face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Companies<br>
  </FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">at
  </FONT></B><B><FONT size=2
face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">January</FONT></B><B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">
  2006</FONT></B></P>
<P align="center"> <IMG src="b822899-31x1x1.jpg" width="100%" border=0> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan="2" align=left> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">NOTES</FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">1)
      </FONT></I></TD>
    <TD align=left> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">This
      chart is a simplified ownership diagram only; not all intermediate holding
      companies are shown.</FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">2)</FONT></I></TD>
    <TD align=left> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">
      A percentage figure in brackets inside a company name box indicates the
      ultimate percentage owned of that company within the HSBC Group.</FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">3)</FONT></I></TD>
    <TD align=left> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Where
      no figure appears the company is wholly owned.</FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">4)</FONT></I></TD>
    <TD align=left> <I><FONT size=1 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Places
      of incorporation are shown in Notes 20 and 24 on the Financial Statements.</FONT></I></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">412</FONT></P>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page><a name="p413"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT></P>
<p><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">SEC 20-F
      Cross-Reference
Sheet and Glossary</font></b></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <tr>
    <td align="left"><b></b></td>
    <td colspan=4 align="left"><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Cross-Reference
          Sheet</font></b></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td colspan=4 align="left"><hr size="2" noshade>
    </td>
    <td align="left"><hr size="2" noshade>
    </td>
    <td><hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td colspan=4 align="left"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Form
          20-F Item Number and Caption</font></b></td>
    <td align="left"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Location</font></b></td>
    <td align="right"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Page</font></b></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td colspan="4" align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">PART
        I</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">1.</font></td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Identity
        of Directors, Senior Management</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
    Advisers</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">2.</font></td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Offer
        Statistics and Expected Timetable</font></td>
    <td width="40%" align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3.</font></td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Key
        Information</font></td>
    <td align="left">&nbsp;</td>
    <td width="8%">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="left">&nbsp;</td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Selected
        Financial Data</font></td>
    <td width="40%" align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Five-Year
        Comparison</font></td>
    <td width="8%" align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">3</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
        GAAP Selected Financial Data</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capitalisation
        and Indebtedness</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reasons
        for the Offer and use of</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Proceeds</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk Factors</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">4.</font></td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Information
        on the Company</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">History
        and Development of the</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Description
        of Business</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">7-19</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Company</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Review</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">26-98,
        420</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Business
        Overview</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Description
        of Business</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">7-19</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Governance,
        Regulation and Supervision</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">20-24</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Review</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">26-98</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Organisational
        Structure</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Description
        of Business</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Organisational
        Structure Chart</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">412</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note
        24 &#150; Notes on the Financial</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">301-303</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property,
        Plants and Equipment</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Description
        of Property</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">189</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note
        23 &#150; Notes on the Financial</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">298-300</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">5.</font></td>
    <td>&nbsp;</td>
    <td align="left" colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
        and Financial Review and</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Prospects</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
        Results</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Review</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">26-149</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liquidity
        and Capital Resources</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Review</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">150-152</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">173-177</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Research
        and Development, Patents</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">and</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Licences,
        etc.</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trend Information</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Review</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">26-149</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">E.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Off-Balance
        Sheet Arrangements</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">182-183</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">F.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contractual
        Obligations</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">183</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">6.</font></td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors,
        Senior Management and</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employees</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors
        and Senior Management</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Board
        of Directors and Senior</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">184-188</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Compensation</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors&#146; Remuneration
        Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">215-232</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Board Practices</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">200-210,</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">215</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors&#146; Remuneration
        Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">223-225</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employees</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Description
        of Business</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">E.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share Ownership</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">211-213</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors&#146; Remuneration
        Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">229-232</font></td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">7.</font></td>
    <td>&nbsp;</td>
    <td align="left" colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Major
        Shareholders and Related Party</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Transactions</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Major Shareholders</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">213</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">413</FONT> </p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page><a name="p413a"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT></P>
<p><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">SEC 20-F
      Cross-Reference
Sheet and Glossary </font></b><font size=1
face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="3%" align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Related
        Party Transactions</font></td>
    <td width="40%" align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note
        43 &#150; Notes on the Financial</font></td>
    <td width="8%" align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">330-332</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests
        of Experts and Counsel</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Information</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Consolidated
        Statements and Other</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Statements</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">233-402</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Information</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Legal
        Proceedings</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">25</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note
        42 &#150; Notes on the Financial</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">330</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">410</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Significant
        Changes</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">9.</font></td>
    <td align="left">&nbsp;</td>
    <td align="left" colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        Offer and Listing</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Offer
        and Listing Details</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">406-411</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Plan
        of Distribution</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Markets</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">406-411</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Selling
        Shareholders</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">E.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dilution</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">F.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Expenses
        of the Issue</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">10.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additional
        Information</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
        Capital</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Memorandum
        and Articles of</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">406</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Association</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Material
        Contracts</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
        Controls</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
        controls and other limitations</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">affecting
        security holders</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">7</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">E.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taxation</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">403-405</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">F.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends
        and Paying Agents</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">G.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements
        by Experts</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">H.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Documents
        on Display</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
        Information</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">408-409</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">I.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subsidiary
        Information</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">11.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Quantitative
        and Qualitative Disclosures</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Review</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">152-172</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">About
        Market Risk</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note
        17 and 34 &#150; Notes on the Financial</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">285-289</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">316-317</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">12.</font></td>
    <td align="left">&nbsp;</td>
    <td align="left" colspan=2><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Description
        of Securities Other than Equity</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt
        Securities</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Warrants
        and Rights</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other
        Securities</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">American
        Depositary Shares</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        required for Annual Report</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan=4 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">PART
        II</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">13.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defaults,
        Dividends Arrearages and</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Delinquencies</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">14.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Material
        Modifications to the Rights of</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities
        Holders and Use of Proceeds</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">15.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Controls
        and Procedures</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Disclosure
        Controls</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">184</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">16.</font></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">[Reserved]</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Audit
        Committee Financial Expert</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">203-204</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">B.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Code
        of Ethics</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">206-208</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">C.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Principal
        Accountant Fees and Services</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">203-206</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Note
        8 &#150; Notes on the Financial</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">269</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statements</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">D.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exemptions
        from the Listing Standards</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        Audit Committees</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">E.</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Purchases
        of Equity Securities by the</font></td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Report
        of the Directors</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">213</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Issuer
        and Affiliated Purchasers</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">413a</FONT> </p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page><a name="p413b"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border=0 align="center" cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td colspan=3><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">PART
        III</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="right">&nbsp;</td>
    <td width="2%" align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">17</font></td>
    <td width="5%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Statements</font></td>
    <td width="30%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Not
        Applicable</font></td>
    <td width="8%" align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">&#151;</font></td>
  </tr>
  <tr>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">18</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Statements</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Statements</font></td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">233-402</font></td>
  </tr>
  <tr>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">19</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">.</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exhibits
        (including Certifications)</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">*</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" align="center" border=0 cellspacing=0 cellpadding=0>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">Glossary
          of accounting terms and abbreviations</FONT></B></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr size="2" noshade>
    </td>
    <td align="left"><hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td width="35%"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Accounting
          terms used</font></b></td>
    <td align="left"><b><font size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">US
          equivalent or brief description</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accounts</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
        Statements</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Allotted</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Issued</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Articles
        of Association</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bylaws</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Associates</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term
        equity investments accounted for by the equity method</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Attributable
        profit</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net income</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance
        sheet</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statement
        of financial position</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bills</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Notes</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Called-up
        share capital</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ordinary
        shares, issued and fully paid</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
        allowances</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Tax depreciation
        allowances</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Creditors</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Payables</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debtors</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Receivables</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred
        tax</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deferred
        income tax</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">De-mutualising</font></td>
    <td><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Process
        by which a mutual society is converted into a public limited company</font></div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Depreciation</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Amortisation</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Finance
        lease</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital
        lease</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Freehold</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ownership
        with absolute rights in perpetuity</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interests
        in associates and joint ventures</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term
        equity investments accounted for by the equity method</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans and
        advances</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lendings</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan capital</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Long-term
        debt</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Nominal
        value</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Par value</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">One-off</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Non-recurring</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ordinary
        shares</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Common
        stock</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Overdraft</font></td>
    <td><div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">A line
        of credit, contractually repayable on demand unless a fixed-term has
        been agreed, established through a customer&#146;s current account</font></div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Preference
        shares</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Preferred
        stock</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Premises</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Real estate</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Allowances</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share capital</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ordinary
        shares or common stock issued and fully paid</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholders&#146; equity</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Stockholders&#146; equity</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share premium
        account</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Additional
        paid-in capital</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        in issue</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shares
        outstanding</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Undistributable
        reserves</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Restricted
        surplus</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Write-offs</font></td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Charge-offs</font></td>
  </tr>
</table>
<p align="center"><FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">413b</FONT> </p>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p414"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
    D I N G S &nbsp; P L C</FONT></P>


<p><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">SEC 20-F
      Cross-Reference
Sheet and Glossary </font></b><font size=1
face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=35% align=left valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Abbreviations used</FONT></B></TD>
        <TD align=left valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Brief description</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ABC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset-backed conduits</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ABS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset-backed securities</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Achievement shares</FONT></TD>
        <TD align=left valign="top">
      <div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Restricted
          share awards made under the HSBC Holdings Restricted Share Plan</font></div>
    </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ADR</FONT></TD>
  <TD align=left valign="top"><div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">American depositary
    receipt</font></div>
  </TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ADS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">American depositary share</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AICPA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The American Institute of Certified Public Accountants</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">AIEA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Average interest-earning assets</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ALCO</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Asset and liability management committee</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Amparos</FONT></I></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Argentinian
judicial orders that allow certain depositors relief from the
 pesification rules
 and recovery of their historical US dollar deposits
 at current exchange
 rates.</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ARB</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accounting Research Bulletin (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">ARM</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Adjustable rate mortgage</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank of Bermuda</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Bank of Bermuda Limited, which was acquired in February 2004</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD height="20" align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank of Communications</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank of Communications Limited, mainland China&#146;s fifth largest bank in which
    HSBC acquired a 19.9% interest in August 2004.</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basel Committee</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Basel Committee on Banking Supervision</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basel II</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Final Accord of the Basel Committee on proposals for a new capital adequacy
    framework</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Brazilian operations</FONT></TD>
        <TD align=left valign="top">

  <div style="margin-left:3%; text-indent:-3%"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
      Bank Brazil and subsidiaries, plus Banco Lloyds TSB S.A. and Losango Promotora
      de Vendas Limitada.</font></div>
</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CCF</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CCF S.A., the former name of HSBC France</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CD</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certificate of deposit</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CGU</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash generating unit</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Combined Code</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Combined
    Code on Corporate Governance issued by the Financial Reporting Council</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CRM</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer relationship management</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CSA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit support annex</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">CSR</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate social responsibility</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Decision One</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Decision One Mortgage Company, HSBC Finance&#146;s subsidiary which
    originates loans referred by mortgage brokers</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">DPF</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Discretionary participation feature of insurance and investment contracts</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">EITF</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Emerging Issues Task Force (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">EPS award</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Earnings per share measure applied to half of the award of performance shares
    under the HSBC Share Plan</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">EU</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">European Union</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FASB</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial Accounting Standards Board (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FDIC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Federal Deposit Insurance Corporation (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FHC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
holding company, as defined under the Gramm-Leach-Bliley Act amendments to the
BHCA</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FIN</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FASB Interpretation (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FinCEN</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
Financial Crimes Enforcement Network, a bureau of the US Treasury Department</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FSA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial Services Authority (UK)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FSMA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial Services and Markets Act 2000 (UK)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FTE</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Full-time equivalent staff numbers</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">FTSE</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial Times &#150; Stock Exchange index</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GAAP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Generally Accepted Accounting Principles</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GDP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gross domestic product</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">GHOS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Government Home Ownership Scheme</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Global Markets</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s treasury and capital markets services in Corporate, Investment
    Banking and Markets</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD height="19" align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings together with its subsidiary undertakings</FONT></div></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">414</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p415"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=35% align=left valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Abbreviations used</FONT></B></TD>
        <TD align=left valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Brief description</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hang Seng Bank Limited, the second largest bank in Hong Kong by market
    capitalisation</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HFC Bank</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HFC Bank Limited, the UK-based consumer finance business acquired through
    the acquisition by HSBC of HSBC Finance Corporation</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HKMA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hong Kong Monetary Authority</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Model Code</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rules governing the listing of securities on the HKSE</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HKSE</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Stock Exchange of Hong Kong Limited</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hong Kong Special Administrative Region of the People&#146;s Republic of
    China</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong GAAP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong Generally Accepted Accounting Principles</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HNAH</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC North America Holdings Inc, the bank holding company formed on
    1 January 2004 to hold all of HSBC&#146;s North America operations</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings together with its subsidiary undertakings</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank plc, formerly Midland Bank plc</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Argentina S.A.</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Brazil</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Brasil S.A.-Banco M&uacute;ltiplo, HSBC&#146;s retail banking operation
    in Brazil, formerly Banco Bamerindus do Brasil S.A.</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Delaware</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Trust Company (Delaware), N.A., a US nationally chartered bank
restricted to trust
activities </FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Malaysia Berhad</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Middle East Limited, formerly The British Bank of the Middle
    East</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Nevada</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank Nevada, NA, (formerly Household Bank (SB), N.A.) a  nationally
    chartered &#145;credit card bank&#146; in the US which is a subsidiary of
    HSBC Finance Corporation</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Bank USA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s retail bank in the US. From 1 July 2004, HSBC Bank USA, N.A. (formerly
    HSBC Bank USA, Inc,)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Finance Corporation, the US consumer finance company acquired
    in March 2003 (formerly Household International, Inc.)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC France</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s French banking subsidiary, whose name was changed from CCF S.A.
    (previously Cr&eacute;dit Commercial de France S.A.) in 2005</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings plc, the parent company of HSBC</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Mexico</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC M&eacute;xico S.A., the commercial banking subsidiary of Grupo Financiero
    HSBC, S.A. de C.V. and the fifth-largest bank in Mexico by deposits and assets</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Bank (Suisse)</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Private Bank (Suisse) S.A., HSBC&#146;s private bank in Switzerland (formerly
    HSBC Republic Bank (Suisse) S.A.)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IAS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">International Accounting Standard</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">International Financial Reporting Standards</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRIC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">International Financial Reporting Interpretations Committee</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IGU</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income generating unit</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Industrial Bank</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Industrial Bank
Co. Limited, a national joint-stock bank in China of which Hang Seng acquired
a 15.98 per cent interest in 2004</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IPO</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Initial public offering</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Key Management Personnel</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors and Group Managing Directors of HSBC Holdings</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">KPMG</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">KPMG Audit plc and its affiliates</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Losango</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Losango Promotora
de Vendas Limitada, the Brazilian consumer finance company acquired in December
2003</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mainland China</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">People&#146;s Republic of China excluding Hong Kong</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Metris</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Metris Companies Inc., US credit card issuer acquired in December 2005</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">M&amp;S Money</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Marks and Spencer
Retail Financial Services Holdings Limited, acquired by HSBC in November 2004.</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">MMEs</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Middle market enterprises</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">MSCI</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Morgan Stanley Capital International index</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">MSRs</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Mortgage servicing rights</FONT></div></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">415</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p416"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></P>


<p><b><font face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">SEC 20-F
      Cross-Reference
Sheet and Glossary </font></b><font size=1
face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Abbreviations used</FONT></B></TD>
        <TD align=left valign="top">
<B><FONT size=2 face="TimesNewRoman,Bold,Times New Roman,Times,serif">Brief description</FONT></B></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
  <TD align=left valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD width=3% align=left>&nbsp;</TD>
        <TD width=35% align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">NA</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Nationally Chartered,
a designation for certain categories of banks in the US</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">NIM</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Net interest margin</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">NYSE</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New York Stock Exchange</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OCC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Office of the Comptroller of the Currency (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OCI</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Other comprehensive income</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OFT</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Office of Fair Trading (UK)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">OTC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Over-the-counter dealing products</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Patriot Act</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The US Patriot Act of October 2001</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Performance shares</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Awards of HSBC
Holdings ordinary shares under employee share plans that are subject to corporate
performance conditions</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pesification</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
    mandatory and asymmetrical conversion of onshore US dollar-denominated assets
    and liabilities
in Argentina</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PFS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s Personal Financial Services customer group</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ping An Insurance</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ping An Insurance
Company of China Limited, the second-largest life insurer in the PRC, in which
HSBC holds a 19.9 per cent interest</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PVBP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present value of a basis point</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PVIF</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Present value of in-force long-term insurance business</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">QUEST</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC&#146;s Qualifying Employee Share Ownership Trust</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">REIT</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Real Estate Investment Trust</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Repos</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sale and repurchase transactions</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reverse repos</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities purchased under commitments to sell</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">RMB</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Renminbi, the currency of mainland China</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SEC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securities and Exchange Commission (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SIC</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Standard Interpretations Committee (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Senior Management</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group Managing Directors, Group General Managers and the Group&nbsp;Company
    Secretary</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SFAS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statement of Financial Accounting Standards (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sinopia</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Sinopia Asset Management</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SME</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Small and medium-sized enterprise</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SOP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statement of Position issued by the AICPA (US)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SORP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statement of Recommended Accounting Practice issued by the BBA&nbsp;(UK)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">SPE</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Special purpose entity</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Act</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Companies Act 1985 (UK)</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Amendment</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Amendment to
IAS 39 &#145;Financial
Instruments: Recognition and Measurement: The Fair Value Option&#146;</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and
Shanghai Banking Corporation</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The Hongkong and
Shanghai Banking Corporation Limited, the founding member of the HSBC Group</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TSR</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total shareholder return</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TSR award</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">TSR measure applied
to half of the award of performance shares under the HSBC Share Plan</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United Kingdom</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK GAAP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">UK Generally Accepted Accounting Principles</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Units</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8.875 per cent adjustable convertible rate equity security units issued by&nbsp;HSBC
    Finance Corporation</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United States of America</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US GAAP</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US Generally Accepted Accounting Principles</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">VAR</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value at risk</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">VIE</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Variable interest entity</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">WHIRL</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Worldwide Household International Revolving Lending system</FONT></div></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
        <TD align=left valign="top">
<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">WTAS</FONT></TD>
        <TD align=left valign="top">
<div style="margin-left:3%; text-indent:-3%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Wealth and Tax Advisory Services, Inc.</FONT></div></TD>
</TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">416</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p417"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></P>


<P>
<B><FONT size="3" face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">lndex</FONT></B></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accounting</font></td>
    <td width="3%">&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">product
    offering 13</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%">&nbsp;</td>
    <td width="47%"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">developments
    (future) 103</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate
    social responsibility (CSR) committee</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">policies
    (significant) 244</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">206</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">requirements
    in UK and Hong Kong 332</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cost efficiency
    ratio 41</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Accounts
    (approval) 402</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
    risk management 115</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Administrative
    expenses 269</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Credit
    quality 127</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Annual
    General Meeting 214, 407</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Critical
    accounting policies 99</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assets</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cross-border
    exposures 132, 149</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
    customer group 11, 280</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Customer
    groups 11, 44 &#150; 98</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by geographical
    region 15, 55, 277</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dealings
    in HSBC Holdings plc shares 213</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">charged
    as security 317</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Debt securities
    in issue 305</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">deployment
    41</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">rating
    agency designation 129</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other 303</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Defined
    terms </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">frontispiece</FONT></I></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Associates
    and joint ventures (interests in) 292</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Deposits</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Assurance
    fund (IFRSs/US GAAP differences) 375</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">average
    balances and average rates 179</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Audit committee
    (Group) 203</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Derivatives
    285</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Auditor
    214</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
    GAAP differences 378, 392</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">report
    234</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Directors</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Balance
    sheet</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">biographies
    184</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">average
    104</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">board of
    directors 200, 217</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">consolidated
    237</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">emoluments
    227</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC Holdings
    240</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">interests
    211</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US GAAP
    basis 389</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other directorships
    225</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Basis
    of preparation of accounts 243</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">remuneration
    215</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Business
    highlights 46 &#150; 54</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">responsibilities
    (statement of) 233</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Calendar
    (financial) 406</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">service
    contracts and terms of appointment 223</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Capital</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Dividends
    406, 407, 410</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">events
    189</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Donations
    214</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">management
    and allocation 173</font></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Earnings
    per share 276</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cash
    flow</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
    GAAP differences 398</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">consolidated
    statement 239</font></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Economic
    background</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">notes 326</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe
    57</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
    GAAP differences 399</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong Kong
    67</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Cautionary
    statement regarding forward-looking </font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest of
    Asia-Pacific 74</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">statements
    6</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North America
    83</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Certificates
    of deposit and other time deposits</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South America
    93</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif"> (maturity
    analysis) 181</font></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Economic
    profit 43</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Collateral
    and credit enhancements 143</font></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Employees
    10</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">Commercial
    Banking</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">compensation
    and benefits 260</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        highlights 48</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">remuneration
    policy 215</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Europe 60</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">disabled
    213</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Hong Kong 68</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">involvement
    213</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Rest of Asia-Pacific 76</FONT></td>
    <td colspan="2"> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Enforceability
    of judgements made in the US 6</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in North America 87</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Enquiries
    (from shareholders) 408</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in South America 95</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Equity
    323</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">product
        offering 12</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Europe</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Committees
        (board) 203</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">competitive
    environment 16</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Communication
        with shareholders 211</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">economic
    background 57</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Competitive
        environment 16</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">profit/(loss)
    56, 64</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Constant
        currency 2</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">regulation
    and supervision 20</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contents </FONT><I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">frontispiece</FONT></I></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Events
    after the balance sheet date 332</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contingent
        liabilities and contractual commitments</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Exchange
    controls and other limitations affecting</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="TimesNewRoman,Times New Roman,Times,serif">327</font></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">security
    holders 6</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Contractual
        obligations 183</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fee income
    (net) 30</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate,
        Investment Banking and Markets</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    assets and liabilities</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        highlights 50</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by measurement
    basis 281</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Europe 61</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
    GAAP differences 381</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Hong Kong 69</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    assets designated at fair value 284</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Rest of Asia-Pacific 77</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    highlights 1</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in North America 88</FONT></td>
    <td colspan="2"><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    instruments</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in South America 96</FONT></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">fair value
    313</FONT></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">net income
    from 257</FONT></td>
  </tr>
</table>
<p>&nbsp;</p>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">417</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p418"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<P> <FONT size=1 face="Arial,Arial,Helvetica,sans-serif">H S B C &nbsp; H O L
D I N G S &nbsp; P L C</FONT></P>


<B><FONT face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">lndex</FONT></B><B><FONT face="Arial,Bold,Arial,Helvetica,sans-serif"> </FONT></B><FONT size=1 face="UniversLT55,Arial,Helvetica,sans-serif">(continued)</FONT>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%" bgcolor="#C0C0C0">&nbsp;</td>
    <td bgcolor="#DDDDDD">&nbsp;</td>
  </tr>
</table>

<p>&nbsp;</p>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=47% align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">valuation
        101</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investment
    securities</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    investments 290, 382</FONT>&nbsp; </TD>
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 395</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    liabilities designated at fair value 304</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Investor
    relations 409</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Financial
    risk management 210</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Lease
    commitments 328</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Five-year
    comparison 3</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Legal
    proceedings 25, (litigation) 330</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Fixed
    assets (intangible) 294</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liabilities</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Foreign
    exchange exposures 316, 395</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">other
        306</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Funds
    under management 42</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">subordinated
        309</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Gains
    less losses from financial investments 34</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Liquidity
    and funding management 150</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Geographical
    regions 15</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loans
    and advances</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goodwill</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
        industry sector 119</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        intangible assets 294</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">impairment
        38, 99, 146</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">impairment
        101</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">maturity
        and interest sensitivity 178</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 377, 391</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 384, 397</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Governance
    20, 206</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Loan
    impairment charges 38</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        Holdings/New York Stock Exchange</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 386</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">corporate
        governance differences 206</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Management
    Board (Group) 203</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Group
    Managing Directors 186</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Market
    risk management 152</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Health
    and safety 210</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Maturity
    analysis of assets and liabilities 315</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
    Kong</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Memorandum
    and Articles of Association 406</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">competitive
        environment 17</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Minority
    interests 318</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">economic
        background 67</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Nomination
    committee 203</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">profit/(loss)
        66, 71</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">North
    America</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">regulation
        and supervision 21</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">competitive
        environment 18</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Holdings plc</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">economic
        background 83</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">balance
        sheet 240</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">profit/(loss)
        82, 90</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">cash
        flow 242</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">regulation
        and supervision 22</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
        risk 143</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Off-balance
    sheet arrangements 182</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">employee
        compensation and benefits 268</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
    income (net) 259</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">history
        and development 7</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
    income (other) 36</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">information
        409</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operating
    expenses 39</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">liquidity
        and funding management 151</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Operational
    risk management 161</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">statement
        of changes in total equity 241</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Organisational
    structure chart 412</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">structural
        foreign exchange exposures 159</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Outlook
    8</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
    assessment 130</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Own
    shares held</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
    allowances 132</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 384</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">collectively
        assessed 131</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Pensions</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">movement
        by industry and geographical</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        directors 228</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">region
        134</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 376, 390</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
    charge to income statement 38, 139</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Personal
    Financial Services</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Impairment
    of assets other than financial</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        highlights 46</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">instruments
        296</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Europe 58</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income
    from financial instruments (net) 33</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Hong Kong 67</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Income
    statement</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Rest of Asia-Pacific 75</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
        geographical region 55</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in North America 84</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">consolidated
        26, 236</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in South America 94</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Insurance</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">product
        offering 11</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">claims
        incurred (net) and movements in</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Principal
    activities and business review 189</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">policyholders&#146; liabilities
        37, 259</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Private
    Banking</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">liabilities
        under contracts issued 306</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">business
        highlights 52</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">net
        earned premiums 35, 258</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Europe 62</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">risk
        management 162</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Hong Kong 70</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Intangible
    assets</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in Rest of Asia-Pacific 78</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 377, 392</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in North America 89</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
    income (net) 28</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">performance
        in South America 96</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">average
        balance sheet 104</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">product
        offering 14</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Interest
    recognition</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Profit
    before tax</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 387</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
        customer group 11, 44, 64, 71, 80, 90, 97, 280</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Internal
    control 208</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;  </TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">by
        geographical region 15, 56, 66, 73, 82, 92, 278</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">International
    Financial Reporting Standards</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Property,
        plant and equipment 25, 298</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
        GAAP comparison / differences 103, 375</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 377</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">transition
        332</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">valuation
        of land and buildings 200</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Provisions
        308</FONT>&nbsp; </TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">418</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p419"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Purchase
    accounting</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Troubled
    debt restructurings 147</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD width="3%" align=left>&nbsp;</TD>
    <TD width="47%" align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 377</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">US
    GAAP</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Ratios &#150; capital
    and performance 2</FONT>&nbsp; </TD>
    <TD width="3%" align=left>&nbsp;</TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs
        comparison/differences 103, 375</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Regulation
    and supervision 20</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">selected
        financial data 4</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Related
    party transactions 330</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Value
    at risk 152</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Remuneration
    Committee 205, 215</FONT>&nbsp; </TD>
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Variable
    interest entities</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Reputational
    risk 162</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 385, 398</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Residual
    risk management 161</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Rest
    of Asia Pacific</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">competitive
        environment 18</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">economic
        background 74</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">profit/(loss)
        73, 80</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Restructuring
    provisions</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 386</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk
    elements in loan portfolio 148</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk
    management 115</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">capital
        management and allocation 173</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">credit
        115</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">insurance
        162</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">liquidity
        and funding management 150</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">market
        152</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">operational
        161, 209</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">reputational
        162, 209</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">residual
        value 161</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Risk-weighted
    assets (by principal subsidiary) 177</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Securitisations
    291</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 385, 399</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Segment
    analysis 277</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Senior
    management</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">biographies
        186</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">remuneration
        217</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share-based
    payments 269</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
    capital 318</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">and
        reserves 189</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">notifiable
        interests 213</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Share
    option plans</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bank
        of Bermuda plans 199</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        France and subsidiary plans 195</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">discretionary
        plans 193</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        directors 229</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">for
        employees 191</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        Finance Corporation and subsidiary</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=center>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;plans
        196</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 376</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Shareholder
    profile 406</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Short-term
    borrowings (analysis) 182</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">South
    America</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">competitive
        environment 18</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">economic
        background 93</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">profit/(loss)
        92, 97</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Statement
    of recognised income and expense 238</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Strategy
    9</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Stock
    symbols 411</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Structural
    foreign exchange exposure 159</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Subsidiaries
    301</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Supplier
    payment policy 213</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Taxation
    275, 403, 404 (US residents)</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">IFRSs/US
        GAAP differences 397</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Total
    shareholder return 220</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    assets and financial investments 42, 284</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    income (net) 32</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Trading
    market (nature of) 410</FONT>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">419</FONT></P>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page><a name="p420"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">HSBC
          HOLDINGS PLC</FONT></B>&nbsp; </TD>
    <TD width=50% align=left> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">STOCKBROKERS</FONT></B>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Incorporated
          in England on 1 January 1959 with</FONT></I>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Goldman
        Sachs</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">limited
          liability under the UK Companies Act.</FONT></I>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Peterborough
        Court</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Registered
          in England: number 617987</FONT></I>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">133
        Fleet Street</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London
        EC4A 2BB</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">REGISTERED
          OFFICE AND GROUP HEAD</FONT></B>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United
        Kingdom</FONT>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">OFFICE</FONT></B>&nbsp; </TD>
    <TD align=left>&nbsp;  </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
        Canada Square</FONT>&nbsp; </TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
    Bank plc</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London
        E14 5HQ</FONT>&nbsp; </TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">8
    Canada Square</FONT>  </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United
        Kingdom</FONT>&nbsp; </TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">London
    E14 5HQ</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone:44
        (0) 20 7991 8888</FONT>&nbsp; </TD>
    <TD align=left><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United
    Kingdom</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Facsimile:
        44 (0) 20 7992 4880</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Web:
        www.hsbc.com</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <B><FONT size=2 face="UniversLT45Light,Bold,Arial,Helvetica,sans-serif">REGISTRARS</FONT></B> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Principal
          Register</FONT></I>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Computershare
        Investor Services PLC</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">PO
        Box 1064, The Pavilions</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bridgwater
        Road</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bristol
        BS99 3FA</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">United
        Kingdom</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone:
        44 (0) 870 702 0137</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Hong
          Kong Overseas Branch Register</FONT></I>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Computershare
        Hong Kong Investor Services</FONT>&nbsp;<FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Limited</FONT>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">46</FONT><SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">floor,
        Hopewell Centre</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">183
        Queen&#146;s Road East</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hong
        Kong</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone:
        852 2862 8628</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Bermuda
          Overseas Branch Register</FONT></I>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Corporate
        Shareholder Services</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        Bank of Bermuda Limited</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">6
        Front Street</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Hamilton
        HM11</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Bermuda</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone:
        1 441 299 6737</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">ADR
          Depositary</FONT></I>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">The
        Bank of New York</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">101
        Barclay Street</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Floor
        22W</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">New
        York, NY 10286</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">USA</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone:
        1 888 269 2377</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <I><FONT size=2 face="TimesNewRoman,Italic,Times New Roman,Times,serif">Paying
          Agent (France)</FONT></I>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">HSBC
        France</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">103
        avenue des Champs Elys&eacute;es</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">75419
        Paris Cedex 08</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="TimesNewRoman,Times New Roman,Times,serif">Telephone:
        33 1 40 70 22 56</FONT>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
</TABLE>
<P align="center">
<FONT size=2 face="UniversLT55,Arial,Helvetica,sans-serif">420</FONT></P>

<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div>
<page>
<a name="p?"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p><p align="left"><font size="2" face="serif"><b>Item 19. Exhibits</b></font></p>
 <hr size="1" noshade>
<p align="left"><font size="2" face="serif">Documents filed as exhibits to this Form 20-F: </font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Exhibit</font></td>
<td width="2%" align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td width="90%" align="left" bgcolor="#FFFFFF"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Number</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Description&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">1.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Memorandum and Articles of Association of HSBC Holdings plc</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">2.1</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">The total amount of long-term debt securities of HSBC Holdings plc authorized under any instrument does not exceed 10 percent of the total assets of the Group on a consolidated basis. HSBC Holdings plc hereby agrees to furnish to the Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of HSBC Holdings plc or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">4.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Employment Agreement dated November 14, 2002, by and between Household International Inc. and William F. Aldinger. * </font></td>
</tr>
<tr valign="top">
<td align="left"></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">4.2</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Amendment to Employment Agreement, dated February 26 ,2005 by and between HSBC Finance Corporation (formerly Household International, Inc.) and William F. Aldinger **</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">4.3</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Service Agreement dated July 14, 1994 between HSBC Holdings plc and John R.H. Bond. *</font></td>
</tr>
<tr valign="top">
<td align="left"></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">4.4</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Service Agreement dated September 29, 1995 between HSBC Holdings plc and Douglas Jardine Flint.*</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">4.5</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Service Agreement dated March 9, 1998 between HSBC Holdings plc and Stephen Keith Green. *</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">4.6</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Service Agreement dated January 14, 2000 between HSBC Holdings plc and Alan Wayne Jebson. *</font></td>
</tr>
<tr valign="top">
<td align="left"></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">4.7</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Service Agreement dated May 25, 2004 between HSBC Asia Holdings BV and Michael F Geoghegan. **</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">8.1</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Subsidiaries of HSBC Holdings plc (set forth in Note 24 to the consolidated financial statements included in this Form 20-F). </font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">12.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Certificate of HSBC Holdings plc&#8217;s Group Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">12.2</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Certificate of HSBC Holdings plc&#8217;s Group Finance Director pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</font></td>
</tr>
<tr valign="top">
<td align="left"></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">13.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Annual Certification of HSBC Holdings plc&#8217;s Group Chairman and Group Finance Director pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  </font></td>
</tr>
</table>
<p align="center">&nbsp;</p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p?"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<br><br>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td align="left"><font size="2" face="serif">14.1</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="90%" align="left"><font size="2" face="serif">Consent of KPMG Audit plc</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">14.2</font></td>
<td align="left" bgcolor="#FFFFFF">&nbsp;</td>
<td align="left" bgcolor="#FFFFFF"><font size="2" face="serif">Pages of HSBC Holdings plc&#8217;s 2000 Form 20-F/A dated February 26, 2001 relating to the Memorandum and Articles of Association of HSBC Holdings plc that are incorporated by reference into this Form 20-F.</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">14.3</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Pages of HSBC Holdings plc&#8217;s 2001 Form 20-F dated March 13, 2002 relating to the Memorandum and Articles of Association of HSBC Holdings plc that are incorporated by reference into this Form 20-F.</font></td>
</tr>
</table>
<br>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td colspan="2" align="left"><hr align="left" width="100" size="1" noshade></td>
  </tr>
<tr valign="top">
<td align="left" width="3%"><font size="2" face="serif">*</font></td>
<td align="left"><font size="2" face="serif">As previously filed with the Securities and Exchange Commission as an exhibit to HSBC Holdings plc&#8217;s Form 20-F dated March 5, 2004.</font></td>
</tr>
<tr valign="top">
<td>&nbsp;</td>
<td>&nbsp;</td> </tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">**</font></td>
<td align="left"><font size="2" face="serif">As previously filed with the Securities and Exchange Commission as an exhibit to HSBC Holdings plc&#8217;s Form 20-F dated March 4, 2005. </font></td>
</tr>
</table>
<p align="center">&nbsp;</p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p?"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>SIGNATURE</b></font> </p>
<p align="left"><font size="2">The registrant hereby certifies that it meets
    all of the requirements for filing on Form 20-F and that it has duly caused
    and authorized the undersigned to sign this annual report on its behalf.</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td><font size="2">HSBC HOLDINGS PLC</font></td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size="2">By: /s/ DOUGLAS J FLINT</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">Name: Douglas J Flint</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">Title: Group Finance Director</font></td>
  </tr>
  <tr>
    <td height="19"><font size="2">Date: March 20, 2006</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
</body>

</html>
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{"company-data": {"conformed-name": "HSBC HOLDINGS PLC", "cik": "0001089113", "assigned-sic": "6035", "irs-number": "000000000", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-14930", "film-number": "06698236"}, "business-address": {"street1": "8 CANADA SQUARE", "city": "LONDON", "state": "X0", "zip": "E145HQ", "phone": "442079912652"}, "mail-address": {"street1": "8 CANADA SQUARE", "city": "LONDON", "state": "X0", "zip": "E14 5HQ"}}
Prepared and filed by St Ives Financial
As filed with the Securities
      and Exchange Commission on March 20, 2006.
SECURITIES
AND EXCHANGE
      COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
REGISTRATION STATEMENT
        PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
or
ANNUAL REPORT PURSUANT TO SECTION
        13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
        for the fiscal year ended December 31, 2005
or
TRANSITION REPORT PURSUANT TO
        SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
or
SHELL COMPANY REPORT PURSUANT
        TO SECTION 14 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
    N/A to N/A
Commission file number: 1-14930
HSBC
        Holdings plc
(Exact name of Registrant as specified in its charter)
N/A
United Kingdom
(Translation of Registrant's
        name into English)
(Jurisdiction of incorporation
        or organization)
8 Canada Square
London E14 5HQ
United Kingdom
(Address of principal executive offices)
Securities registered or to be registered
    pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each
          class
Name of each exchange on which
        registered
Ordinary Shares, nominal value
        US$0.50 each.
London Stock Exchange
Hong Kong Stock Exchange
Euronext Paris
Bermuda Stock Exchange
New York Stock Exchange*
American Depository Shares,
        each representing 5 Ordinary
Shares of nominal value US$0.50 each.
New York Stock Exchange
6.20% Non-Cumulative Dollar
        Preference Shares, Series A
New York Stock Exchange*
American Depository Shares,
        each representing one-fortieth of a Share of 6.20% Non-Cumulative Dollar
        Preference Shares, Series A
New York Stock Exchange
Securities registered or to be registered
    pursuant to Section 12(g) of the Securities Exchange Act of 1934: None
Securities for which there is a reporting
    obligation pursuant to Section 15(d) of the Securities Exchange Act of 1934:
    None
The number of outstanding shares
    of each of the issuer's classes of capital or common stock as of December
    31, 2005 was:
Ordinary Shares, nominal value
        US$0.50 each
11,172,075,550
Indicate by check mark if the registrant
    is a well-known seasoned issuer, as defined in Rule 405 of the Securities
    Act:
Yes
No
Indicate by check mark if the registrant
    is not required to file reports pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934:
Yes
No
Indicate by check mark whether the
    registrant (1) has filed all reports required to be filed by Section 13 or
    15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
    (or for such shorter period that the registrant was required to file such
    reports), and (2) has been subject to such filing requirements for the past
    90 days.
Yes
No
Indicate by check mark whether the
    registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
    filer. See definition of accelerated filer and large accelerated filer" in
    Rule 12b-2 of the Exchange Act:
Large accelerated
        filer
Accelerated filer
Non-accelerated filer
Indicate by check mark which financial
    statements Item the registrant has elected to follow:
Item 17
Item 18
Indicate by check mark whether the
    registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes
No
* Not for trading, but only in connection
    with the registration of American Depositary Shares.
H S B C   H O L
  D I N G S   P L C
Table of
Contents
Page
Certain Defined Terms
below
Financial Highlights
1
Five-Year Comparison
3
Cautionary
      Statement regarding Forward-Looking Statements
5
Information about the Enforceability of Judgements made in the United States
6
Exchange
                Controls and Other Limitations affecting Equity Security Holders
6
Description of Business
7
Governance, Regulation and Supervision
20
Description of Property
25
Legal Proceedings
25
Financial Review
26
Other Information
178
Page
Board of Directors and Senior Management
184
Report of the Directors
189
Directors' Remuneration
      Report
215
Statement
      of Directors' Responsibilities in relation to Financial Statements
233
Independent
      Auditor's Report
234
Financial Statements
236
Notes on the Financial Statements
243
Including:
Summary of significant accounting policies
244
Transition to IFRSs
332
Differences between IFRSs and US GAAP
375
Taxation of Shares and Dividends
403
Shareholder Information
406
Organisational Structure
412
SEC
                20-F Cross-Reference Sheet and Glossary
413
Index
417
Certain Defined
Terms
Unless
        the context requires otherwise, 'HSBC Holdings' means HSBC
        Holdings plc and 'HSBC' or the 'Group' means HSBC
        Holdings together with its subsidiaries and associates. Within this document
    the Hong Kong Special Administrative Region of the
People's
        Republic of China is referred to as 'Hong Kong'. When used
        in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means
    holders of HSBC Holdings ordinary and preference shares.
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H
        S B C   H O L D I N G S   P L C
Financial
          Highlights
HSBC's Financial Statements and Notes thereon, as set out on pages 236 to 402, are prepared in accordance with International Financial Reporting Standards ('IFRSs') as
  endorsed by the EU and effective for HSBC's reporting for the year ended 31 December 2005. There is no difference between IFRSs currently in effect and EU-endorsed IFRSs as they apply to the Group. This is the first time HSBC's annual
  financial statements have been prepared under IFRSs. Moving to IFRSs has necessarily involved the application of a number of available transition exemptions which means that prior year figures are not fully comparable with those presented in respect
  of 2005. Details of HSBC's transition to IFRSs are set out on page 332. HSBC previously reported under United Kingdom Generally Accepted Accounting Principles ('UK GAAP').
In July 2005, HSBC published
2004 IFRS Comparative Financial
Information
, summarising the principal effects of IFRSs on the financial information previously reported in respect of 2004 and including a reconciliation between data
previously reported in respect of 2004 under UK GAAP and under IFRSs. HSBC's opening balance sheet at 1 January 2005 differs from the closing balance sheet at 31 December 2004 as the former reflects first-time adoption of International
Accounting Standard 32 'Financial Instruments: Presentation' ('IAS 32'), IAS 39 'Financial Instruments: Recognition and Measurement' ('IAS 39') and IFRS 4 'Insurance Contracts' ('IFRS
4').
Certain information for years prior to 2004 has been prepared under UK GAAP, which is not comparable with IFRSs.
HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts
its business. Unless otherwise stated, the accounting information presented in this document has been prepared in accordance with IFRSs.
2005
2004
US$m
US$m
For the year
Total operating income
61,704
55,988
Profit before tax
20,966
18,943
Profit attributable to shareholders of the parent company
15,081
12,918
Dividends
7,750
6,932
At the year-end
Total equity
98,226
99,197
Total shareholders' equity
92,432
85,522
Capital resources
105,449
90,780
Customer accounts and deposits by banks
809,146
777,127
Total assets
1,501,970
1,279,974
Risk-weighted assets
827,164
759,210
US$
US$
Per ordinary share
Basic earnings
1.36
1.18
Diluted earnings
1.35
1.17
Dividends
0.69
0.63
Net asset value at the year-end
8.16
7.66
At
At
31 December
31
            December
2005
2004
Share information
US$0.50 ordinary shares in issue (million)
11,334
11,172
Market capitalisation (billion)
US$
182
US$190
Closing market price per ordinary share:
– London
£
9.33
£8.79
– Hong
    Kong
HK$
124.50
HK$133.00
Closing market price per
American Depositary Share ('ADS')
1
US$
80.47
US$
85.14
Over 1 year
Over 3 years
Over
              5 years
HSBC total shareholder
return ('TSR') to 31 December 2005
2
111.3
158.8
121.2
Benchmarks:
– FTSE
            100
3
120.8
158.4
105.9
– MSCI
            World
4
123.1
159.1
99.1
For footnotes, see page 4.
1
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H
        S B C   H O L D I N G S   P L C
Financial
          Highlights
(continued)
Capital
and performance ratios
2005
2004
%
%
Capital ratios
Tier 1 capital
9.0
8.9
Total capital
12.8
12.0
Performance ratios
Return on average invested capital
5
15.9
15.0
Return on average total
shareholders' equity
6
16.8
16.3
Post-tax return on average total assets
1.06
1.14
Post-tax return on average risk-weighted assets
2.01
2.13
Credit coverage ratios
Loan impairment charges as a percentage of total operating income
12.74
11.06
Loan impairment charges as a percentage of average gross customer advances
1.16
1.04
Total outstanding
allowances against loan impairment as a percentage of
non-performing
loans at the year end
99.1
100.9
Efficiency and revenue mix ratios
Cost efficiency ratio
7
51.2
51.6
– constant
    currency basis
51.2
52.4
As a percentage of total operating income:
– net
    interest income
50.8
55.5
– net
    fee income
23.4
23.1
– trading
    income
9.5
5.0
Constant currency
Constant currency comparatives in respect of 2004 used in the 2005 commentaries are computed by retranslating into US dollars:
•
the income
        statements for 2004 of non-US dollar branches, subsidiaries, joint ventures
        and associates at the
average
    rates of exchange for 2005; and
•
the balance
        sheets at 31 December 2004 for non-US dollar branches, subsidiaries,
        joint ventures and associates
at
        the
prevailing rates of exchange on 31 December 2005.
No adjustment is made to the exchange rates used to translate foreign currency denominated assets and liabilities into the functional currency of any HSBC
branch, subsidiary, joint venture or associate.
2005
    compared with 2004
As
Constant
reported
currency
              on
an
              underlying
basis
%
%
Operating income and cost growth
Total operating income
10
10
Net operating income before loan impairment charges and other credit risk provisions
12
12
Total operating expenses
11
9
For details of the underlying constant currency basis, see 'Comparison of financial information' on page
4
.
For footnotes, see page 4.
2
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Five-year
comparison
2005
2004
2003
2002
2001
US$m
US$m
US$m
US$m
US$m
For the year
31,334
31,099
Net interest income
25,598
15,460
14,725
30,370
24,889
Other operating income
15,474
11,135
11,163
(7,801
)
(6,191
)
Loan
    impairment charges and other
credit risk provisions
–
–
–
–
–
Provisions for bad and doubtful debts
(6,093
)
(1,321
)
(2,037
)
(29,514
)
(26,487
)
Total operating expenses
(22,532
)
(15,808
)
(15,404
)
20,966
18,943
Profit before tax
12,816
9,650
8,000
15,081
12,918
Profit
    attributable to shareholders of the
parent company
8,774
6,239
4,992
7,750
6,932
Dividends
6,532
5,001
4,467
At the year-end
5,667
5,587
Called up share capital
5,481
4,741
4,678
92,432
85,522
Total shareholders' equity
–
–
–
–
–
Shareholders' funds
74,473
51,765
45,688
105,449
90,780
Capital resources
10
74,042
57,430
50,854
739,419
693,072
Customer accounts
573,130
495,438
449,991
3,474
3,686
Undated subordinated loan capital
3,617
3,540
3,479
35,856
32,914
Dated subordinated loan capital
17,580
14,831
12,001
740,002
672,891
Loans and advances to customers
11,12
528,977
352,344
308,649
1,501,970
1,279,974
Total assets
1,034,216
758,605
695,545
US$
US$
US$
US$
US$
Per ordinary share
1.36
1.18
Basic earnings
0.84
0.67
0.54
1.35
1.17
Diluted earnings
0.83
0.66
0.53
0.69
0.63
Dividends
0.60
0.53
0.48
8.16
7.66
Net asset value at year-end
6.79
5.46
4.88
Share information
11,334
11,172
US$0.50
              ordinary shares in
issue
    (millions)
10,960
9,481
9,355
%
%
%
%
%
Financial ratios
50.7
53.4
Dividend payout ratio
13
60.6
69.7
76.2
1.06
1.14
Post-tax return on average total assets
1.01
0.97
0.86
16.8
16.3
Return
    on average total shareholders'
equity
–
–
–
–
–
Return on average shareholders' funds
13.0
12.4
10.6
5.96
6.35
Average
    total shareholders' equity to
average
    total assets
–
–
–
–
–
Average
    shareholders' funds to
average
    total assets
7.06
6.91
6.87
Capital ratios
9.0
8.9
Tier 1 capital
8.9
9.0
9.0
12.8
12.0
Total capital
12.0
13.3
13.0
Foreign
exchange translation rates to
US$
0.581
0.517
Closing  – £:US$1
0.560
0.620
0.690
0.847
0.733
– €:US$1
0.793
0.953
1.130
0.550
0.546
Average – £:US$1
0.612
0.666
0.695
0.805
0.805
– €:US$1
0.885
1.061
1.117
For
footnotes, see page 4.
3
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H
        S B C   H O L D I N G S   P L C
Financial
          Highlights
(continued)
Five-year comparison
(continued)
Amounts in accordance with US GAAP
2005
2004
2003
2002
2001
US$m
US$m
US$m
US$m
US$m
Income statement for the year
Net income available
for ordinary shareholders
14,703
12,506
7,231
4,900
4,911
Other comprehensive income
(7,271
)
983
7,401
5,502
(1,439
)
Dividends
7,750
6,932
6,974
4,632
4,394
Balance sheet at 31 December
Total assets
1,406,944
1,266,365
1,012,023
763,565
698,312
Shareholders' funds
93,524
90,082
80,251
55,831
48,444
US$
US$
US$
US$
US$
Per ordinary share
Basic earnings
1.33
1.15
0.69
0.52
0.53
Diluted earnings
1.32
1.13
0.69
0.52
0.53
Dividends
0.69
0.63
0.685
0.495
0.48
Net asset value at year end
8.25
8.06
7.32
5.89
5.18
Comparison of financial information
When reference to 'constant currency' or 'constant exchange rates' is made, comparative data reported in the functional currencies of HSBC's operations have been
translated at the appropriate exchange rates applied in the current period in respect of the income statement or the balance sheet. When reference to 'underlying basis' is made, comparative information has been expressed at constant
currency and adjusted for the effect of acquisitions and the change in presentation of non-equity minority issues.
As the transition to IFRSs affects the comparability of the financial information presented in this document (see Note 1 on the Financial Statements), the
commentary that follows specifies the impact when this is material to a reader's understanding of the underlying business trends.
Footnotes to 'Financial Highlights'
1
Each ADS represents five ordinary shares.
2
Total shareholder return ('TSR') is defined on page 220.
3
The Financial Times-Stock Exchange 100 Index.
4
The Morgan Stanley Capital International World Index.
5
The definition of return on average invested capital and a reconciliation to the equivalent GAAP measures are set out on page 43.
6
The return on average total shareholders' equity is defined as profit attributable to shareholders of the parent company divided by average total shareholders'
equity.
7
The cost efficiency ratio is defined as total operating expenses divided by net operating income before loan impairment charges and other credit risk provisions.
8
Comparative data for 2004 excludes the provisions of IAS 32, IAS 39 and IFRS 4, which were adopted for the first time with effect from 1 January 2005.
9
The periods 2001-2003 were prepared in accordance with UK GAAP. The principal adjustments necessary to conform these periods with IFRSs are described in Note 46 on the Financial
Statements on page 332. HSBC's accounting policies under UK GAAP are stated in Note 2 on the Financial Statements in the
2004 Annual Report and Accounts.
10
Capital resources are defined on page 173. A detailed computation for 2005 and 2004 is provided on page 176.
11
Net of suspended interest and provisions for bad and doubtful debts (UKGAAP).
12
Net of impairment allowances against customers (IFRSs).
13
Dividends per share expressed as a percentage of earnings per share (2001 to 2003: excluding goodwill amortisation).
4
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H
        S B C   H O L D I N G S   P L C
Cautionary
          Statement regarding Forward-Looking Statement
s
This
Annual Report
contains certain
forward-looking statements with respect to the financial condition, results of operations and business of HSBC.
Statements that are not historical facts, including statements about HSBC's beliefs and expectations, are forward-looking statements. Words such as
'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar
expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date
they are made, and it should not be assumed that they have been revised or updated in the light of new information or future events.
Written and/or oral forward-looking statements may also be made in the periodic reports to the United States Securities and Exchange Commission, summary
financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including
financial analysts.
Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in
some instances materially, from those anticipated or implied in any forward-looking statement. These factors include, among others:
•
changes
        in general economic conditions in the markets in which HSBC operates,
    such as:
–
changes
        in foreign exchange rates, in both market exchange rates (for example,
        between the US dollar and the pound sterling) and government-established
        exchange rates (for example, between the Hong Kong dollar and the US
    dollar);
–
volatility
        in interest
rates;
–
volatility
        in equity markets, including in the smaller and less liquid trading markets
    in Asia and South America;
–
lack of
        liquidity in wholesale funding markets in periods of economic or political
    crisis;
–
illiquidity
        and downward price pressure in national real estate markets, particularly
    consumer-owned real estate markets;
–
the impact of lower than expected investment returns on the burden of funding private and public sector defined benefit pensions;
–
the effect of unexpected changes in actuarial assumptions on longevity which would influence the funding of private and public sector defined benefit pensions;
–
continuing or deepening recessions and employment fluctuations; and
–
consumer perception as to the continuing availability of credit, and price competition in the market segments served by HSBC.
•
changes in
    governmental policy and regulation, including:
–
the monetary, interest rate and other policies of central banks and bank and other regulatory authorities, including the United Kingdom Financial Services Authority, the Bank of England,
the Hong Kong Monetary Authority, the United States Federal Reserve, the US Office of the Comptroller of the Currency, the European Central Bank, the People's Bank of China and the central banks of other leading economies and markets where HSBC
operates;
–
expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership;
–
initiatives by local, state and national regulatory agencies or legislative bodies to revise the practices, pricing or responsibilities of financial institutions serving their consumer
markets;
–
changes in bankruptcy legislation in the principal markets in which HSBC operates and the consequences thereof;
–
general changes in governmental policy that may significantly influence investor decisions in particular markets in which HSBC operates;
–
other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for HSBC's products and
services;
–
the costs, effects and outcomes of regulatory reviews, actions or litigation, including any additional compliance requirements; and
5
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H
        S B C   H O L D I N G S   P L C
Cautionary
            Statement regarding Forward-Looking Statements
(continued)
–
the effects of competition in the markets where HSBC operates including increased competition from non-bank financial services companies, including securities firms.
•
factors specific to HSBC:
–
the success of HSBC in adequately identifying the risks it faces, such as the
incidence
        of loan losses or delinquency, and managing those risks (through account
        management, hedging and other techniques). Effective risk management
        depends on, among other things, HSBC's ability through stress testing
        and other techniques to prepare for events that cannot be captured by
      the statistical models it uses.
Information
    about the Enforceability of Judgements made in the United States
HSBC Holdings is a public limited company incorporated in England and Wales. Most of HSBC Holdings' Directors and executive officers live outside the US. As a result, it may not be
possible to serve process on such persons or HSBC Holdings in the US or to enforce judgements obtained in US courts against them or HSBC Holdings based on civil liability provisions of the securities laws of the US. There is doubt as to whether
English courts would enforce:
•
certain
          civil liabilities under US securities laws
in
    original actions; or
•
judgements
            of US courts based upon these civil
liability
    provisions.
In addition, awards of punitive damages in actions brought in the US or elsewhere may be unenforceable in the UK. The enforceability of any judgement in the
UK will depend on the particular facts of the case as well as the laws and treaties in effect at the time
Exchange
          Controls and Other Limitations affecting Equity Security Holders
There are currently no UK laws, decrees or regulations which would prevent the
import or export of capital or remittance of distributable profits by way of
dividends and other payments
to
holders of HSBC Holdings' equity securities who are not residents of the
UK. There are also no
restrictions under the laws of the UK or the terms of the Memorandum and Articles
of Association of HSBC Holdings concerning the right of non-resident or foreign
owners to hold
HSBC
Holdings' equity securities or, when entitled to vote, to do so.
6
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H S B C
H O
  L D I N G S
P L C
Description
  of Business
Introduction
HSBC is one
    of the largest banking and financial services organisations in the world,
    with a market capitalisation of US$182 billion at 31 December 2005.
Headquartered in London, HSBC operates through long-established businesses and has an international network of over 9,800 properties in 76 countries and
territories in five geographical regions: Europe; Hong Kong; Rest of Asia-Pacific, including the Middle East and Africa; North America and South America. Within these regions, a comprehensive range of financial services is offered to personal,
commercial, corporate, institutional, investment and private banking clients. Services are delivered primarily by domestic banks, typically with large retail deposit bases, and consumer finance operations.
HSBC manages its business through four customer groups: Personal Financial Services; Commercial Banking; Corporate, Investment Banking and Markets; and
Private Banking. Personal Financial Services incorporates the Group's consumer finance businesses, reflecting their increasing integration within mainstream financial services around the world. The largest of these is HSBC Finance Corporation,
one of the leading consumer finance companies in the US.
The establishment in 1999 of HSBC as a uniform, international brand name ensured that the Group's hexagon corporate symbol has become an increasingly
familiar sight across the world.
History
        and development
The founding member of HSBC, The Hongkong and Shanghai Banking Corporation Limited ('The Hongkong and Shanghai Banking Corporation'), was established in both Hong Kong and
Shanghai in 1865. The bank expanded rapidly, with an emphasis on building up representation in mainland China and throughout the rest of Asia, while also establishing a presence in the major financial and trading centres in Europe and
America.
In the mid-1950s, The Hongkong and Shanghai Banking Corporation embarked on a strategy of pursuing profitable growth through acquisition as well as organic
development – a combination that has remained a key feature of HSBC's approach ever since.
With each acquisition, HSBC focused on integrating its newly acquired operations with its existing businesses with the aim of maximising the
synergy between the various components. Key to this integration process is the blending of local and international expertise.
The most significant developments are described below. Other acquisitions in 2005 are discussed in the 'Financial Review' on pages 26 to
177.
The Hongkong
    and Shanghai Banking
Corporation
    purchased The Mercantile Bank of India Limited and The British Bank of the
    Middle East, now HSBC Bank Middle East Limited ('HSBC Bank Middle East')
    in 1959. In 1965, it acquired a 51 per cent interest (subsequently increased
    to 62.14 per cent) in Hang Seng Bank Limited ('Hang Seng Bank'),
    consolidating its leadership position in Hong Kong. Hang Seng Bank is the
    third-largest listed bank in Hong Kong by market capitalisation.
The Hongkong and Shanghai Banking Corporation entered the US market in 1980 by acquiring a 51 per cent interest in Marine Midland Banks, Inc., now HSBC USA,
Inc. The remaining interest was acquired in 1987.
In 1981, The Hongkong and Shanghai Banking Corporation incorporated its then existing Canadian operations. HSBC Bank Canada has since made numerous
acquisitions, expanding rapidly to become the largest foreign-owned bank in Canada and the seventh-largest overall at 31 December 2005.
From the early 1980s, The Hongkong and Shanghai Banking Corporation began to focus its acquisition strategy on the UK. In 1987, it purchased a 14.9 per cent
interest in Midland Bank plc, now HSBC Bank plc ('HSBC Bank'), one of the UK's principal clearing banks. In 1991, HSBC Holdings plc was established as the parent company of the HSBC Group and, in 1992, it purchased the remaining
interest in HSBC Bank. As a consequence of this acquisition, HSBC's head office was transferred from Hong Kong to London in January 1993.
In 1997, HSBC assumed selected assets, liabilities and subsidiaries of Banco Bamerindus do Brasil S.A., now HSBC Bank Brasil S.A.-Banco Múltiplo
('HSBC Bank Brazil'), following the intervention of the Central Bank of Brazil, and in Argentina completed the acquisition of Grupo Roberts, now part of HSBC Bank Argentina S.A. ('HSBC Bank Argentina').
In December 1999, HSBC acquired Republic New York Corporation, subsequently merged with HSBC USA, Inc., and Safra Republic Holdings S.A. In July 2004, HSBC
Bank USA, Inc. merged with
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H S B C   H O L
  D I N G S   P L C
Description of Business
(continued)
HSBC Bank & Trust (Delaware) N.A. to form HSBC Bank USA, N.A. ('HSBC Bank USA').
To expand its base in the euro zone, in 2000 HSBC completed its acquisition of 99.99 per cent of the issued share capital of Crédit Commercial de
France S.A., subsequently CCF S.A. ('CCF') and now HSBC France, a major French banking group.
In 2002, HSBC took further steps in expanding its presence in the Americas, completing the acquisition of 99.59 per cent of Grupo Financiero Bital, S.A. de
C.V., the holding company of what is now HSBC México, S.A. ('HSBC Mexico'), the fourth-largest banking group in Mexico measured by assets and the third by customer deposits.
Mainland China remains a key long-term growth area for the Group. In 2002, HSBC completed the acquisition of a 10 per cent equity stake in Ping An Insurance
Company of China Limited ('Ping An Insurance'), reducing its holding to 9.99 per cent following an initial public offering ('IPO') in 2004. In August 2005, HSBC acquired a further 9.91 per cent of Ping An Insurance at a cost of
US$1,039 million, increasing its investment to 19.9 per cent. Ping An Insurance is the second-largest life insurer and the third-largest property and casualty insurer in mainland China.
In 2003, HSBC
    acquired Household
International,
    Inc., now HSBC Finance Corporation ('HSBC Finance'). HSBC Finance
    brought to the Group national coverage in the US for consumer lending, credit
    cards and credit insurance through multiple distribution channels, as well
    as expertise in consumer finance for HSBC to roll out internationally.
Also in 2003, HSBC expanded in Brazil, acquiring Banco Lloyds TSB S.A.-Banco Múltiplo and the country's leading consumer finance company, Losango
Promotora de Vendas Limitada ('Losango').
In 2004, the acquisition of The Bank of Bermuda Limited ('Bank of Bermuda') was completed.
In the same year, HSBC acquired Marks and Spencer Retail Financial Services Holdings Limited, which trades as Marks and Spencer Money ('M&S
Money') in the UK.
In mainland China in 2004, HSBC acquired 19.9 per cent of Bank of Communications Limited ('Bank of Communications'), mainland China's fifth
largest bank by total assets. In the same year, Hang Seng Bank acquired 15.98 per cent of Industrial Bank Co.
Limited ('Industrial Bank'), one of only 13 national joint-stock banks.
In
    December 2005, HSBC Finance completed the acquisition of Metris Companies
    Inc. ('Metris') for US$1.6 billion. HSBC is now the 5th largest
    issuer of MasterCard
®
and Visa
®
cards
1
in the US.
Outlook
In the near term, the outlook is encouraging. The world economy continues to grow steadily. The US economy is strong, the UK resilient, Japan and Germany are recovering and the emerging
markets are buoyant.
Longer term prospects are more uncertain. Apart from the possibility, albeit remote, of a sudden shock to the world's financial system, HSBC remains
concerned about the unprecedented level of trade imbalances. Similarly, the implications of demographic change and of ageing populations for financial markets and businesses will be profound. It is inevitable that at some stage a process of
adjustment will begin, but the timing is open to question. So far, the financial markets are taking a benign view of these potential sources of instability.
Progressively, globalisation is forcing countries and businesses operating within them to re-evaluate their comparative advantages and to adjust to a world
in which emerging markets compete not only in terms of cost but also in skills and technology. The globalisation of the services industry, spurred on by new technologies and the rapid fall in communication costs, will afford huge opportunities but
also pose significant challenges to many areas of economic activity, including financial services. Incipient protectionism, resulting from a reluctance to face up to the new competitive realities, remains a threat to the continuing growth of the
world economy.
In
    certain mature markets, under-funded pension schemes threaten to become a
    drain on companies' resources. Combined with the rising cost of long-term
    health care, they pose a considerable challenge to policy makers. Continuing
    productivity growth is, therefore, increasingly important. Only if it is achieved
    will financial markets be able to offer returns with a meaningful premium
    to the risk-free rate embodied in government debt. Without such productivity
    gains and associated financial returns, the affordability of pension and health
    care promises
1
Visa
        is a registered trademark of VISA USA, Inc.and MasterCard is a registered
        trademark of MasterCard International, Incorporated.
8
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will become increasingly burdensome. The challenge to society of managing the equitable distribution of wealth created between competing generations may well become one of the most
pressing of the next decade.
In this environment HSBC, with its unique international footprint, is determined to continue to deliver profitable growth and value to its various
constituencies. Success ensures that the Group can offer good employment prospects to an ever more diverse workforce. It means that HSBC can afford to continue to invest in expanding the platforms by which it delivers services to its customers. It
enables the Group to contribute to the savings and retirement needs of those who invest in HSBC directly, or indirectly through pension plans and investment funds.
Building on its achievements, HSBC's priority for the rest of 2006 is to continue to implement its Managing for Growth strategy. It will achieve this by
being distinctive, reinforcing its brand values of trust and integrity in all its dealings with customers. The Group will make itself even more relevant by broadening the product, channel and geographical coverage it offers. Furthermore, HSBC will
ensure that the scale and complexity needed to compete successfully will be seamless from the perspective of its customers and manageable from that of its employees.
HSBC's
    businesses in Asia, Turkey, Mexico, Brazil and the Middle East see strong
    opportunities for growth on the back of investments already made. The Group
    also sees opportunities to strengthen its position in its franchises in the
    UK, Hong Kong, North America and France. HSBC believes there is growing momentum
    from the development of its new business streams within Corporate, Investment
    Banking and Markets businesses. Overall, HSBC is well positioned for further
    growth.
Strategy
At the end of 2003, HSBC launched 'Managing for Growth', a strategic plan that provides HSBC with a blueprint for growth and development during the period to 2008. The strategy
is evolutionary, not revolutionary. It builds on HSBC's strengths and it addresses the areas where further improvement is considered both desirable and attainable.
Management's vision for the Group remains consistent: HSBC aims to be the world's leading financial services company. In this context,
'leading' means preferred, admired and dynamic, and being recognised for giving the customer a fair deal. HSBC
will strive to secure and maintain a leading position within each of its customer groups in selected markets.
HSBC will concentrate on growing earnings over the long term at a rate which will place it favourably when compared with its peer group. It will also focus
on investing in its delivery platforms, its technology, its people and its brand to support the future value of HSBC as reflected in its comparative stock market rating and TSR. HSBC remains committed to benchmarking its performance both absolutely
and by comparison with a peer group. For full details of the peer group benchmark, see page 220.
HSBC's core values are integral to its strategy, and communicating them to customers, shareholders and employees is intrinsic to the plan. These values
comprise an emphasis on long-term, ethical client relationships; high productivity through teamwork; a confident and ambitious sense of excellence; being international in outlook and character; prudence; creativity and customer-focused
marketing.
The plan also reaffirms HSBC's recognition of its corporate social responsibility ('CSR'). HSBC has always aspired to the highest standards of
conduct, recognises its wider obligations to society and believes there is a strong link between CSR, long-term success and value creation. Moreover, changing public expectations across a wide spectrum of social, ethical and environmental issues
require continuing attention to this area. The strategy therefore calls for a renewed emphasis on CSR and for increased external communication of the Group's CSR policies and performance, particularly on education and the environment, which
will remain the principal beneficiaries of HSBC's philanthropic activities.
HSBC's growth ambitions centre on its four customer groups: Personal Financial Services; Commercial Banking; Corporate, Investment Banking and Markets;
and Private Banking; and specific strategies are being implemented for each of them. HSBC believes that by organising its internal and external reporting around customer groups, it reinforces to all its employees the Group's customer
focus.
Within Personal Financial Services, the increasing integration, skills sharing and transfer of technology with the consumer finance business has augmented
and enhanced existing activities. In addition, the introduction of skills and practices from the world's leading retailing businesses is shaping HSBC's competitive positioning.
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H S B C   H O L D
  I N G S   P L C
Description of Business
(continued)
Key elements in achieving HSBC's objectives for its customer groups will be accelerating the rate of growth of revenue; developing the brand strategy
further; improving productivity; and maintaining the Group's prudent risk management and strong financial position. Developing the skills of HSBC's staff will also be critical and it will be necessary to ensure that all employees
understand how they can contribute to the successful achievement of the Group's objectives. Employees who do make such a contribution will be rewarded accordingly.
Operational
    management will continue to be organised geographically under four regional
    intermediate head offices, with business activities concentrated in locations
    where growth and critical mass are to be found.
The
        plan contains eight strategic imperatives:
•
Brand:
        make HSBC and its hexagon symbol one
of
        the world's leading brands for customer
experience and corporate social
        responsibility;
•
Personal
        Financial Services: drive growth in key
markets
        and through appropriate channels to
make HSBC the strongest global
        player in
personal
        financial services;
•
Consumer
        Finance: extend the reach of this
business
        to existing customers through a wider
product range and penetrate new
        markets;
•
Commercial
        Banking: make the most of HSBC's
international
        customer base through effective
relationship management and improved
        product
offerings
        in all the Group's markets;
•
Corporate,
        Investment Banking and Markets:
accelerate
        growth by enhancing capital markets
and advisory capabilities focused
        on client
service
        in defined sectors where HSBC has
critical relevance and strength;
•
Private
        Banking: serve the Group's highest
value
        personal clients around the world;
•
People:
        attract, develop and motivate HSBC's
people,
        rewarding success and rejecting
mediocrity; and
•
TSR: fulfil
        HSBC's TSR target by achieving
strong
        competitive performances in earnings per
share growth and efficiency.
Employees
        and management
At 31 December
    2005, HSBC's customers were served by 284,000 employees (including part-time
    employees) worldwide, compared with 253,000 at 31 December 2004 and 232,000
    at 31 December 2003. The main centres of employment are the UK
with 55,000 employees, the US 49,000, Brazil 28,000, Hong Kong 26,000, Mexico 22,000, India 20,000 and France 14,000. HSBC negotiates with recognised unions, and estimates that
approximately 40 per cent of its employees are unionised. The highest concentrations of union membership are in Brazil, France, India, Malaysia, Malta, Mexico, the Philippines, Singapore and the UK. As a result of well-developed communications and
consultation programmes, HSBC has not experienced any material disruptions to its operations from labour disputes during the past five years.
In support of its strategy, HSBC focuses on attracting, developing and motivating the very best individuals and on encouraging talent internally. Emphasis is
placed on performance management; differentiated rewards; succession planning; diversity; and learning and development, with priority accorded to enhancing sales and relationship management skills. HSBC continues to endeavour to ensure that
employees' engagement with the business is maximised as this is beneficial to shareholders, colleagues and customers alike.
HSBC recruits from a broad cross-section of society and encourages the sharing of individual perspectives and ideas through collective training and global
secondments. HSBC's diverse workforce represents a significant competitive advantage. The broad cultural mix and increasing cross-border mobility of its employees enables HSBC to resource operations with individuals who have detailed knowledge
of local markets and of HSBC globally. This strengthens international networks and facilitates the sharing of best practices. In addition, a continuing focus on policies that encourage an inclusive working environment and the availability of career
opportunities for all is critical to HSBC being an employer of choice. HSBC seeks to maintain an employee profile that reflects its customer base.
HSBC operates in a highly competitive and international business environment. Through its network of international operations, it has the advantage of being
able to respond to the availability of talented employees wherever they are, in order to enhance customer service and improve productivity. As education levels improve globally and as investments in technology and telecommunications facilitate
access at competitive cost to hitherto untapped resources, the balance of employment continues to change, resulting in global resource centres of excellence. Job losses may arise in some countries, but HSBC has a good record of communicating openly
and sensitively in these circumstances, and of reassigning employees and
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minimising compulsory
  redundancies wherever
possible.
HSBC
    seeks to promote and recruit the most able people and attaches great importance
    to cultivating its own talent. Resources have been set aside to ensure a
    supply of talented individuals to meet business succession needs, with support
    provided for these employees in the form of career enhancement and personal
    development programmes. In addition, HSBC recognises that there are lessons
    to be learned from other successful businesses, and will recruit from non-banking
    industries where appropriate.
Customer
        groups
Profit
        before tax by customer group
Year ended
        31 December 2005
Total
    assets
1
by customer group
As
    at 31 December 2005
1
Excluding
        Hong Kong Government certificates of indebtedness.
Personal
    Financial Services
Personal
    Financial Services provides some 120 million individual and self-employed
    customers with a wide range of banking and related financial services. The
    precise nature of the products and services provided is, to some extent, driven
    by local regulations, market practices and the market positioning of HSBC's
    local businesses. Typically, products provided include
current and savings accounts, mortgages and personal loans, credit cards, and local and international payments services.
Personal
customers prefer to conduct their financial business at times convenient to them,
using a range of delivery channels. This demand for flexibility is  met through
the increased provision of direct channels such as the internet and self-service
terminals, in addition to traditional and automated branches and service centres
accessed by telephone.
Delivering the right products and services for particular target markets is a fundamental requirement in any retail service business, and market research and
customer analysis is key to developing an in-depth understanding of significant customer segments and their needs. This understanding of the customer ensures that Customer Relationship Management ('CRM') systems are effectively used to
identify and fulfil sales opportunities, and to manage the sales process.
HSBC
Premier
is a premium banking service providing personalised relationship management, 24-hour priority telephone access, global travel assistance and cheque encashment facilities. There are now over 1.3 million HSBC
Premier
customers, who can use more than 250 specially designated
Premier
branches and centres in 35 countries and territories, either when visiting, or on a more permanent basis if they
require a banking relationship in more than one country.
Insurance and investment products play an important part in meeting the needs of customers. Insurance products sold and distributed by HSBC through its
direct channels and branch networks include loan protection, life, property and health insurance, and pensions. Acting as both broker and underwriter, HSBC sees continuing opportunities to deliver insurance products to its personal customer
base.
HSBC also makes available a wide range of investment products. A choice of third party and proprietary funds is offered, including traditional 'long
only' equity and bond funds; structured funds that provide capital security and opportunities for an enhanced return; and 'fund of funds' products which offer customers the ability to diversify their investments across a range of
best-in-class fund managers chosen after a rigorous and objective selection process. Comprehensive financial planning services covering customers' investment, retirement, personal and asset protection needs are offered through specialist
financial planning managers.
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H S B C   H O
L D I N G S
P L C
Description
  of Business
(continued)
High net worth individuals and their families who choose the differentiated services offered within Private Banking are not included in this customer
group.
Consumer Finance
Within Personal
    Financial Services, HSBC Finance's operations in the US, the UK and Canada
    make credit available to customer groups not well catered for by traditional
    banking operations, facilitate point-of-sale credit in support of retail purchases
    and support major affiliate credit card programmes. At 31 December 2005 HSBC
    Finance had over 60 million customers with total gross advances of US$142.1
    billion. Consumer Finance products are offered through the following businesses
    of HSBC Finance:
The
consumer
    lending
business is one of the largest sub-prime home equity originators
    in the US, marketed under the HFC and Beneficial brand names through a network
    of nearly 1,400 branches in 45 states, direct mail, telemarketing, strategic
    alliances and the internet. Consumer lending also acquires sub-prime loans
    on the secondary market. 'Sub-prime' is a category used in the US
    which describes customers who have limited credit histories, modest incomes,
    high debt-to-income ratios, high loan-to-value ratios (for real estate secured
    products) or have experienced credit problems caused by occasional delinquencies,
    prior charge-offs, bankruptcy or other credit-related actions. Consumer lending
    products include secured and unsecured loans such as first and second lien
    closed-end mortgages, open-ended home equity loans, personal loans, loans
    secured on motor vehicles and retail finance contracts. Consumer lending also
    offers a near-prime mortgage product which was first introduced in 2003 to
    broaden the range of customers to which its products are relevant.
The
mortgage services
business purchases first and second lien residential mortgage loans, including open-end home equity loans, from a network of over 280 unaffiliated third-party lenders in the US. Purchases are primarily of pools of loans
('bulk acquisitions'), but also include individual loan portfolios ('flow acquisitions'), made under predetermined underwriting guidelines. Forward commitments are offered to selected correspondents to strengthen relationships
and create a sustainable growth channel for this business. HSBC Finance, through its subsidiary, Decision One Mortgage Company ('Decision One'), also originates mortgage loans referred by mortgage brokers.
The
retail
    services
business
    is one of the
largest providers of third party private label credit cards (or store cards) in the US based on receivables outstanding, with over 70 merchant relationships and 15.8 million active
customer accounts.
In addition to originating and refinancing motor vehicle loans, HSBC Finance's
motor vehicle finance
business purchases retail instalment contracts of US customers who do not have access to traditional prime-based lending sources. The
loans are largely sourced from a network of approximately 10,000 motor dealers.
The
credit card services
business is the fifth largest issuer of MasterCard
®
and
Visa
®
credit cards in the US, and also includes affiliation programmes such as the GM
Card
®
and the AFL-CIO Union Plus
®
credit card. Also, credit cards issued in the name of Household Bank, Orchard Bank and Direct Merchants Bank brands are offered to customers
under-served by traditional providers, or are marketed primarily through merchant relationships established by the retail services business.
A wide range of
insurance services
is offered by HSBC Finance to customers in the US, the UK and Canada who are typically not well-served by traditional sources.
The
taxpayer financial services
business accelerates access to funds for US taxpayers who are entitled to tax refunds and offers financial services through more than 25,000 tax return preparers in the US. The business is seasonal with most revenues
generated in the first three months of the year.
HSBC Finance's business in the UK ('HFC Bank') provides mid-market consumers with mortgages, secured and unsecured loans, insurance products,
credit cards and retail finance products. It concentrates on customer service through its 187 HFC Bank and Beneficial branches, and finances consumer electronic goods through its retail finance operations. Its credit card business was sold to HSBC
Bank in December 2005. In Canada, similar products are offered through trust operations of HSBC Finance's subsidiary there.
Commercial Banking
HSBC is one of the world's leading, and most international, banks in the provision of financial services and products to small, medium-sized and middle market businesses, with over
2.5 million customers including sole proprietors, partnerships, clubs and associations, incorporated businesses and publicly quoted companies.
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At 31 December 2005, HSBC had total commercial customer account balances of US$148.1 billion and total commercial customer loans and advances, net of
loan impairment allowances, of US$142.0 billion.
Commercial Banking places particular emphasis on multi-disciplinary and geographical collaboration in meeting its commercial customers' needs, thereby
differentiating, broadening and enhancing its offering. The range of products includes:
Payments and cash management
: HSBC is a leading provider of payments,
collections, liquidity management and account services worldwide, enabling commercial customers to manage their cash efficiently on a global basis. HSBC's extensive network of offices and strong domestic capabilities in many countries,
including direct access to local clearing systems, enhances its ability to provide high-quality competitive cash management services.
Treasury and capital markets
: Commercial Banking customers have long been
volume users of the Group's foreign exchange capabilities. These are now being supplemented with more sophisticated currency and interest rate options.
Investment banking
: A small number of Commercial Banking customers need
occasional investment banking advisory support. Co-operation with Corporate, Investment Banking and Markets ensures that in most key markets such requirements are serviced internally.
Wealth management services
: These include advice and products related to
savings and investments. They are provided to Commercial Banking customers and their employees through HSBC's worldwide network of branches and business banking centres.
Insurance
: HSBC offers insurance protection, employee benefits programmes
and pension schemes designed to meet the needs of businesses and their employees, and to help fulfil the applicable statutory obligations of client companies. These products are provided by HSBC either as an intermediary (broker, agent or
consultant) or as a supplier of in-house or third party offerings. Products and services include a full range of commercial insurance, including pension schemes; healthcare schemes; 'key man' life insurance; car fleet; goods in transit;
trade credit protection; risk management and insurance due diligence reviews; and actuarial/employee benefit consultancy.
Trade services
: HSBC has more than 140 years of experience in trade
services. A complete range of traditional documentary credit, collections and
financing products is offered, as well as specialised services such as insured export finance, international factoring and forfaiting. HSBC's expertise is supported by highly
automated systems.
Leasing, finance and factoring
: HSBC has established specialised divisions
to provide leasing and instalment finance for vehicles, plant and equipment, machinery and materials handling, and large complex leases. HSBC also provides domestic and international factoring and receivables finance services through a network of 11
businesses worldwide.
Credit cards
: HSBC offers commercial credit card services in 18 countries.
Commercial card issuing provides small to middle market businesses with services, including corporate and purchasing cards, which variously enhance cash management, improve cost control and streamline purchasing processes. Commercial card acquiring
enables merchants to accept credit card payments either in-store or on the internet.
Corporate, Investment Banking and Markets
HSBC's Corporate, Investment Banking and Markets business provides tailored financial solutions to major government, corporate and institutional clients worldwide. Managed as a
global business, this customer group operates a long-term relationship management approach to build a full understanding of clients' financial requirements. Sectoral client service teams comprising relationship managers and product specialists
develop financial solutions to meet individual client needs. With dedicated offices in over 60 countries and with access to HSBC's worldwide presence and capabilities, this business serves subsidiaries and offices of its clients on a global
basis.
Products
    and services offered include:
Global Markets
HSBC's
    operations in Global Markets consist of treasury and capital markets services
    for supranationals, central banks, corporations, institutional and private
    investors, financial institutions and other market participants. Products
    include:
•
foreign
        exchange;
•
currency,
        interest rate, bond, credit, equity and
other
        specialised derivatives;
•
government
        and non-government fixed income
and
        money market instruments;
•
precious
        metals and exchange traded futures;
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H S B C   H O
L D I N G S
P L C
Description
  of Business
(continued)
•
equity
      services, including research, sales and
trading
      for institutional, corporate and private
clients and asset management
      services,
including
      global investment advisory and fund
management services; and
•
distribution
      of capital markets instruments,
including
      debt, equity and structured products,
utilising links with HSBC's
      global networks.
Corporate and Investment Banking
Global
  Investment Banking
comprises:
•
capital
      raising, both publicly and privately,
including
      debt and equity capital, structured
finance and syndicated finance;
•
corporate
      finance and advisory services for
mergers
      and acquisitions, asset disposals, stock
exchange listings, privatisations
      and capital
restructurings;
      and
•
project
      and export finance services providing
non-recourse
      finance to exporters, importers and
financial institutions, and working
      closely with
all
      major export credit agencies.
Corporate
  and Institutional Banking
includes:
•
direct
      lending, including structured finance for
complex
      investment facilities;
•
leasing
      finance with an emphasis on 'large
ticket'
      transactions; and
•
deposit-taking.
Global Transaction Banking
includes international, regional and 'in-country' payments and cash
management services; trade services, particularly the specialised 'supply chain' product; and securities services, where HSBC is one of the world's leading custodians providing custody and clearing services and funds administration to
both domestic and cross-border investors. Factoring and banknotes services are also provided by specialist units.
Private Equity
comprises HSBC's captive private equity fund management activities, strategic
relationships with certain third party private equity managers together with direct listed and unlisted equity investments and fund commitments.
Group Investment Businesses
These comprise asset management products and services for institutional investors, intermediaries and individual investors and their advisers.
Management structure
During February 2006, the management structure of Global Markets and Corporate and Investment Banking was restructured. Under the new structure, there are three principal business lines:
Global Banking, Global Markets and Global Transaction Banking. This new structure will allow Corporate, Investment Banking and Markets to focus on the relationships and sectors that best fit the Group's footprint and ensure seamless delivery of
HSBC's enhanced product capabilities to clients.
Private
  Banking
HSBC's presence in all the major wealth-creating regions has enabled it to build one of the world's leading private banking groups, providing financial services to high net
worth individuals and their families in 74 locations in 35 countries, with total assets under management of US$282 billion at 31 December 2005. HSBC Private Bank is the principal marketing name of the HSBC Group's international private
banking business which, together with HSBC Guyerzeller and HSBC Trinkaus & Burkhardt, provides private banking services.
Utilising the most suitable products from the marketplace, Private Banking works with its clients to offer both traditional and innovative ways to manage and
preserve wealth whilst optimising returns. Products and services offered include:
Investment services
: These comprise both advisory and discretionary investment services. A wide range of investment vehicles is covered, including bonds, equities, derivatives, options, futures, structured products and alternative products, mutual
  funds, hedge funds and fund of funds. Supported by six major advisory centres in Hong Kong, Singapore, Geneva, New York, Paris and London, Private Banking seeks to select the most suitable investments for clients' needs and investment
  strategies.
Global wealth solutions
: These comprise inheritance planning, trustee and
other fiduciary services designed to protect existing wealth and create tailored structures to preserve wealth for future generations. Areas of expertise include trusts, foundation and company administration, charitable trusts and foundations,
insurance and offshore structures.
Specialist
  advisory services
:
  Private Banking offers expertise in several specialist areas of wealth management
  including tax advisory and financial planning, family office advisory, corporate
  finance,
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consolidated
  reporting, industry services such as
charities
  and foundations, media, shipping, diamond
and
  jewellery, and real estate planning. Specialist
advisers
  are available to deliver products and
services
  that are tailored to meet the full range of
high
  net worth clients' individual financial needs.
General
    banking services
:
    These comprise
treasury
    and foreign exchange, offshore and onshore
deposits,
    credit and specialised lending, tailor-made
loans
    and internet banking. Private Banking works to
ensure
    its clients have full access to relevant skills and products available throughout
    HSBC, such as corporate banking, investment banking and insurance.
Geographical
        regions
Profit
    before tax split by geographical region
Year ended 31
    December 2005
Total
  assets
1
split by geographical
  region
As
  at 31 December 2005
1
Excluding
      Hong Kong Government certificates of indebtedness.
Additional information regarding business developments in 2005 may be found in the 'Financial Review' on pages 26 to 177.
Europe
HSBC's principal banking operations in Europe are HSBC Bank in the UK, HSBC France, HSBC Bank
A.S. in Turkey, HSBC Bank Malta, HSBC Private Bank (Suisse), HSBC Trinkaus & Burkhardt KGaA and HSBC Guyerzeller Bank AG. Through these operations HSBC provides a wide range of
banking, treasury and financial services to personal, commercial and corporate customers across Europe.
Hong Kong
HSBC's principal banking subsidiaries in Hong Kong are The Hongkong and Shanghai Banking Corporation and Hang Seng Bank. The former is the largest bank incorporated in Hong Kong and
is HSBC's flagship bank in the Asia-Pacific region. It is one of Hong Kong's three note-issuing banks, accounting for more than 65 per cent by value of banknotes in circulation in 2005.
Rest of Asia-Pacific (including the Middle East)
The Hongkong and Shanghai Banking Corporation offers personal, commercial, corporate and investment banking and markets services in mainland China. The bank's network spans 12 major
cities, comprising 12 branches and eight sub-branches. Hang Seng Bank offers personal and commercial banking services and operates six branches, four sub-branches, and two representative offices in eight cities in mainland China. HSBC also
participates indirectly in mainland China through its three associates, Bank of Communications (19.9 per cent owned), Ping An Insurance (19.9 per cent) and Industrial Bank (15.98 per cent).
Outside Hong Kong and mainland China, the HSBC Group conducts business in the Asia-Pacific region primarily through branches and subsidiaries of The Hongkong
and Shanghai Banking Corporation in 22 countries, with particularly strong coverage in India, Indonesia, South Korea, Singapore and Taiwan. HSBC's presence in the Middle East is led by HSBC Bank Middle East in a network of branches and
subsidiaries with the widest coverage in the region; in Australia by HSBC Bank Australia Limited; and in Malaysia by HSBC Bank Malaysia Berhad, which has the second largest presence of any foreign-owned bank in the country. HSBC's associate in
Saudi Arabia, The Saudi British Bank (40 per cent owned), is the Kingdom's sixth largest bank.
North America
HSBC's
    North American businesses cover the US, Canada, Mexico, Bermuda and Panama.
    Operations in the US are primarily conducted through HSBC Bank USA, N.A. which
    is concentrated in New York State, and HSBC Finance, a national consumer
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H S B C   H O
L D I N G S
P L C
Description
  of Business
(continued)
finance company
    based in Chicago. HSBC's businesses in Mexico and Panama are run through
    HSBC Mexico, with HSBC Bank Canada and Bank of Bermuda responsible for operations
    in their respective countries.
South America
HSBC's
    operations in South America principally comprise HSBC Bank Brazil and HSBC
    Bank Argentina, although HSBC is also represented in Venezuela, Chile and
    Uruguay. In addition to banking services, HSBC operates large insurance businesses
    in Argentina and Brazil. In Argentina, HSBC's main insurance business
    is HSBC La Buenos Aires and, through Máxima and HSBC New York Life,
    HSBC offers pensions and life assurance products. In Brazil, HSBC also offers
    consumer finance products through its subsidiary, Losango.
Competitive
        environment
HSBC believes that open and competitive markets are good for both local economies and their participants, and the Group faces very strong competition in the markets it serves. In personal
and commercial banking, it competes with a wide range of institutions including commercial banks, consumer finance companies, retail financial service companies, savings and loan associations, credit unions, general retailers, brokerage firms and
investment companies. In investment banking, HSBC faces competition from specialist providers and the investment banking operations of other commercial banks.
Regulators routinely monitor and investigate the competitiveness of the financial services industry (of which HSBC is a part) in a number of areas,
particularly in the UK and Europe.
Global
  factors
Consolidation in the banking industry
Over the past few decades there has been a trend towards consolidation in banking and financial services, both nationally and internationally. This development has created a large and
growing number of institutions which are capable of competing with HSBC across a wide range of services.
Limited market growth
The majority of HSBC's business is conducted in the US, the UK and Hong Kong. Penetration of standard banking services in these markets is nearing saturation, with little scope for further market
growth. Greater potential for expansion lies in the provision of a wider range of financial services, including consumer finance, to new
and existing customers. HSBC has also identified emerging economies in Asia-Pacific, Mexico, the Middle East, Turkey and Latin America as a source of current and future growth.
Advances in technology
Over the last decade, new technologies such as the internet and related innovations have matured, and financial institutions have not been alone in recognising the potential of these
developments. Financial services and other market participants can now deliver a large and expanding range of products and services through these channels and competition is, as a result, fierce. However, with competition come opportunities. HSBC
will continue to offer a full range of services via the channels preferred by its customers. These currently include the internet, interactive TV, mobile phone, WAP and telephone banking as well as the traditional branch network.
Regional
    factors
Europe
The European Commission has commenced inquiries into retail banking and business insurance across all member states. All HSBC entities affected have responded to the initial
questionnaires.
The 65 member banks of the European Payments Council have signed an agreement to create a Single European Payments Area by 2008 which aims to harmonise
transfers, banker's orders and cards transactions. This should offer strong growth opportunities for some banks but will also lead to more competition.
UK
After several
    very positive years, UK growth slowed in 2005. Although corporate earnings
    rose and the UK stock market was healthy, strong commodity and oil prices
    adversely affected several sectors.
Retailers
    are suffering from declining levels of consumer confidence and disposable
    income, mainly caused by high levels of indebtedness and rising tax and utility
    burdens.
A stable interest rate environment, strong employment levels and a solid housing market helped to keep demand for consumer finance strong but could not
prevent a rise in default and arrears rates in all forms of unsecured personal lending.
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Despite these developments, competition in the retail banking sector for the best customers remained intense, with pressure on credit products, interest
margins and, in particular, deposit rates.
The high level of personal indebtedness and strong competition within the retail banking and consumer finance sectors led regulatory authorities to continue
to monitor closely the financial services sector.
In December, the UK Competition Commission released its provisional remedies to improve competition following its investigation into the US$8.3 billion
store card industry. HSBC continues to co-operate with the Commission as the inquiry draws to a conclusion.
Also in 2005, the Office of Fair Trading ('OFT') continued with its inquiry into credit card terms under the Unfair Terms in Consumer Contracts
regulations. HSBC has made various submissions to the OFT and discussions continue.
The OFT also published its decision on the multilateral interchange agreement between MasterCard members in October. MasterCard has appealed against the
decision to the Competition Appeals Tribunal. Visa is also subject to investigation but the case is suspended pending resolution of the MasterCard case.
In November, the Financial Services Authority published the results of its themed review of the sale of Payment Protection Insurance. It has expressed
concerns regarding some practices which were common within the industry. HSBC has not received a negative response in respect of its own procedures, but will be considering its products and sales practices in the light of the findings. The OFT will
be undertaking a market investigation into Payment Protection Insurance following a super-complaint from the Citizens' Advice Bureau.
Throughout 2005, a Payments Task Force chaired by the OFT has brought together representatives of the banking industry, consumer bodies and business with the
Bank of England and HM Treasury to look at various aspects of the payments system. Its first report recommended that the payment industry implement a faster means of making low cost electronic payments. HSBC agrees that this is in the
consumer's interest and favours its early implementation.
The Consumer Credit Bill, currently in its second reading in Parliament, updates existing consumer legislation in order to provide better consumer
protection, and is likely to come into force during 2006.
HSBC's
policy is to co-operate and work positively with all its regulators, inputting
data and perspective on those issues which affect all financial service  providers
via industry bodies.
France
Stable interest rates in the euro zone contributed to a strong growth in real estate investment in France. Competition between French banks was concentrated on the promotion of real
estate mortgage loans, which are the principal means by which new customers in France are acquired. Market activity increased and consumers enjoyed improved pricing to the detriment of bank margins throughout 2005.
The payment of interest on sight deposits, which has only been permitted since the beginning of 2005, was introduced by one major mutual French bank. This
move did not provoke a widespread reaction in the domestic market and, to date, no other leading French bank has followed suit.
In December 2005, Banque Postale (a subsidiary of the French Postal service) received the necessary regulatory approvals and with effect from January 2006
will be able to offer real estate mortgages and financial services, including the sale of investment products manufactured by third party providers. Given the scale of Banque Postale's geographical coverage, this will increase competition in an
already competitive market.
The French government has reformed tax law for 2006/2007 with two measures which will increase disposable income for high income individuals: a tax exemption
on capital gains on equities held for more than eight years, which brings the French taxation regime into line with practices in many other European countries, and a cap on total household taxes at 60 per cent of income. This will boost one of the
market segments on which HSBC France focuses.
At
the end of December, French banks were granted approval, as in the UK, to provide
equity release mortgages. This will assist customers to invest in real estate
and finance consumption.
Hong Kong
While fierce competition
in traditional core banking products remained evident in Hong Kong, the rising
cost of funds in the second half of 2005 from increasing interbank rates made
banks with smaller deposit bases more cautious in price competition. A decline
in property
loan demand also added pressure on banks to look for new outlets for lending.
Personal loans, including credit card advances, attracted
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H S B C   H O L
  D I N G S   P L C
Description
  of Business
(continued)
banks' attention as consumer spending revived strongly.
The Chinese currency regime was reformed in July 2005 and the second phase of Hong Kong's renminbi business introduced late in the year. While
developments in these areas remain at an early stage, they are expected, along with the benefits flowing from the liberalisation of China's financial sector under the World Trade Organisation agreement, to be a continued source of growth in the
future.
Rest of Asia-Pacific
(including the Middle East)
The competitive environment in the Rest of Asia-Pacific continues to intensify as international banks focus on targeted sectors in emerging markets in pursuit of higher returns. Local
banks are also actively expanding their reach and business, both within countries and across borders. Competition remains intense throughout the region in all the customer groups served by HSBC. However, in many countries the growing sophistication
of the relatively young population and increasing affluence of the middle class continue to provide HSBC with further opportunities for growth.
Banks and non-banks, both local and international, are rapidly building consumer finance and direct banking businesses in a number of countries in the
region.
North America
In an already highly competitive US financial services industry, institutions involved in a broad range of financial products and services continued to consolidate. Within the banking
sector, consolidation continued into 2006, with a greater focus on national networks and retail branch banking.
The Group's principal US subsidiaries, HSBC Bank USA and HSBC Finance, face vigorous competition from a wide array of financial institutions. These
include banks, thrifts, insurance companies, credit unions, mortgage lenders and brokers, and non-bank suppliers of consumer credit and other financial services. Many of these institutions are not subject to US banking industry regulation, unlike
HSBC. This gives some of them cost and product advantages and will further increase competitive pressures. HSBC competes by expanding its customer base through portfolio acquisitions or alliances, co-branding opportunities and direct sales channels,
by offering a very wide variety of consumer loan products and by maintaining a strong service orientation.
The five largest banks in Canada dominate the country's financial services industry. Despite this, the market remains very competitive with comparable
financial products and services offered by other banks, insurance companies and other institutions. Merger activity among the largest banks in Canada remains possible, but without such consolidation major financial institutions will continue to look
elsewhere for growth.
Mexico's banking industry is highly concentrated. Five large foreign-owned banks, including HSBC, control 75 per cent of banking assets and 78 per cent
of deposits through their local subsidiaries. The majority of Mexico's 105 million people neither have access to nor use the banking system. Thus there are favourable growth opportunities for retail banking over the medium to long term. HSBC is
well placed in this environment, with an extensive branch network and an expanding base of young customers from which to develop growth opportunities. Currently, there is strong regulatory and consumer pressure to reduce banking and pension
management fees and commissions as volumes increase, constraining growth in non-funds income. Mexico's economy is very closely linked to the US and 88 per cent of its exports are sent there.
South America
The composition of the Brazilian financial system saw relatively little change in 2005. The top ten banking groups, which account for 68 per cent of assets and 86 per cent of branches,
remained dominated by a combination of large state-owned banks, privately-owned local banks and subsidiaries of foreign banks such as HSBC. In 2005, HSBC was the sixth largest non-state owned bank in the country, ranked by assets.
Notwithstanding the persistence of high interest rates in Brazil and an uncertain outlook for the economy, 2005 saw strong growth in lending to individuals.
Central Bank statistics indicate that personal lending increased by an estimated 37 per cent during the year, following growth of 28.6 per cent in 2004. However, total lending as a percentage of GDP remained low in international terms at 31.3 per
cent. This, together with the fact that within the economically active population an estimated 40 million people have limited access to financial services, indicates that the outlook for further growth is positive.
Against this background, banks continued to develop their consumer finance businesses, with particular emphasis on partnerships with large retailers and
'green field' ventures. In the retail
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segment, payroll and pension-linked advances emerged in 2005 as a significant source of lending. Banks also developed 'virtual' banking networks known as
correspondentes bancários.
These
are typically small retail establishments offering basic payment and banking services on behalf of established banks on a commission basis. By the end of 2005, HSBC had
developed a network of 1,824
correspondentes
generating close to one million monthly
transactions.
In Argentina, HSBC's competition comes from international financial groups which, in most cases, provide an equivalent range of banking, insurance,
pension and annuity products and services.
The completion of Argentina's international debt swap negotiation eliminated a major concern that had overshadowed the country and the financial system.
This had a significantly favourable impact
upon the pensions and life insurance business, which also benefited from increasing contributions as more people returned to employment in the formal economy.
Consequently, the banking industry showed improved profitability with many of the larger foreign-owned banks re-capitalising their domestic operations.
Continued growth and increased confidence in the economy were reflected in increased deposit levels and a 38 per cent growth in demand for loan products compared with 2004.
HSBC sees the return to a more normal business environment continuing and intends to monitor opportunities within the financial services industry in
Argentina with a view to growing core retail and commercial banking franchises.
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H S B C   H O L
D I N G S   P L C
Governance,
  Regulation and Supervision
Governance
With listings
        of its ordinary shares in London, Hong Kong, New York, Paris and Bermuda,
        HSBC Holdings complies with the relevant requirements for listing and
        trading on each of these exchanges. In the UK, these are the Listing
        Rules of the Financial Services Authority; in Hong Kong, The Rules Governing
        the Listing of Securities on The Stock Exchange of Hong Kong Limited;
        in the US, where the shares are traded in the form of
ADSs, HSBC Holdings' shares are registered with the US Securities
        and Exchange Commission. As a consequence of its US listing, HSBC Holdings
        is also subject to the reporting and other requirements of the US Securities
        Act of 1933, as amended, the Securities Exchange Act of 1934, as amended,
        and the New York Stock Exchange's Listed Company Manual, in each
        case as applied to foreign private issuers. In France and Bermuda, HSBC
        Holdings is subject to the listing rules of Euronext, Paris and the Bermuda
      Stock Exchange applicable to companies with secondary listings.
A
        statement of HSBC's compliance with the code provisions of the Combined
        Code on Corporate Governance issued by the Financial Reporting Council
        and with the Code on Corporate Governance Practices in Appendix 14 to
        the Rules Governing the Listing of Securities on The Stock Exchange of
      Hong Kong Limited is set out in the 'Report of the Directors'.
Regulation
      and supervision
HSBC's
        operations throughout the world are regulated and supervised by approximately
        490 different central banks and regulatory authorities in those jurisdictions
        in which HSBC has offices, branches or subsidiaries. HSBC estimates the
        cost of this regulation and supervision to be approximately US$635
        million in 2005. These authorities impose a variety of requirements and
        controls
covering,
inter alia
,
capital adequacy, depositor protection, market liquidity, governance standards,
customer protection (for example, fair lending practices, product design, and
marketing and documentation standards), and social responsibility obligations
(for example, anti-money laundering and anti-terrorist financing measures). In
addition, a number of countries in which HSBC operates impose rules that affect,
or place limitations on, foreign or foreign-owned or controlled banks and financial
institutions. The rules include restrictions on the opening of local offices,
branches or subsidiaries and the types of banking and non-banking activities
that may be conducted by those local offices, branches or subsidiaries; restrictions
on the acquisition of local banks or
regulations
    requiring a specified percentage of local ownership; and restrictions on
    investment and other financial flows entering or leaving the country. The
    supervisory and regulatory regimes of the countries where HSBC operates will
    determine to some degree HSBC's ability to expand into new markets,
    the services and products that HSBC will be able to offer in those markets
    and how HSBC structures specific operations.
The Financial Services Authority ('FSA') supervises HSBC on a consolidated basis. In addition, each operating bank, finance company or insurance
operation within HSBC is regulated by local supervisors. The primary regulatory authorities are those in the UK, Hong Kong and the US, the Group's principal areas of operation.
In June 2004, the Basel Committee on Banking Supervision introduced a new capital adequacy framework to replace the 1988 Basel Capital Accord in the form of
a final Accord (commonly known as 'Basel II'). Details of the European Union's implementation of Basel II and how this will affect HSBC are set out on page 174.
United Kingdom regulation and supervision
UK banking and financial services institutions are subject to multiple regulations. The primary UK statute is the Financial Services and Markets Act 2000 ('FSMA'). Other UK
primary and secondary banking legislation is derived from European Union ('EU') directives relating to banking, securities, investment and sales of personal financial services.
The FSA is responsible for authorising and supervising UK financial services institutions and regulates all HSBC's businesses in the UK which require
authorisation under the FSMA. These include retail banking, life and general insurance, pensions, mortgages, custody and branch share-dealing businesses, and treasury and capital markets activity. HSBC Bank is HSBC's principal authorised
institution in the UK.
FSA rules establish the minimum criteria for authorisation for banks and financial services businesses in the UK. They also set out reporting (and, as
applicable, consent) requirements with regard to large individual exposures and large exposures to related borrowers. In its capacity as supervisor of HSBC on a consolidated basis, the FSA receives information on the capital adequacy of, and sets
requirements for, HSBC as a whole. Further details on capital measurement are included in 'Capital Management' on pages 176 to 177. The FSA has the right to object, on prudential grounds, to
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persons who hold, or intend to hold, 10 per cent or more of the voting power of a financial institution.
The regulatory framework of the UK financial services system has traditionally been based on co-operation between the FSA and authorised institutions. The
FSA monitors authorised institutions through ongoing supervision and the review of routine and
ad hoc
reports relating to financial and prudential matters. The FSA may periodically obtain independent reports, usually from the auditors of the authorised institution, as to the adequacy of internal control procedures and systems as
well as procedures and systems governing records and accounting. The FSA meets regularly with HSBC's senior executives to discuss HSBC's adherence to the FSA's prudential guidelines. They also regularly discuss fundamental matters
relating to HSBC's business in the UK and internationally, including areas such as strategic and operating plans, risk control, loan portfolio composition and organisational changes, including succession planning.
UK depositors and investors are covered by the Financial Services Compensation Scheme which deals with deposits with authorised institutions in the UK,
investment business and contracts of insurance. Institutions authorised to accept deposits and conduct investment business are required to contribute to the funding of the scheme. In the event of the insolvency of an authorised institution,
depositors are entitled to receive 100 per cent of the first £2,000 (US$3,442) of a claim plus 90 per cent of any further amount up to £33,000 (US$56,798) (the maximum amount payable being £31,700 (US$54,560)). Payments
under the scheme in respect of investment business compensation are limited to 100 per cent of the first £30,000 (US$51,634) of a claim plus 90 per cent of any further amount up to £20,000 (US$34,423) (the maximum amount payable
being £48,000 (US$82,615)). In addition, the Financial Services Compensation Scheme has been extended to cover mortgage advice and arranging, certain long term and general insurance products, and the provision of general advice and
arranging services. Differing levels of compensation limits apply to each of these additional areas.
The EU Savings Directive took effect on 1 July 2005. Under the directive, each member state other than Austria, Belgium, and Luxembourg is required to
provide the tax authorities of each other member state with details of payments of interest or other similar income paid by a person within its jurisdiction to individuals resident in such other member state. For a transitional period beginning on
the same date, Austria, Belgium, and Luxembourg
have imposed a
withholding tax on such income. The withholding tax rate is 15 per cent, increasing
to 20 per cent from 2008 and 35 per cent from 2011. Subject to future conditions
being  met, Austria, Belgium, and Luxembourg may cease to apply the withholding
tax and instead comply with the automatic exchange of information rules applicable
to the other member states. These future conditions will depend on other key
financial
centres – Switzerland, Liechtenstein, San Marino, Andorra and the US – not
exchanging information. These financial centres and several other European countries
and related offshore territories have also entered into similar agreements to

the Savings Directive with the EU states.
Hong Kong regulation and supervision
Banking in Hong Kong is subject to the provisions of the Banking Ordinance of Hong Kong (Chapter 155) (the 'Banking Ordinance'), and to the powers, functions and duties ascribed
by the Banking Ordinance to the Hong Kong Monetary Authority (the 'HKMA'). The principal function of the HKMA is to promote the general stability and effective working of the banking system in Hong Kong. The HKMA is responsible for
supervising compliance with the provisions of the Banking Ordinance. The Banking Ordinance gives power to the Chief Executive of Hong Kong to give directions to the HKMA and the Financial Secretary with respect to the exercise of their respective
functions under the Banking Ordinance.
The HKMA has responsibility for authorising banks, and has discretion to attach conditions to its authorisation. The HKMA requires that banks or their
holding companies file regular prudential returns, and holds regular discussions with the management of the banks to review their operations. The HKMA may also conduct 'on site' examinations of banks, and in the case of banks incorporated
in Hong Kong, of any local and overseas branches and subsidiaries. The HKMA requires all authorised institutions to have adequate systems of internal control and requires the institutions' external auditors, upon request, to report on those
systems and other matters such as the accuracy of information provided to the HKMA. In addition, the HKMA may from time to time conduct tripartite discussions with banks and their external auditors.
The HKMA, which may deny the acquisition of voting power of over 10 per cent in a bank, and may attach conditions to its approval thereof, can effectively
control changes in the ownership and control of Hong Kong-incorporated financial institutions. In addition, the HKMA has the power to
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H
      S B C   H O L D I N G S   P L C
Governance,
  Regulation and Supervision
(continued)
divest
        controlling interests in a bank from persons if they are no longer deemed
        to be fit and proper, if they may otherwise threaten the interests of
        depositors or potential depositors, or if they have contravened any conditions
      specified by the HKMA.
The HKMA
        may revoke authorisation in the event of an institution's non-compliance
        with the provisions of the Banking Ordinance. These provisions require,
      among other things, the furnishing of accurate reports.
The
        Banking Ordinance requires that banks submit to the HKMA certain returns
        and other information and establishes certain minimum standards and ratios
        relating to capital adequacy (see below), liquidity, capitalisation,
        limitations on shareholdings, exposure to any one customer, unsecured
        advances to persons affiliated with the bank and holdings of interests
        in land, with which banks must
comply.
Hong
          Kong fully implemented the capital adequacy standards established by
          the 1988 Basel Capital Accord. The Banking Ordinance currently provides
          that banks incorporated in Hong Kong maintain a capital adequacy ratio
          (calculated as the ratio, expressed as a percentage, of the bank's
          capital base to its risk-weighted exposure) of at least 8 per cent.
          For banks with subsidiaries, the HKMA is empowered to require that
          the ratio be calculated on a consolidated basis, or on both consolidated
          and unconsolidated bases. If circumstances require, the HKMA is empowered
          to increase the minimum capital adequacy ratio (to up to 16 per cent),
          after consultation with the bank.
The
        HKMA is in the process of establishing a Deposit Protection Scheme for
      banks in Hong Kong. It is expected that this will be launched in 2006.
The
          marketing of, dealing in and provision of advice and asset management
          services in relation to securities in Hong Kong are subject to the
          provisions of the Securities and Futures Ordinance of Hong Kong (Chapter
          571) (the 'Securities and Futures Ordinance'). Entities engaging
          in activities regulated by the Securities and Futures Ordinance are
          required to be licensed. The HKMA is the primary regulator for banks
          involved in the securities business, while the Securities and Futures
          Commission is the regulator for non-banking entities.
US
      regulation and supervision
HSBC is
        subject to extensive federal and state supervision and regulation in
        the US. Banking laws and regulations of the Federal Reserve Board, the
        Federal Deposit Insurance Corporation
('FDIC') and
the Office of
    the Comptroller of the Currency ('OCC') govern many aspects of HSBC's
    US business.
HSBC and its US operations are subject to supervision, regulation and examination by the Federal Reserve Board because HSBC is a 'bank holding
company' under the US Bank Holding Company Act of 1956 (the 'BHCA') as a result of its ownership of HSBC Bank USA. HSBC Bank USA is a nationally chartered commercial bank and a member of the Federal Reserve System. HSBC Bank USA is
the surviving institution of the 1 July 2004 merger of HSBC Bank USA and HSBC Bank & Trust (Delaware) N.A. HSBC also owns HSBC Bank Nevada, N.A. ('HSBC Bank Nevada'), a nationally chartered 'credit card bank' and HSBC Trust
Company (Delaware) NA ('HSBC Bank Delaware'), a nationally chartered bank limited to trust activities, each of which is also a member of the Federal Reserve System. Each of HSBC Bank USA, HSBC Bank Nevada and HSBC Bank Delaware is subject
to regulation, supervision and examination by the OCC. The deposits of HSBC Bank USA and HSBC Bank Nevada are insured by the FDIC and both banks are subject to relevant FDIC regulation. On 1 January 2004, HSBC formed a new company to hold all of its
North American operations, including these two banks. This company, called HSBC North America Holdings Inc. ('HNAH') is also a 'bank holding company' under the BHCA, by virtue of its ownership and control of HSBC Bank
USA.
The BHCA and the International Banking Act of 1978 impose certain limits and requirements on the US activities and investments of HSBC, HNAH, and certain
companies in which they hold direct or indirect investments. HSBC is also a 'qualifying foreign banking organisation' under Federal Reserve Board regulations and, as such, may engage within the United States in certain limited non-banking
activities and hold certain investments that would otherwise not be permissible under US law. Prior to 13 March 2000, the BHCA generally prohibited HSBC from acquiring, directly or indirectly, ownership or control of more than 5 per cent of the
voting shares of any company engaged in the US in activities other than banking and certain activities closely related to banking. On that date HSBC became a financial holding company ('FHC') under the Gramm-Leach-Bliley Act amendments to
the BHCA, enabling it to offer a more complete line of financial products and services. Upon its formation, HNAH also registered as an FHC. HSBC and HNAH's ability to engage in expanded financial activities as FHCs depend upon HSBC and HNAH
continuing to meet certain criteria set forth in the
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BHCA, including requirements that its US depository institution subsidiaries, HSBC Bank USA, HSBC Bank Nevada and HSBC Bank Delaware, be 'well-capitalised' and
'well-managed', and that such institutions have achieved at least a satisfactory record in meeting community credit needs during their most recent examinations pursuant to the Community Reinvestment Act. These requirements also apply to
Wells Fargo HSBC Trade Bank, N.A., in which HSBC and HNAH have a 20 per cent voting interest in equity capital and a 40 per cent economic interest. Each of these depository institutions achieved at least the required rating during their most recent
examinations. At 31 December 2005, HSBC Bank USA, HSBC Bank Nevada, HSBC Bank Delaware and Wells Fargo HSBC Trade Bank, N.A. were each well capitalised and well managed under Federal Reserve Board regulations.
In general under the BHCA, an FHC would be required, upon notice by the Federal Reserve Board, to enter into an agreement with the Federal Reserve Board to
correct any failure to comply with the requirements to maintain FHC status. Until such deficiencies are corrected, the Federal Reserve Board may impose limitations on the US activities of an FHC and depository institutions under its control. If such
deficiencies are not corrected, the Federal Reserve Board may require an FHC to divest its control of any subsidiary depository institution or to desist from certain financial activities in the US.
HSBC and HNAH are generally prohibited under the BHCA from acquiring, directly or indirectly, ownership or control of more than 5 per cent of any class of
voting shares of, or substantially all the assets of, or exercising control over, any US bank or bank holding company without the prior approval of the Federal Reserve Board.
The US is party to the 1988 Basel Capital Accord and US banking regulatory authorities have adopted risk-based capital requirements for US banks and bank
holding companies that are generally consistent with the Accord. In addition, US regulatory authorities have adopted 'leverage' capital requirements that generally require US banks and bank holding companies to maintain a minimum amount of
capital in relation to their balance sheet assets (measured on a non-risk-weighted basis).
The Federal Deposit Insurance Corporation Improvement Act of 1991 provides for extensive regulation of insured depository institutions (such as HSBC Bank
USA, HSBC Bank Nevada and Wells Fargo HSBC Trade Bank, N.A.), including requiring federal banking regulators to take 'prompt corrective
action' with respect to FDIC-insured banks that do not meet minimum capital requirements.
HSBC Bank USA, HSBC Bank Nevada and Wells Fargo HSBC Trade Bank, N.A., like other FDIC-insured banks, may be required to pay assessments to the FDIC for
deposit insurance under the FDIC's Bank Insurance Fund. Under the FDIC's risk-based system for setting deposit insurance assessments, an institution's assessments vary according to the level of capital an institution holds, its
deposit levels and other factors.
The USA Patriot Act ('Patriot Act') imposes significant record keeping and customer identity requirements, expands the US federal government's
powers to freeze or confiscate assets and increases the available penalties that may be assessed against financial institutions for failure to comply with obligations imposed on such institutions to detect, prevent and report money laundering and
terrorist financing. Among other things, the Patriot Act requires the US Treasury Secretary to develop and adopt final regulations with regard to the anti-money laundering compliance obligations of financial institutions (a term which, for this
purpose, includes insured US depository institutions, US branches and agencies of foreign banks, US broker-dealers and numerous other entities). The US Treasury Secretary delegated certain authority to a bureau of the US Treasury Department known as
the Financial Crimes Enforcement Network ('FinCEN').
Many of the anti-money laundering compliance requirements of the Patriot Act, as implemented by FinCEN, are generally consistent with the anti-money
laundering compliance obligations previously imposed on the then HSBC Bank USA and Household Bank (now HSBC Bank Nevada) under the Bank Secrecy Act (which was amended in certain respects by the Patriot Act) and applicable regulations. These include
requirements to adopt and implement an anti-money laundering programme, report suspicious transactions and implement due diligence procedures for certain correspondent and private banking accounts. Certain other specific requirements under the
Patriot Act involve new compliance obligations. The passage of the Patriot Act and other recent events have resulted in heightened scrutiny of the Bank Secrecy Act and anti-money laundering compliance by federal and state bank examiners. On 30 April
2003 the then HSBC Bank USA entered into a written agreement with the Federal Reserve Bank of New York and the New York State Banking Department to enhance its compliance with anti-money laundering requirements. HSBC Bank USA implemented certain
improvements in its compliance, reporting, and review systems and procedures to
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H
      S B C   H O L D I N G S   P L C
Governance,
  Regulation and Supervision
(continued)
comply
          with this agreement. When HSBC Bank USA merged with HSBC Bank & Trust
          (Delaware) N.A. on 1 July 2004, the OCC made the merger conditional
          on HSBC Bank USA's continuing compliance with the requirements
          of the written agreement. On 6 February 2006, the OCC determined that
          HSBC Bank USA had satisfied the requirements of the written agreement,
      and it terminated the agreement.
HSBC's
          US consumer finance operations are subject to extensive state-by-state
          regulation in the US, and to laws relating to consumer protection;
          (both
in general, and in respect of 'sub-prime' lending operations, which
have been subject to enhanced regulatory scrutiny); discrimination in extending
credit; use of credit reports; privacy matters; disclosure of credit terms; and
correction of billing errors. They also are subject to regulations and legislation
that limit operations in certain jurisdictions. For example, limitations may
be placed on the amount of interest or fees that a loan may bear, the amount
that may be borrowed, the types of actions that may be taken to collect or foreclose
upon delinquent loans or the information about a customer that may be shared.
HSBC's US consumer finance branch lending offices are generally licensed
in those jurisdictions in which they operate. Such licences have limited terms but are renewable, and are revocable for cause. Failure to comply with applicable laws and regulations may
  limit the ability of these licensed lenders to collect or enforce loan agreements made with consumers and may cause the consumer finance lending subsidiary to be liable for damages and penalties.
HSBC's US credit insurance operations are subject to regulatory supervision under the laws of the states in which they operate. Regulations vary from
state to state but generally cover licensing of insurance companies; premiums and loss rates; dividend restrictions; types of insurance that may be sold; permissible investments; policy reserve requirements; and insurance marketing
practices.
Certain US source payments to foreign persons may be subject to US withholding tax unless the foreign person is a qualified intermediary. A qualified
intermediary is a financial intermediary which is qualified under the Internal Revenue Code and has completed the Qualified Intermediary Withholding Agreement with the Internal Revenue Service. Various HSBC operations outside the US are qualified
intermediaries.
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H
        S B C   H O L D I N G S   P L C
Description
          of Property
At 31 December 2005, HSBC operated from some 9,800 operational properties worldwide, of which approximately 3,300 were located in Europe, 600 in Hong Kong and the Rest of Asia-Pacific,
  4,000 in North America (including 1,600 in Mexico) and 1,900 in South America. These properties had an area of approximately 63.8 million square feet (2004: 62.2 million square feet).
In addition, properties with a net book value of US$2,170 million were held for investment purposes. Of the total net book value of HSBC properties, more than 80 per cent were owned or held under long-term leases. Further details are included in Note 23 on the Financial
Statements.
HSBC's properties are stated at cost, being historical cost or fair value at the date of transition to IFRSs (their deemed cost) less any impairment
losses, and are depreciated on a basis calculated to write off the assets over their estimated useful lives.
Legal
          Proceedings
HSBC is named in and is defending legal actions in various jurisdictions arising out of its normal business operations. None of the above proceedings is regarded as material litigation.
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H S B C   H O L
    D I N G S   P L C
Financial
Review
Summary
Year ended 31 December
2005
2004
US$m
US$m
Interest income
60,094
50,471
Interest expense
(28,760
)
(19,372
)
Net interest income
31,334
31,099
Fee income
17,486
15,902
Fee expense
(3,030
)
(2,954
)
Net fee income
14,456
12,948
Trading income excluding net interest income
3,656
2,786
Net interest income on trading activities
2,208
–
Net trading income
1
5,864
2,786
Net income from financial instruments designated at fair value
1,034
–
Net investment income on assets backing policyholders' liabilities
–
1,012
Gains less losses from financial investments
692
540
Dividend income
155
622
Net earned insurance premiums
5,436
5,368
Other operating income
2,733
1,613
Total operating income
61,704
55,988
Net insurance claims incurred and movement in policyholders' liabilities
(4,067
)
(4,635
)
Net operating income before loan impairment charges and other credit risk provisions
57,637
51,353
Loan impairment charges and other credit risk provisions
(7,801
)
(6,191
)
Net operating income
49,836
45,162
Employee compensation and benefits
(16,145
)
(14,523
)
General and administrative expenses
(11,183
)
(9,739
)
Depreciation of property, plant and equipment
(1,632
)
(1,731
)
Amortisation of intangible assets
(554
)
(494
)
Total operating expenses
(29,514
)
(26,487
)
Operating profit
20,322
18,675
Share of profit in associates and joint ventures
644
268
Profit before tax
20,966
18,943
Tax expense
(5,093
)
(4,685
)
Profit for the year
15,873
14,258
Profit attributable to shareholders of the parent company
15,081
12,918
Profit attributable to minority interests
792
1,340
1
'
Net
trading income
'
comprises
all gains and losses from changes in the fair value of financial assets and financial
liabilities held for trading, together with related external interest income,
interest expense and dividend income. The 2004 comparative figure does not
include interest income and interest expense on trading assets and liabilities
except for trading derivatives, nor does it include dividend income on
trading assets.
HSBC made a profit before tax of US$20,966 million, a rise of US$2,023 million or 11 per cent compared with 2004. Of this increase, US$267 million was attributable to additional contributions of ten and two
  months from M&S Money and Bank of Bermuda respectively, one month's contribution from Metris, and the first full year effect of HSBC's
  investments in Bank of Communications and Industrial Bank.
As a result of the transition to full IFRSs, the format of the income statement has changed. In
particular, US$685 million of what would, in the past, have been included in non-equity minority interest, has moved within the income statement and is classified as 'Interest
expense' in 2005, rather than 'Profit attributable to minority interests'. As the applicable IFRSs requiring these changes only came into effect from 1 January 2005, the comparative 2004 figures are presented on the previous
basis.
On an underlying basis, which is described on page 4, profit before tax increased by 13 per cent.
26
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Total
operating income of US$61,704 million was US$5,716 million or 10 per
cent higher than in 2004. On an underlying basis, total operating income  also
rose by 10 per cent. This reflected organic lending growth in all regions and
expansion in transactional banking revenues from increased trade, funds under
management, administration and custody activities. Strong growth was also seen
in fixed income

and credit trading. Operating income performance was well spread geographically
with particularly strong growth in HSBC's operations in South America, the
Middle East and the Rest of Asia-Pacific.
Loan impairment and other credit risk provisions as a percentage of gross average advances to customers was moderately higher in 2005 at 1.16 per cent than
in 2004, 0.99 per cent. There was also a small rise in the percentage ratio of new loan impairment charges to gross average advances to customers from 1.41 in 2004 to 1.50 in 2005. The charge of US$7,801 million was US$1,610 million or 26
per cent higher than in 2004 and on an underlying basis 23 per cent higher. Of this increase, approximately half was driven by growth in lending, with the remainder attributable to the higher rate of new provisions and the non-recurrence of general
provision releases benefiting 2004. Underlying credit conditions in the UK were adversely affected by slower economic growth and changes in bankruptcy legislation. This was offset by improved credit experience in the US, notwithstanding the impact
of Hurricane Katrina and an acceleration of bankruptcy filings ahead of legislative changes in the fourth quarter of 2005. In Brazil, HSBC also experienced higher charges as increased credit availability, particularly in the consumer segment, led to
over-indebtedness.
Total
operating expenses of US$29,514 million were US$3,027 million or 11 per
cent
higher
than in 2004, 9 per cent higher on an underlying basis. Much of the growth reflected
    investment to expand the Group's geographic presence and adding product
    expertise and sales support. This expansion was most marked in Personal Financial
    Services in the Rest of Asia-Pacific and in Corporate, Investment Banking
    and Markets, where investment spend peaked during 2005. In addition, business
    expansion in Mexico, the Middle East and South America contributed to cost
  growth.
Productivity improvements achieved in the UK and Hong Kong allowed the Group to continue building its Personal Financial Services and Commercial Banking
businesses in the Rest of Asia-Pacific, and expanding its capabilities in Corporate, Investment Banking and Markets, without deterioration in the Group's cost efficiency ratio. In the UK, the focus on improving utilisation of the existing
infrastructure led to broadly flat costs in Personal Financial Services and Commercial Banking compared with underlying combined revenue growth of 10 per cent.
HSBC's cost efficiency ratio, which is calculated as total operating expenses divided by net operating income before loan impairment charges and other
credit risk provisions, improved slightly to 51.2 per cent in 2005 from 51.6 per cent in 2004.
HSBC's share of profit in associates and joint ventures increased by US$376 million, boosted by full year contributions from Bank of Communications
and Industrial Bank in mainland China, and increased income from The Saudi British Bank, which reported a record performance on the back of a vibrant economy and a strong oil price.
27
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H S B C   H
    O L D I N G S   P L C
Financial
Review
(continued)
Net interest
income
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
8,221
26.2
9,098
29.3
Hong Kong
4,064
13.0
3,638
11.7
Rest of Asia-Pacific
2,412
7.7
2,060
6.6
North America
14,887
47.5
14,993
48.2
South America
1,750
5.6
1,310
4.2
Net interest income
1
31,334
100.0
31,099
100.0
Year ended 31 December
2005
2004
US$m
US$m
Net interest income
1
31,334
31,099
Average interest-earning assets
999,421
976,387
Gross interest yield (per cent)
2
6.01
5.17
Net interest spread (per cent)
3
2.84
2.97
Net interest margin (per cent)
4
3.14
3.19
1
'Net
interest income' in
2005 comprises interest income less interest expense on financial assets and
liabilities which is not recognised as part of 'Net trading
income' or 'Net income earned from financial instruments designated
at fair value'. In 2004, all interest income and expense was included within 'Net
interest income' so these figures  are not strictly
comparable.
2
Gross interest yield is the average annualised interest rate earned on average interest-earning assets ('AIEA').
3
Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest
rate paid on average interest-bearing funds.
4
Net interest margin is net interest income expressed as an annualised percentage of AIEA.
Net interest
    income of US$31,334 million was US$235 million, or 1 per cent, higher
  than in 2004.
Under IFRSs, HSBC's presentation of net interest income in 2005 was particularly affected by:
•
the reclassification
        of certain preference
dividends
      within non-equity minority interests
as interest expense;
•
the inclusion
        of certain loan origination fees and
expenses
        as part of an effective interest rate
calculation instead of being
        recognised in full on
inception
      of the loan; and
•
external
        interest income and expense on trading
assets
      and liabilities now included within 'Net
trading income'.
Adjusting for these changes and on an underlying basis, net interest income increased by 12 per cent. The commentary that follows is on
this basis.
The benefit of strong growth in interest-earning assets globally more than offset the effect of spread compression from flattening yield curves in the major
currencies. This latter phenomenon reduced opportunities for HSBC's treasury operations to enhance margin by placing the Group's surplus liquidity longer term than the behaviouralised deposit funding base. In addition, short-term interest
rate rises in the US reduced spreads on consumer finance loans.
In Europe, higher personal and commercial lending and increased deposit balances led to a 12 per cent increase in net interest income.
UK
Personal
Financial Services balances grew strongly in mortgages, unsecured lending and
cards, mainly funded by a 12 per cent increase in deposit and savings balances.
In Turkey, card
balances grew from increased marketing and working with HSBC's retail partners.
Spreads tightened on UK personal lending, reflecting the introduction of preferential
pricing for lower-risk and higher-value customers, and on savings, due to better
pricing for customers. In Commercial Banking in the UK, lending and overdraft
balances increased by 23 per cent, with growth particularly strong in the property,
distribution and services sectors. Deposit balances grew by 11 per cent, partly
from keen pricing, though this reduced deposit spreads. Yields on UK corporate
lending, which were lower largely as a result of competitive pressure, were only
partly offset by higher loan balances, while lower treasury income reflected
the effect
of rising short-term rates and flattening yield curves on balance sheet management
revenues.
In North America, net interest income increased by 6 per cent. Growth in mortgage, card and unsecured personal lending balances was strong, offsetting spread
contraction as the cost of funds rose with progressive interest rate rises. Core deposit growth benefited from expansion of the branch
28
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network and the launch of new savings products, including an online savings product which attracted a significant number of new customers. Treasury income from balance sheet management
within Corporate, Investment Banking and Markets diminished as the rise in short-term interest rates limited opportunities to profit from placing the liquidity generated from core banking operations over extended periods.
In Hong Kong, net interest income rose by 17 per cent. Rising interest rates reinvigorated demand for traditional savings products, driving increases in
personal and commercial savings balances. Coupled with the rise in deposit spreads, which increased in line with interest rates, this led to a sharp rise in net interest income. Mortgage spreads, however, contracted, as the gradual increase in
yields during the year, in line with higher rates, was more than offset by rising funding costs. There was little net new lending for residential mortgages as interest rate rises cooled the residential property market in the second half of 2005.
Economic growth in mainland China boosted commercial lending to the trade and manufacturing sectors, and property lending also increased. Treasury income remained under pressure, with rising short-term interest rates and a flat yield curve providing
limited opportunities to profitably deploy surplus liquidity and increasing funding costs.
In the Rest of Asia-Pacific, net interest income increased by 24 per cent, reflecting business expansion and favourable economic conditions
throughout the region. In the Middle East, buoyant oil-based economies stimulated demand for credit for property and infrastructure projects. Increasing personal and corporate wealth
contributed to growth in deposit balances, while interest rate rises led to higher deposit spreads. General economic expansion created demand for consumption credit which boosted credit card lending. For the reasons noted above, treasury income from
balance sheet management was weaker.
In South America, the positive economic environment encouraged growth in personal and commercial lending, particularly in credit cards and vehicle finance,
which led to a 35 per cent increase in net interest income. A significant rise in customer acquisition and the development of the Losango customer base in Brazil also contributed.
Average interest-earning assets increased by US$23 billion, or 2 per cent, compared with 2004. At constant exchange rates, and excluding the US$84.7
billion of trading assets in 2004, average interest-earning assets increased by 11 per cent, reflecting strong growth in mortgages, personal lending and cards globally, and increased lending in Commercial Banking.
HSBC's net interest margin was 3.14 per cent in 2005 compared with 3.19 in 2004. For the reasons set out in the opening paragraphs, these figures are
not strictly comparable as a result of presentation changes under IFRSs from 1 January 2005.
29
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H S B C   H
    O L D I N G S   P L C
Financial
Review
(continued)
Net fee
income
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
6,299
43.6
5,980
46.2
Hong Kong
1,674
11.6
1,703
13.2
Rest of Asia-Pacific
1,340
9.2
1,041
8.0
North America
4,606
31.9
3,765
29.1
South America
537
3.7
459
3.5
Net fee income
14,456
100.0
12,948
100.0
Year ended 31 December
2005
2004
US$m
US$m
Account services
3,132
2,779
Credit facilities
1
880
1,179
Remittances
396
353
Cards
4,699
3,987
Imports/exports
722
692
Underwriting
274
234
Insurance
1,082
1,001
Mortgage servicing
76
80
Trust income
199
203
Broking income
1,104
943
Global custody
656
564
Maintenance income on operating leases
180
190
Funds under management
1,831
1,479
Unit trusts
388
498
Corporate finance
211
193
Other
1,656
1,527
Total fee income
17,486
15,902
Less: fee expense
(3,030
)
(2,954
)
Net fee income
14,456
12,948
1
Under
IFRSs from 2005, a higher proportion of fees on credit facilities is dealt with
as part of an effective interest rate calculation than previously. This
change in accounting affects both the timing of fee income recognition and its
presentation in the accounts. In accordance with the transition arrangements
to IFRSs, the 2004 comparative figure is presented on the old accounting
basis.
Net fee income
of US$14,456 million was
US$1,508
million or 12 per cent higher than in 2004. Under IFRSs, a greater
proportion of fees related to the provision of credit facilities is now amortised
and accounted for in net interest income as part of an effective interest rate
calculation than was the case before 1 January 2005. This resulted in a reduction
in reported net fee income of approximately 4 per cent. Excluding this effect
and
on an underlying
basis, growth in
net fee income was 14 per cent and the comments that follow are presented on
this basis. The principal drivers of this growth were:
•
the increase
        in card fee income, reflecting
strong
        growth in personal credit card sales
across the Group and increased
      transaction
volumes;
•
increased
        customer numbers, higher transaction
volumes,
      an increase in packaged accounts and
the selective
        management of tariffs led to an
11
      per cent increase in account services fees;
•
in Private
        Banking, the introduction of a wider
range
        of alternative investment products and
services generated higher fee
      income;
•
increased
        demand for credit among personal
and
        commercial customers drove mortgage and
lending fees up by 11 per cent;
      and
•
rising
        equity markets and renewed interest in
emerging
        markets led to higher global custody,
broking and asset management
      fees.
Offsetting these positive trends, after a strong run of growth, fee income from unit trust sales in Hong Kong fell as rising interest rates made traditional
deposit products more attractive.
In Europe, fee income increased by 9 per cent. Higher personal and commercial lending volumes led to a 19 per cent increase in credit fees. Card
fee
30
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income rose by 22 per cent, principally in the UK which benefited from higher customer numbers and greater card utilisation. Account service fees increased by 9 per cent, reflecting
increased customer numbers, the launch of a new packaged product in the UK and the introduction of a Small Business Tariff in Commercial Banking. Buoyant equity markets benefited custody fees, which grew as a result of both increased asset values
and strong new business volumes. Private Banking fee income was 12 per cent higher than in 2004 following increases in client assets under management and transaction volumes.
In Hong Kong, net fee income was in line with 2004. Unit trust fees decreased by 42 per cent as Personal Financial Services customers switched to traditional
deposit savings and shorter-term investment products. The launch of 173 new open-ended funds established HSBC as the leading investment service provider in Hong Kong. This, together with the successful attraction of client assets in Private Banking,
contributed to a rise in income from funds under management. Credit card fee income increased by 18 per cent, reflecting growth in cardholder spending as HSBC strengthened its position as the largest credit card issuer in Hong Kong. In Commercial
Banking, net fees increased as trade services, insurance and lending income rose. However, lower Structured Finance revenues led to reduced Corporate, Investment Banking and Markets fees.
Net
fee income in the Rest of Asia-Pacific rose by 28 per cent from higher card transaction
volumes and increased account service fees in response to the  expansion of the
Personal Financial Services
business in the region. Rising equity markets, buoyant regional economies and an increase in personal wealth combined with the launch of new products to increase sales of investment
products to personal customers. Client assets in Private Banking also grew. Global Transaction Banking revenues increased in line with transaction volumes following investment in 2004 to expand capabilities. Custody fees grew by 29 per cent as a
result of improved investor sentiment and rising local equity markets. Trade services income rose by 13 per cent, reflecting strong trade flows.
In North America, net fee income grew by 21 per cent. Card fee income grew as a result of higher transactions, increased receivables and improvements in the
interchange rate, while US mortgage lending fees benefited from lower refinancing prepayments and the consequent release of impairment provisions on mortgage servicing rights. In Mexico, strong growth in the cards base drove higher net fee income
and increased transaction volumes delivered higher ATM fees and increased remittance income. Investment banking fees increased in response to HSBC's success in attracting customers with an expanded range of products.
Net fee income in South America increased by 23 per cent, principally due to higher card, lending and current account servicing fees. Current account fees
benefited from increased customer numbers and tariff increases, while lending fee growth was principally related to higher lending volumes. Card fees increased as a result of higher spending in both Brazil and Argentina.
31
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H S B C   H
    O L D I N G S   P L C
Financial
Review
(continued)
Net trading
income
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
3,036
51.7
997
35.8
Hong Kong
546
9.3
659
23.7
Rest of Asia-Pacific
860
14.7
494
17.7
North America
1,013
17.3
582
20.9
South America
409
7.0
54
1.9
Net trading income
5,864
100.0
2,786
100.0
Year ended 31 December
2005
2004
US$m
US$m
Trading activities
3,884
2,786
Net interest income on trading activities
2,208
–
Other trading income
Hedge
    ineffectiveness:
– on
    cash flow hedges
(96
)
–
– on
    fair value hedges
14
–
Non-qualifying hedges
(146
)
–
Net trading income
5,864
2,786
Net trading income of US$5,864 million rose by 110 per cent against 2004. Under IFRSs, HSBC's presentation of trading income for 2005 reclassified into trading income external
interest income and dividend income on trading assets and interest expense on trading liabilities.
The external funding of long trading positions is reported separately within 'Net interest income on trading activities'; in the 2004 comparatives
this was included within 'Interest expense'. The net effect of these adjustments added approximately US$2.9 billion to net trading income.
In the segmental analysis, both net internal funding and net external interest income on trading activities are reported as 'Net interest income on
trading activities'. The offset on the net internal funding is reported as 'Net interest income' within the lending customer group. The resulting 'Net trading income' line comprises all gains and losses from changes in the
fair value of financial assets and financial liabilities classified as held for trading, together with related external interest income and interest expense and dividends received.
Income from trading activities rose, reflecting positive revenue trends on core products within Global Markets following the investment made in client-facing
trading capabilities. In Europe, revenues were boosted from higher volumes through electronic trading platforms and from the expansion of primary dealing activity in European government bond markets. In the US, the benefit of favourable movements on
credit spreads was compounded by
the non-recurrence of losses experienced in the industrial sector in 2004.
In Asia, volatility in the value of the Korean won against the US dollar, the introduction of a managed float for Malaysian ringgit and the enhancement of
capabilities coupled with greater focus on trading regional currencies in the Middle East all contributed to higher foreign exchange revenues. In Europe, the weakening euro and market volatility following the general election in the UK and the
French referendum on the EU constitutional treaty afforded opportunities to increase foreign exchange revenues.
Derivatives activity grew strongly as structured product capabilities were added in the credit, equity, and interest rate and foreign exchange areas. Further
benefit was derived from the greater focus put on client-driven risk management and the investment made in sales and execution expertise in previous years. In accordance with IFRSs, the inception profits on certain derivative transactions are
deferred as described in Note 17 on the Financial Statements.
Further analysis on the trading performance of the Global Markets business is provided in the regional business commentaries on Corporate, Investment Banking
and Markets.
32
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Net income from financial instruments designated at fair value
Year ended 31 December 2005
At 31 December 2005
Net
    income
Assets
Liabilities
US$m
%
US$m
US$m
By geographical region
Europe
362
35.0
9,077
27,442
Hong Kong
(6
)
(0.6
)
3,909
3,999
Rest of Asia-Pacific
58
5.6
872
300
North America
434
42.0
–
29,934
South America
186
18.0
1,188
154
Net
    income from financial instruments
designated at fair value
1,034
100.0
15,046
61,829
2005
US$m
Income from assets held to meet liabilities under insurance and investment contracts
1,760
Change in fair value of liabilities to customers under investment contracts
(1,126
)
Movement in fair value of HSBC's long-term debt issued and related derivatives
403
– change
    in own credit spread on long-term debt
(70
)
– other
    changes in fair value
473
Income from other instruments designated at fair value
(3
)
Net income from financial instruments designated at fair value
1,034
HSBC has utilised the 'Amendment to IAS 39 Financial Instruments: Recognition and Measurement: the Fair Value Option' with effect from 1 January 2005. HSBC may designate
financial instruments at fair value under the option in order to remove or reduce accounting mismatches in measurement or presentation, or where financial instruments are managed and their performance is evaluated on a fair value basis. All income
and expense on financial instruments for which the fair value option has been taken is included in this line except for debt securities in issue and related derivatives, where the interest components are shown in interest income.
HSBC has principally used the fair value designation in the following cases:
•
for certain
        fixed rate long-term debt issues
whose
        interest rate characteristic has been
changed to floating through
        interest rate swaps
as
        part of a documented interest rate
management strategy. Approximately
US$51
        billion of the Group's debt issues have
been accounted for using the option. The
movement
        in fair value of these debt issues
includes the effect of changes in own credit
spread
        and any ineffectiveness in the economic
relationship between the related swaps and own
debt.
        Such ineffectiveness arises from the
different credit characteristics of the swap and
own
        debt coupled with the sensitivity of the
floating leg of the swap to changes in short-term
interest
        rates. In addition, the economic
relationship between the swap and own debt can
be affected
        by relative movements in market
factors,
        such as bond and swap rates, and the
relative bond and swap rates
        at inception. The
size
        and direction of the accounting
consequences of changes in own credit spread
and
        ineffectiveness can be volatile from period
to period, but do not alter the cash flows
envisaged
      as part of the documented interest rate
management strategy;
•
certain
        financial assets held by insurance
operations
        and managed at fair value to meet
liabilities under insurance
        contracts
(approximately
      US$4 billion of assets); and
•
financial
          liabilities under investment contracts
and
          the related financial assets, when the change
in value of the assets is correlated
          with the
change
          in value of the liabilities to policyholders
(approximately US$8 billion
          of liabilities and
related
      assets).
The introduction of the new categories of financial instruments under IAS 39 on 1 January 2005 has led to a change in income statement presentation for the
results of HSBC's life insurance business. In 2005, income from assets designated at fair value and held to meet liabilities under insurance and investment contracts of US$1,760 million is reported under 'Net income from financial
instruments designated at fair value'. In 2004, the corresponding amounts were reported within 'Net investment income on assets backing policyholders' liabilities'.
33
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H S B C   H
    O L D I N G S   P L C
Financial
Review
(continued)
Income from assets designated at fair value and held to meet liabilities under insurance and investment contracts during 2005 is correlated with increases in
liabilities under the related investment and insurance contracts. Under IFRSs, only investment contracts can be designated as financial instruments. Changes in the liability under these contracts, therefore, like the related assets, are included
within the heading 'Net income from financial instruments designated at fair value'. The
element of the increase in liabilities under insurance contracts that reflects investment performance is reported separately within 'Net insurance claims incurred and movements in
policyholders' liabilities'. In 2004, investment income on assets backing policyholder liabilities was offset against the movement in policyholders' liabilities without distinction between insurance and investment
contracts.
Gains less losses from financial investments
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
439
63.4
154
28.5
Hong Kong
108
15.6
175
32.4
Rest of Asia-Pacific
18
2.6
17
3.1
North America
88
12.8
160
29.7
South America
39
5.6
34
6.3
Gains less losses from financial investments
692
100.0
540
100.0
2005
2004
US$m
US$m
Net gain from disposal of:
– debt securities
138
202
– equity securities
505
296
– other financial investments
7
42
650
540
Recovery of impairment losses
42
–
Total gains from financial investments
692
540
The net gain of US$692 million from the disposal of available-for-sale financial investments was 28 per cent higher than in 2004. Lower income from the disposal of debt securities was
more than
compensated for by an increase in gains from the disposal of private equity investments, particularly in HSBC's European operations.
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Net earned insurance premiums
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
1,599
29.4
1,875
34.9
Hong Kong
2,334
42.9
2,247
41.9
Rest of Asia-Pacific
155
2.9
97
1.8
North America
602
11.1
553
10.3
South America
746
13.7
596
11.1
Net earned insurance premiums
5,436
100.0
5,368
100.0
Year ended 31 December
2005
2004
US$m
US$m
Gross insurance premium income
6,152
6,022
Reinsurance premiums
(716
)
(654
)
Net earned insurance premiums
5,436
5,368
Net
earned
    insurance premiums of US$5,436 million increased by US$68 million compared with
    2004. On an underlying basis, net earned insurance premiums were in line with
    2004.
Under IFRSs, in 2005 there were changes in the presentation of certain aspects of HSBC's insurance business, which are now treated as liabilities under
investment contracts. Investment income from these products is now reported as 'Net income from financial investments designated at fair value'. Income that was previously reported as 'Net earned insurance premiums' is now taken
directly to the balance sheet as customer liabilities, with a corresponding movement in net insurance claims. Net insurance claims have fallen to a greater extent than premium income, due to the additional impact of the reclassification of the fair
value movement in respect of liabilities under investment contracts.
The commentary that follows excludes the presentational changes discussed above, and is on an underlying basis.
Higher premium income in Europe was due to an increased uptake of creditor protection products in the UK.
The increase in premiums in Hong Kong reflected HSBC's continued emphasis on the growth and development
of its insurance proposition. Higher volumes of life assurance new business were directly driven by the launch of new endowment products, augmented by HSBC's leading position in
online personal insurance provision. In addition, greater demand for private medical insurance products was driven by the public response to government deliberation over reforms to healthcare financing. Investment in HSBC's insurance business
included the establishment of a new Commercial Banking insurance division in October, which positively contributed to higher volumes of new business.
In
the Rest of Asia-Pacific, the increase in premiums was mainly attributable to
growth in the number of personal insurance policies, resulting from an expansion
of

HSBC's insurance operations in the region.
In North America, increased cross-sales of insurance products through the branch network, combined with strong sales of other personal insurance-related
products, resulted in an increase in net earned insurance premiums.
On an underlying basis, net earned insurance premiums in South America were broadly in line with 2004.
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H S B C   H
    O L D I N G S   P L C
Financial
Review
(continued)
Other operating income
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
1,603
43.7
1,175
52.4
Hong Kong
805
21.9
536
23.9
Rest of Asia-Pacific
335
9.1
146
6.5
North America
740
20.2
359
16.0
South America
188
5.1
28
1.2
3,671
100.0
2,244
100.0
Intra-HSBC elimination
(938
)
(631
)
Other operating income
2,733
1,613
Year ended 31 December
2005
2004
US$m
US$m
Rent received
859
793
Gain/(loss) on disposal of assets held for resale
11
(93
)
Valuation gains on investment properties
201
99
Gain on disposal of property, plant and equipment, and non-financial investments
703
267
Gain on disposal of operating leases
26
–
Change in present value of in-force long-term insurance business
40
71
Other
893
476
Other operating income
2,733
1,613
Other operating income of US$2,733 million was US$1,120 million higher than in 2004. On an underlying basis, other operating income grew by 69 per cent.
The commentary that follows is on an underlying basis.
In
Europe, the increase in other operating income was largely driven by increased
rental income on the leasing of train rolling stock, higher disposals of assets
and a number of private equity realisations.
In Hong Kong, higher other operating income was driven mainly by an increase in market value of the investment property portfolio and the disposal of a
leasehold residential property. HSBC's investment properties are located principally in Hong Kong. Under IFRSs, valuation movements on investment properties are reflected in the income statement rather than through revaluation reserves. Within
Hong Kong, the commercial property sector enjoyed good growth as the economy grew and vacant space fell markedly with a corresponding rise in rents.
The increase in other operating income in the Rest of Asia-Pacific was, in part, due to gains
realised on the sale of the Group's asset management operations in Australia.
Other operating income in North America doubled, in part due to improved revenues from the sale of consumer real estate owned assets, higher rental income
and disposals of property, plant and equipment.
In South America, other operating income increased by US$160 million, primarily as a result of the sale of the insurance underwriter HSBC Seguros de
Automoveis e Bens Limitada in Brazil, and the receipt of compensation and coverage bonds in Argentina.
HSBC's rental income mainly arose from leasing in the UK. Europe accounted for 80 per cent of total rental income; the remainder was attributable to
North America and Hong Kong.
The
increase in the 'Other' caption
was partly due to the receipt of non-core income in Mexico from the distribution
of
third-party
products
through the HSBC network. Higher 'Other' income in South America reflected
the receipt of compensation and coverage bonds in Argentina and increased revenues
from 'capitalisation' products in Brazil.
36
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Net insurance claims incurred and movement in policyholders' liabilities
Year
            ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
818
20.1
1,628
35.1
Hong Kong
2,059
50.6
2,154
46.5
Rest of Asia-Pacific
166
4.1
82
1.8
North America
333
8.2
312
6.7
South America
691
17.0
459
9.9
Net insurance claims incurred and movement in policyholders' liabilities
4,067
100.0
4,635
100.0
Year ended 31 December
2005
2004
US$m
US$m
Gross insurance claims and movement in policyholders' liabilities
4,153
5,220
Reinsurers' share of claims incurred and movement in policyholders' liabilities
(86
)
(585
)
Net insurance claims incurred and movement in policyholders' liabilities
4,067
4,635
Net insurance claims incurred and movement in policyholders' liabilities of US$4,067 million decreased by 12 per cent compared with 2004. On an underlying basis, net insurance
claims incurred decreased by 13 per cent.
As
with net earned insurance premiums, the primary reason for the reduction was
the required reclassification under IFRSs in 2005 of policyholders'
liabilities in respect of long term insurance contracts which were reclassified
as 'Liabilities to customers under investment contracts'. As a consequence,
reported net insurance claims incurred and movement in policyholders'
liabilities have reduced.
The majority of HSBC's non-life insurance business largely relates to the provision of personal insurance products. Minimal impact from hurricane damage
in the US and a lack of significant claims events during 2005 resulted in a relatively stable
claims experience, augmented by negligible prior-year reserve development in respect of 2004.
Excluding the effect of the above reclassification, the most significant reduction in net claims occurred in Europe, due to the effect of revised actuarial
valuations of existing life insurance policies in the UK life operation.
The reinsurers' share of claims incurred and movement in policyholder liabilities in 2004 included the renegotiation of a reinsurance treaty in the UK
life operation, in which a greater proportion of risk was transferred to the reinsurer. The subsequent implementation of a revised liability valuation system in 2005 reduced the amount of reserves held for liabilities in respect of income protection
products, bringing additional benefits in terms of capital efficiency of the UK life operation.
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H S B C   H
    O L D I N G S   P L C
Financial
Review
(continued)
Loan
impairment charges and other credit risk provisions
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
1,929
24.7
1,033
16.8
Hong Kong
146
1.9
(220
)
(3.6
)
Rest of Asia-Pacific
134
1.7
89
1.4
North America
5,038
64.6
5,022
81.1
South America
554
7.1
267
4.3
Total loan impairment charges and other credit risk provisions
7,801
100.0
6,191
100.0
Year ended 31 December
2005
2004
US$m
US$m
Loan impairment charges
1
New allowances
10,140
8,873
Reversal of allowances no longer required
(1,786
)
(1,267
)
Recoveries of amounts previously written off
(494
)
(913
)
7,860
6,693
Individually assessed allowances
518
–
Collectively assessed allowances
7,342
–
General provisions
–
(498
)
Other credit risk provisions
(59
)
(4
)
Total loan impairment charges and other credit risk provisions
7,801
6,191
Customer impaired loans
11,446
12,427
Customer loan impairment allowances
11,357
12,542
1
Loan
    impairment charges in 2004 refer to specific provisions
.
During 2005, the
underlying growth in customer lending excluding loans to the financial sector
and the impact of grossing adjustments required from 1 January 2005 under IFRSs,
was 12 per cent. Personal lending accounted for 63 per cent of this increase,
principally in mortgages, credit cards and other personal lending products. At
31 December 2005, personal lending accounted for 56 per cent of the customer
loan portfolio, in line
with 2004. The proportion of the portfolio attributable to corporate and commercial
lending was augmented by the IFRSs adjustment noted above. Residential mortgages
comprised 56 per cent of the personal lending portfolio
.
The charge for loan impairment adjusts the balance sheet allowance for loan impairment to the level that management deems adequate to absorb actual and
inherent losses in the Group's loan portfolios. The majority of the Group's loan impairment charges are determined on a portfolio basis, employing statistical calculations using roll rate methodologies. The total charge for loan impairment
and other credit risk provisions in 2005 was US$7,801 million compared with a total charge of US$6,191 million in 2004, a rise of 26 per cent. This reflected:
•
underlying
      growth in lending of 12 per cent;
•
a weakening
        credit environment in the UK and
Brazil
      but an improved credit experience in the
US; and
•
the non-recurrence
        of the 2004 net release of
general
      provision of US$498 million.
In the US, the underlying trend in loan impairment charges was favourable compared with 2004, notwithstanding the negative effect on loan impairment charges
of Hurricane Katrina and a surge in personal bankruptcies in October ahead of new legislation making such declarations more onerous. This was due to a change in portfolio mix towards higher quality lending and a positive economic
environment.
In the UK, credit costs rose following an expansion in personal lending, which was accompanied by an increase in delinquencies as the economy slowed during
2005. This was evidenced by rising personal bankruptcy, caused in part by legislative changes which facilitated debt reconstruction procedures, an increase in unemployment and higher levels of personal debt. In Hong Kong, the credit environment
remained benign, with falling bankruptcies contributing to a modest reduction in loan impairment allowances in the personal sector. A fall in releases in the corporate
38
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sector, however, contributed to a modest charge for loan impairment as compared with a net release in 2004. In the Rest of Asia-Pacific, continuing releases and recoveries partly offset
the impact of lending growth in the region. Higher charges in the personal sector in Brazil followed intense competitive pressure in the consumer segment, where significant increases in the availability of credit led to customers becoming
over-indebted.
The aggregate customer loan impairment allowances at 31 December 2005 of US$11,357 million represented 1.5 per cent of gross customer advances (net of
reverse repos, settlement accounts and netting) compared with 2.0 per cent at
31 December 2004. As in 2004, HSBC's cross-border exposures did not necessitate significant allowances.
Impaired loans to customers were US$11,446 million at 31 December 2005 compared with US$12,427
million at 31 December 2004, largely reflecting the write-off of impaired loans
against the provisions held in respect of these loans. At constant exchange rates,
impaired loans were 3 per cent lower than 2004 compared with underlying lending
growth (excluding lending to the financial sector and settlement accounts) of
12 per cent.
Operating expenses
Year ended 31 December
2005
2004
US$m
%
US$m
%
By geographical region
Europe
12,639
41.4
12,028
44.4
Hong Kong
2,867
9.4
2,558
9.4
Rest of Asia-Pacific
2,762
9.1
2,087
7.7
North America
10,217
33.6
9,032
33.3
South America
1,967
6.5
1,413
5.2
30,452
100.0
27,118
100.0
Intra-HSBC elimination
(938
)
(631
)
Total operating expenses
29,514
26,487
Year ended 31 December
2005
2004
US$m
US$m
By expense category
Employee compensation and benefits
16,145
14,523
Premises and equipment (excluding depreciation)
2,977
2,615
General and administrative expenses
8,206
7,124
Administrative expenses
27,328
24,262
Depreciation of property, plant and equipment
1,632
1,731
Amortisation of intangible assets
1
554
494
Total operating expenses
29,514
26,487
At 31 December
2005
2004
Staff numbers (full-time equivalent)
Europe
77,755
74,861
Hong Kong
25,931
25,552
Rest of Asia-Pacific
55,577
41,031
North America
75,926
69,781
South America
33,282
32,108
Total staff numbers
268,471
243,333
1
Intangible asset amortisation comprises the expensing through the income statement of purchased intangibles such as mortgage servicing rights and customer/merchant relationships
and amounts allocated to intangible assets on the fair valuation of assets within acquired business combinations. This latter category principally includes customer relationships.
Operating expenses
of US$29,514 million were
US$3,027
million, or 11 per cent, higher than in 2004. On an
      underlying basis, cost growth was 9 per
cent,
      trailing net operating income growth before
39
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H S B C   H
O L D I N G S   P L C
Financial
Review
(continued)
impairment charges by 3 percentage points. This resulted in a slight improvement in the cost efficiency ratio to 51 per cent. The three main drivers of cost growth were as
follows:
•
volume expansion
in many markets drove both revenue and costs. In Personal Financial Services
and Commercial Banking, business expansion drove cost growth of 6 per cent and
4
per
cent respectively,
though this was
exceeded
by growth in net operating income before loan impairment charges of 11 per cent
and 15
per cent respectively. In Mexico, Turkey and Brazil, cost increases contributed
over half of the overall increase, but were significantly exceeded by income
growth;
•
HSBC continued
to improve productivity in mature markets. In the UK, reorganisations in Personal
Financial Services and Commercial Banking in 2004 resulted, in aggregate, in
broadly
flat
costs compared with growth of
10
per
cent in net operating income before loan
impairment
charges. This was delivered through greater utilisation of direct channels, improved
training
and increased incentives. In Hong Kong, the promotion of cost-efficient delivery
channels and greater utilisation of the Group Service Centres contributed to
a 6 percentage point improvement in the cost efficiency ratios in Personal Financial
Services and Commercial Banking; and
•
following a number of senior hires in 2004 in Corporate, Investment Banking and Markets, subsequent investment was focused on operations and technology, to support revenue growth.
Non-staff costs increased by 23 per cent in 2005, with staff costs growing by 14 per cent.
The rate of cost
growth peaked during the year and the cost efficiency ratio was 2 percentage
points better in the second half of the year than the first half, as net operating
income
before loan impairment charges grew faster than costs.
The following points are also of note. In Europe, costs included the rebranding of the Group's operations in France, the refurbishment of 60 UK branches
and increased marketing costs. These increases were offset by lower costs in Commercial Banking in the UK following restructuring activity
in 2004. Costs in Corporate, Investment Banking and Markets increased by 9 per cent, reflecting increased staff numbers and investments in technology and infrastructure.
In Hong Kong, higher operating expenses reflected business expansion in Corporate, Investment Banking and Markets, supported by increased staff in the
investment banking division and the recruitment of senior relationship managers. This was partly offset by the effect of branch restructuring and increased utilisation of the Group Service Centres in Personal Financial Services, which led to a 4 per
cent fall in branch headcount.
Underlying operating expenses in the Rest of Asia-Pacific increased by 31 per cent, reflecting investment in broadening the customer base and the
distribution platform. HSBC's branch network was extended in mainland China, South Korea, and India and additional sales and support staff were recruited in Personal Financial Services and Commercial Banking. Staff numbers also increased in
response to the migration of call centre activities to the Group Service Centres in the region. Growth initiatives required investment in infrastructure and technology, and accordingly non-staff costs increased by 39 per cent.
In North America, costs bore a particularly large share of the investment in Corporate, Investment Banking and Markets, reflecting HSBC's commitment to
growing its presence in the region. Costs also reflected the expansion of the network, with the opening of 27 new branches in 2005 and the launch of HSBC's on-line savings account in the US.
HSBC's
South American operations reported a 17 per cent increase in operating expenses
on an underlying basis, partly as a result of higher average  staff numbers following
the acquisition of consumer finance businesses in 2004. Marketing costs rose
following a number of high profile campaigns in 2005, while transactional taxes
and incentive payments grew as a direct consequence of higher
income.
Productivity improvements and strong disposal gains allowed HSBC to substantially complete its investment in Corporate, Investment Banking and Markets
without any deterioration in the Group's cost efficiency ratio.
40
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Cost
      efficiency ratios
Year ended 31 December
2005
2004
%
%
HSBC
51.2
51.6
Personal Financial Services
48.7
50.1
Europe
58.2
65.7
Hong Kong
33.3
39.2
Rest of Asia-Pacific
72.3
70.8
North America
42.8
41.9
South America
66.6
72.5
Commercial Banking
45.5
50.0
Europe
49.9
55.2
Hong Kong
27.2
33.7
Rest of Asia-Pacific
43.8
42.7
North America
45.9
48.3
South America
60.5
62.9
HSBC's
      cost efficiency ratio on an underlying basis improved from 52.4 per cent
      to 51.2 per
    cent. This was mainly attributable to improvements in productivity in Personal
    Financial
    Services and Commercial Banking, as illustrated in the
tables set out above. The deterioration in cost efficiency ratios in the Rest of Asia-Pacific reflected continuing investment to expand HSBC's presence within the region.
Asset deployment
At 31 December
2005
2004
US$m
%
US$m
%
Loans and advances to customers
740,002
49.7
672,891
53.2
Loans and advances to banks
125,965
8.5
143,449
11.3
Trading assets
232,909
15.6
122,160
9.6
Financial investments
182,342
12.2
185,332
14.6
Derivatives
73,928
5.0
32,190
2.5
Goodwill and intangible assets
33,200
2.2
34,495
2.7
Other
101,070
6.8
77,579
6.1
1,489,416
100.0
1,268,096
100.0
Hong Kong Government certificates of indebtedness
12,554
11,878
1,501,970
1,279,974
Loans and advances to customers include:
–
reverse repos
14,610
29,346
–
settlement accounts
2,142
13,819
Loans and advances to banks include:
–
reverse repos
24,754
36,543
–
settlement accounts
2,669
6,086
HSBC's total assets (excluding Hong Kong Government certificates of indebtedness) at 31 December 2005 were US$1,489.4 billion, an increase of US$221.3 billion or 17 per cent
since 31 December 2004. Acquisitions, including Metris in the US, added just over US$6 billion to total assets. The accounting effect of the adjustments required under IFRSs from 1 January 2005 added a further US$89.8 billion, to which the
largest single contributor was the grossing up of certain customer
lending and current account relationships in the UK, mainly in Corporate, Investment Banking and Markets, which would previously have been offset in reported loans and advances and
customer accounts. At 31 December 2005, this grossing change resulted in a US$44.2 billion increase in customer loans and advances. At constant exchange rates and excluding these changes, total assets grew by 17 per cent.
At 31 December 2005, HSBC's balance sheet remained highly liquid. The proportion of assets
41
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H S B C   H
O L D I N G S   P L C
Financial
Review
(continued)
deployed in customer advances fell to 50 per cent, largely due to expansion of the fixed income business and the reclassification of certain financial instruments to 'Trading
  assets'. Customer advances increased by 10 per cent, driven by lending to finance consumer spending, mortgage financing and cards. These were areas in which HSBC grew market share, particularly through competitive pricing and marketing
  initiatives in parts of Asia-Pacific, the UK and the US. Growth in corporate lending was concentrated in Commercial Banking, and largely reflected trade financing, project finance in the Middle East and expansion of the customer base in the UK,
  particularly in the property, distribution and services sectors. At constant exchange rates and excluding the grossing change mentioned above, net loans and advances to customers grew by 10 per cent in 2005, of which acquisitions represented 1 per
  cent, or US$5.3 billion.
At 31 December 2005, assets held by HSBC as custodian amounted to US$3,242 billion, 15 per cent higher than the US$2,819 billion held at 31 December
2004. At constant exchange rates, growth was 22 per cent. Custody is the safekeeping and administration of securities and financial instruments on behalf of others.
Complementing this is HSBC's funds under administration business. At 31 December 2005, the value of funds held under administration by the Group
amounted to US$779 billion, 28 per cent higher than the US$610 billion held at 31 December 2004. At constant exchange rates, growth was 37 per cent.
Trading assets and financial investments
Trading assets principally consist of debt and equity instruments acquired for the purpose of benefiting from short-term price movements. Securities classified as held-for-trading are
carried in the balance sheet at fair value with movements in fair value reflected within the income statement.
Trading assets of US$232.9 billion were 91 per cent higher than at 31 December 2004. This increase was primarily driven by the reclassification of
certain financial instruments from loans and advances to 'Trading assets', coupled with the expansion of the fixed income platform in Global Markets.
Financial investments include debt and equity instruments that are classified as available-for-sale or, to a very small extent, held to maturity. The
available-for-sale investments essentially represent the deployment of the Group's surplus deposits and
may be disposed of either to manage liquidity or in response to reinvestment opportunities arising from favourable movements in economic indicators, such as interest rates, foreign
exchange rates and equity prices. They are carried at fair value with unrealised gains and losses from movements thereon reported in equity until disposal. On disposal, the accumulated unrealised gain or loss is recognised through the income
statement and reported as 'Gains less losses from financial investments'.
Financial investments of US$182.3 billion were broadly in line with the balance at 31 December 2004. Unrealised gains included in the valuation of
equities amounted to US$1.1 billion.
Funds under management
Funds under management of US$561 billion were US$85 billion, or 18 per cent, higher than at 31 December 2004. Growth reflected strong inflows of net new money and good investment
performances in both Group Investment Businesses and Private Banking, partly offset by the translation effect of the strengthening US dollar on sterling and euro-denominated funds.
In Group Investment Businesses, net new money trebled to US$33 billion compared with the previous year. Included in this, HSBC's Sinopia subsidiary
in France grew funds under management by 35 per cent, particularly in alternative funds. HSBC continues to manage some of the world's largest active equity funds investing in India and China with US$4.7 billion and US$1.9 billion of
assets, respectively, at the end of 2005. In Private Banking, increased recognition of HSBC in the private banking sector and an expanded product range contributed to strong funds inflows.
At 31 December
2005, HSBC's Group
Investment
Businesses, including affiliates, reported funds under management of US$272
billion, and Private Banking reported funds under management of US$202 billion.
Other funds  under management, of which the main constituent was a corporate
trust business in Asia, comprised US$87
billion.
Client assets, which are a measure of overall Private Banking volumes and include funds under management, cash deposits and fiduciary deposits, rose by 13
per cent to US$282 billion.
42
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2005
2004
US$bn
US$bn
Funds under management
At 1 January
476
386
Net new money
63
64
– Bank
    of Bermuda
–
22
– Other
63
42
Value change
45
19
Exchange and other
(23
)
7
At 31 December
561
476
Economic profit
HSBC's internal performance measures include economic profit, a calculation which compares the return on financial capital invested in HSBC by its shareholders with the cost of that
capital. HSBC prices its cost of capital internally and the difference between that cost and post-tax profit attributable to ordinary shareholders represents the amount of economic profit generated. Economic profit is used by management as a means
to decide where to allocate resources so that they will be most productive. In order to concentrate on external factors rather than measurement bases, HSBC emphasises the trend in economic profit within business units rather than absolute amounts.
In light of the current levels of world interest rates, and taking into account its geographical and customer group diversification, HSBC believes that its true cost of capital on a consolidated basis is 10 per cent. HSBC plans to continue using
this rate until the end of the current five-year strategic plan in 2008 in order to ensure consistency and comparability.
The effect of adopting IFRSs on the Group's financial results has been reflected in the derivation of economic profit shown below. Under IFRSs, there is
no periodic amortisation charge for goodwill arising on acquisitions. This removes the need for adjustments to post-tax profit for economic profit purposes. In addition, the Group has modified its calculation of economic profit for the
following:
•
Unrealised
        gains and losses on effective cash flow hedges. Gains and losses on the
        effective hedging of future cash flows essentially reflect the opportunity
        profit or loss on decisions taken to fix in monetary terms the yield
        on assets or the cost of liabilities when measured against current market
        rates. Given that these amounts are ultimately reflected in profit for
        the period, they are excluded from average invested capital upon which
      the capital charge is based.
•
Unrealised
        gains and losses on available-for-sale securities. These are excluded
        from the measure of average invested capital for the purpose of computing
        economic profit because (i) the gains or losses represent unrealised
        profit which may be offset or reversed in the future, and (ii) there
        is accounting asymmetry in that the offsetting profit or loss on the
      liabilities taken out to fund these assets is not reflected.
On
    this basis, economic profit increased by US$1,318 million or 31 per cent
  compared with 2004, reflecting improved underlying profitability.
Economic profit
Year
    ended 31 December
2005
2004
US$m
%
1
US$m
%
1
Average
        total shareholders' equity
89,589
79,391
Add:
        Goodwill previously amortised or written off
8,172
8,172
Less:
        Property revaluation reserves
(1,092
)
(1,092
)
Reserves
        for unrealised gains on effective hedges
(315
)
–
Reserves
        for unrealised gains on available-for-sale securities
(1,294
)
–
Preference
        shares
(351
)
–
Average
        invested capital
2
94,709
86,471
Return
        on invested capital
3
15,060
15.9
12,918
15.0
Benchmark
        cost of capital
(9,471
)
(10.0
)
(8,647
)
(10.0
)
Economic
        profit/spread
5,589
5.9
4,271
5.0
1
Expressed as a percentage of average invested capital.
2
Average invested capital is measured as average total shareholders' equity after adding back goodwill previously written-off directly to reserves, deducting preference
shares issued by HSBC Holdings and deducting average reserves for unrealised gains/(losses) on effective hedges and available-for-sale securities. This measure reflects capital initially invested and subsequent profit.
3
Return on invested capital is based on the profit attributable to ordinary shareholders of the parent company.
43
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H
      S B C   H O L D I N G S   P L C
Financial
      Review
(continued)
Analysis
      by customer group and by geographical region
By
  customer group
Profit before tax
Year
      ended 31 December 2005
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking
      &
Private
segment
Services
Banking
Markets
Banking
Other
6
elimination
Total
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest
income/(expense)
23,351
6,310
3,001
848
(472
)
(1,704
)
31,334
Net
      fee income
7,313
2,876
2,967
1,080
220
–
14,456
Trading
      income/(expense)
excluding
      net interest
income
360
150
2,919
317
(90
)
–
3,656
Net
      interest income/
(expense)
      on trading
activities
214
(3
)
306
–
(13
)
1,704
2,208
Net
      trading
income/(expense)
1
574
147
3,225
317
(103
)
1,704
5,864
Net
      income/(expense) from
financial
      instruments
designated
      at fair value .
574
(12
)
67
(1
)
406
–
1,034
Gains
      less losses from
financial
      investments
19
9
475
45
144
–
692
Dividend
      income
16
9
79
9
42
–
155
Net
      earned insurance
premiums
4,864
236
76
–
260
–
5,436
Other
      operating income
729
327
1,621
68
2,634
(2,646
)
2,733
Total
      operating income
37,440
9,902
11,511
2,366
3,131
(2,646
)
61,704
Net
      insurance claims
2
(3,716
)
(118
)
(54
)
–
(179
)
–
(4,067
)
Net
      operating income
before
      loan impairment
charges
and
      other credit
risk
       provisions
33,724
9,784
11,457
2,366
2,952
(2,646
)
57,637
Loan
      impairment charges
and
      other credit risk
provisions
(7,537
)
(547
)
272
12
(1
)
–
(7,801
)
Net
      operating income
26,187
9,237
11,729
2,378
2,951
(2,646
)
49,836
Total
      operating expenses
(16,427
)
(4,453
)
(6,838
)
(1,466
)
(2,976
)
2,646
(29,514
)
Operating
      profit
9,760
4,784
4,891
912
(25
)
–
20,322
Share
      of profit in associates
and
      joint ventures
144
177
272
–
51
–
644
Profit
      before tax
9,904
4,961
5,163
912
26
–
20,966
%
%
%
%
%
%
Share
      of HSBC's profit
before
      tax
47.2
23.7
24.6
4.4
0.1
100.0
Cost
      efficiency ratio
48.7
45.5
59.7
62.0
100.8
51.2
US$m
US$m
US$m
US$m
US$m
US$m
Selected
      balance sheet
data
3
Loans
      and advances to
customers
      (net)
398,884
142,041
169,435
27,749
1,893
740,002
Total
      assets
4
471,760
175,120
755,056
59,827
27,653
1,489,416
Customer
      accounts
321,240
148,106
202,361
67,205
507
739,419
Loans
      and advances to
banks
      (net)
5
106,123
Trading
      assets, financial
assets
      designated at fair
value,
      and financial
investments
5
373,787
Deposits
      by banks
5
65,853
For
      footnotes, see page 55.
44
Back to Contents
Year
      ended 31 December 2004
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking
      &
Private
segment
Services
Banking
Markets
Banking
Other
6
elimination
Total
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income
21,422
4,875
3,994
718
90
–
31,099
Net
      fee income
6,406
2,645
2,764
962
171
–
12,948
Trading
      income
320
234
1,935
257
40
–
2,786
Net
      investment income on
assets
      backing policy-
holders'
      liabilities
635
324
9
–
44
–
1,012
Gains
      less losses from
financial
      investments
79
6
197
39
219
–
540
Dividend
      income
16
37
548
5
16
–
622
Net
      earned insurance
premiums
3,652
1,072
86
–
558
–
5,368
Other
      operating income
360
513
1,029
24
2,050
(2,363
)
1,613
Total
      operating income
32,890
9,706
10,562
2,005
3,188
(2,363
)
55,988
Net
      insurance claims
2
(2,953
)
(1,264
)
(59
)
–
(359
)
–
(4,635
)
Net
      operating income
before
      loan impairment
charges
      and other credit risk provisions
29,937
8,442
10,503
2,005
2,829
(2,363
)
51,353
Loan
      impairment charges
and
      other credit risk
provisions
(6,500
)
(200
)
499
11
(1
)
–
(6,191
)
Net
      operating income
23,437
8,242
11,002
2,016
2,828
(2,363
)
45,162
Total
      operating expenses
(15,009
)
(4,220
)
(5,809
)
(1,319
)
(2,493
)
2,363
(26,487
)
Operating
      profit
8,428
4,022
5,193
697
335
–
18,675
Share
      of profit in associates
and
      joint ventures
69
35
95
–
69
–
268
Profit
      before tax
8,497
4,057
5,288
697
404
–
18,943
%
%
%
%
%
%
Share
      of HSBC's profit
before
      tax
44.9
21.4
27.9
3.7
2.1
100.0
Cost
      efficiency ratio
50.1
50.0
55.3
65.8
88.1
51.6
US$m
US$m
US$m
US$m
US$m
US$m
Selected
      balance sheet data
3
Loans
      and advances to
customers
      (net)
370,576
130,160
145,353
24,463
2,339
672,891
Total
      assets
4
441,114
159,251
584,779
56,751
26,201
1,268,096
Customer
      accounts
319,485
137,801
177,449
57,780
557
693,072
The
      following assets and
liabilities
      were significant
to
      Corporate, Investment
Banking
      and Markets:
Loans
      and advances to
banks
      (net)
128,032
Trading
      assets, financial
assets
      designated at fair
value,
      and financial
investments
252,459
Deposits
      by banks
80,443
For
      footnotes, see page 55.
45
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H
      S B C   H O L D I N G S   P L C
Financial
      Review
(continued)
Personal
  Financial Services
Profit before tax
Year
        ended
31 December
2005
2004
US$m
US$m
Net
        interest income
23,351
21,422
Net
        fee income
7,313
6,406
Trading
        income excluding net
interest
        income
360
320
Net
        interest income
on
        trading activities
214
–
Net
        trading income
1
574
320
Net
            income from financial
instruments
      designated at fair
value
574
–
Net
              investment income on assets
backing
      policyholders'
liabilities
–
635
Gains
      less losses from financial
investments
19
79
Dividend
        income
16
16
Net
        earned insurance premiums
4,864
3,652
Other
        operating income
729
360
Total
        operating income
37,440
32,890
Net
        insurance claims
2
(3,716
)
(2,953
)
Net
                operating income before loan impairment charges and  other
credit
      risk provisions
33,724
29,937
Loan
            impairment charges and other
credit
      risk provisions
(7,537
)
(6,500
)
Net
        operating income
26,187
23,437
Total
        operating expenses
(16,427
)
(15,009
)
Operating
        profit
9,760
8,428
Share
            of profit in associates and
joint
      ventures
144
69
Profit
        before tax
9,904
8,497
By
        geographical region
Europe
1,932
1,621
Hong
        Kong
2,628
2,063
Rest
        of Asia-Pacific
377
336
North
        America
4,761
4,384
South
        America
206
93
Profit
        before tax
9,904
8,497
%
%
Share
        of HSBC's profit before tax
47.2
44.9
Cost
        efficiency ratio
48.7
50.1
US$m
US$m
Selected
        balance sheet data
3
Loans
      and advances to customers
(net)
398,884
370,576
Total
        assets
4
471,760
441,114
Customer
        accounts
321,240
319,485
For
        footnotes, see page 55.
Business highlights
•
Pre-tax
        profits from Personal Financial Services grew by 17 per cent to US$9,904
        million, driven by improved performances in the core operations in the
        UK, North America and Hong Kong. On an underlying basis, growth in profit
        before tax was 15
        per cent, and markedly strong rates of growth were achieved
        in Turkey, Canada, the Middle East and Brazil.
•
The importance
        of direct sales channels continued to increase globally. HSBC conducted
        183 million transactions online in 2005, an increase of 17 per cent on
        2004. Online sales to personal customers rose by 65
        per cent and online revenues by 71 per cent.
•
The number
           of customers using HSBC
Premier
grew for the sixth consecutive year, to 1.3 million, an increase
         of 17 per cent compared with 2004. HSBC
Premier
was
        launched in Bangladesh and South Korea during the year, and is now available
         in 35 countries.
Europe
•
In the
        UK, investment in marketing and a range of campaigns,
        including the first ever January sale for a UK bank, heightened brand
        awareness and increased market
        share in most product lines. In France, marketing campaigns accompanying
        the rebranding to
        'HSBC' by CCF and four subsidiary banks generated sales growth in mortgages,
        current accounts
        and savings products. In Turkey, marketing helped increase customer numbers
        by 7 per cent to 2.2
        million.
•
HSBC's
        mortgage products in the UK were highly rated:
        HSBC was named 'Best Value National Bank' for
        mortgage borrowing over two, five and ten years by
What Mortgage
magazine
        for the fourth year running,
        and 'Best Bank' for mortgages by
Mortgage
magazine.
        First Direct was also named 'Best Direct Lender' over two and ten
        years by
What
        Mortgage
magazine, and 'Best Offset Mortgage' by
Mortgage
magazine.
•
The UK
        business was further streamlined, with the
product
        range simplified and strengthened and the
rollout of a branch refurbishment
        programme initially
covering
        60 major branches. In the UK, the credit
card operations of HFC Bank and
        HSBC Bank were
merged.
        Good progress was made with the integration
and expansion of M&S Money.
46
Back to Contents
•
HSBC's
      UK current account offering was
relaunched
      in 2005, providing a range of
simplified propositions tailored
      to customer
segments,
      including HSBC's first packaged
bank account in the UK market.
Personal
Finance Magazine
awarded
      HSBC 'Best
Current
      Account' provider during the year.
Hong
      Kong
•
HSBC built
      on its leading position with the
rollout
      of 25 new Financial Management
Centres, providing investment
      planning services
to
      non-
Premier
customers.
•
HSBC was
      named by the
Asian
      Banker
as the
'Best
      Retail Bank' in Hong Kong and Asia in
2004,
      and its web site was rated by
Global
Finance
as the 'Best Consumer Internet Bank'
in
      Hong Kong in 2005.
•
HSBC maintained
      its position as the largest
credit
      card issuer in Hong Kong, increasing the
number of cards in circulation
      by 15 per cent
and
      its market share of spending from 50.5 per
cent to 52.1 per cent.
•
A new innovative
      retirement planning solution
was
      launched to meet the retirement planning
needs of customers of all ages.
      HSBC was one
of
      the first banks in Hong Kong to offer such a
comprehensive service.
Rest
      of Asia-Pacific
•
Customer
      acquisition was a core focus again in
2005,
      with customer numbers growing by 22 per
cent to 7.0 million. HSBC continued
      to enhance
distribution
      channels with a 43 per cent increase
in the sales force. Seven new
      branches were
opened
      in South Korea, Vietnam and India.
•
Customer
      loans grew by 20 per cent, driven by
the
      new customer acquisition programmes. In
particular, the number of credit
      cards in
circulation
      grew by 34 per cent, or 1.6 million
cards, to 6.3 million.
•
In mainland
      China, HSBC maintains the largest
branch
      network amongst foreign banks, and
opened ten new branches and sub-branches
      in
2005.
      Average deposit balances grew by 80 per
cent and income by 61 per cent.
North
      America
•
HSBC continued
      to expand its banking presence
in
      the US by opening 27 new branches. The
introduction of the HSBC
Premier
Savings
account and
      the Online Savings Account,
HSBC's
      first nationwide savings product, generated total new deposit balances of
      US$2.5 billion and added over 30,000 new customers to HSBC.
•
Other niche
      marketing initiatives introduced by HSBC in the US included the launch of
      deposit generation programmes focused on the Chinese and Hispanic communities.
      Together these garnered US$589 million of new deposits.
•
An agreement
      was reached for HSBC to offer American Express branded credit cards in the
      US. This will allow HSBC to expand its product range and offer broader choice,
      value and convenience to customers.
•
HSBC completed
      its acquisition of Metris on
1
December
      2005, and is now the 5th largest
issuer
      of MasterCard and Visa cards in the US. This will strengthen HSBC's
      capabilities to serve the full spectrum of credit card customers.
•
HSBC acquired
      Invis Inc, the largest independent mortgage broker in Canada.
•
In Mexico,
      strong asset and liability growth continued. Average deposit balances grew
      by
15
per cent,
      due in part to the success of the 'Tu
      Cuenta' product,
      the only integrated financial services product of its kind in the country.
      Since its launch in February, over 600,000 new accounts have been opened.
      Product innovation, improved customer service and competitive pricing led
      to strong growth in mortgages, vehicle financing and payroll loans.
•
HSBC Mexico's
      cards in circulation grew by
80
per cent to
      over one million, following an active marketing campaign, and strong sales
      to the existing customer base.
South
      America
•
In Brazil,
          the integration of two consumer
finance
          businesses purchased in 2004 into the
Losango operating model was completed
          during
2005.
•
A number
      of new products were introduced in
2005.
      In Brazil, HSBC launched Consórcio de
Imóveis, a lending product
      aimed at funding
property
      purchases, and a new credit card,
Cartão Solidariedade,
      which enables donations
to
      be made to a children's charity in lieu of an
annual fee. In Argentina, a co-branded
      C&A
credit
      card was launched in November, with
over 25,000 cards issued in the
      following
month.
47
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H
      S B C   H O L D I N G S   P L C
Financial
      Review
(continued)
Commercial
  Banking
Profit before tax
Year
        ended
31 December
2005
2004
US$m
US$m
Net
        interest income
6,310
4,875
Net
        fee income
2,876
2,645
Trading
        income excluding net
interest
        income
150
234
Net
        interest expense
on
        trading activities
(3
)
–
Net
        trading income
1
147
234
Net
          expense from financial
instruments
      designated at fair
value
(12
)
–
Net
        investment income on assets
backing
        policyholders'
liabilities
–
324
Gains
        less losses from financial
investments
9
6
Dividend
        income
9
37
Net
        earned insurance premiums
236
1,072
Other
        operating income
327
513
Total
        operating income
9,902
9,706
Net
        insurance claims
2
(118
)
(1,264
)
Net
        operating income before loan
impairment
        charges and
other
credit
        risk provisions
9,784
8,442
Loan
        impairment charges and other
credit
        risk provisions
(547
)
(200
)
Net
        operating income
9,237
8,242
Total
        operating expenses
(4,453
)
(4,220
)
Operating
        profit
4,784
4,022
Share
        of profit in associates and
joint
        ventures
177
35
Profit
        before tax
4,961
4,057
By
        geographical region
Europe
1,939
1,663
Hong
        Kong
955
904
Rest
        of Asia-Pacific
818
483
North
        America
1,064
848
South
        America
185
159
Profit
        before tax
4,961
4,057
%
%
Share
        of HSBC's profit before tax
23.7
21.4
Cost
        efficiency ratio
45.5
50.0
US$m
US$m
Selected
        balance sheet data
3
Loans
        and advances to customers
(net)
142,041
130,160
Total
        assets
4
175,120
159,251
Customer
        accounts
148,106
137,801
For
        footnotes, see page 55.
Business highlights
•
Pre-tax
        profit was 22 per cent higher than last year,
driven
        by strong growth in net operating income
before loan impairment,
        which more than
compensated
        for the non-recurrence of the loan
provision releases that benefited
        results in 2004. On
an
        underlying basis, profits increased by 19 per cent.
•
Customer
        numbers rose by 10 per cent to 2.5 million
as
        customers were attracted by HSBC's competitive
positioning.
        Loans and advances to customers and
customer
        account balances increased by 9 per cent
and 7 per cent respectively,
        with significant
expansion
        in the UK and Hong Kong. Interest spreads
increased in Hong Kong, North
        America and the Rest
of
        Asia-Pacific following interest rate rises.
•
The commercial
        customer base was refined and now
comprises
        four categories: Corporate, Mid-Market
(together, 'MME'),
        Small and Micro businesses
(collectively,
        'SME'), building upon the successful
business segmentation
        model in existence in Hong
Kong
        and the UK.
•
Cross-border
        sales were strengthened by the launch
of
        new cross-border referral programmes and the
global implementation of online
        cross-border account
opening
        and referral tools.
•
HSBC's
        competitiveness in meeting the needs of
SMEs
        was enhanced through the introduction of pre-
approved loans and lines
        of credit in Hong Kong, the
launch
        of scored lending in India, the introduction of
small business accounts
        in Singapore and the
expansion
        of business banking centres in Malaysia.
•
Customers
        responded favourably to enhanced online
banking
        services, with numbers registered for internet
banking increasing by
        24 per cent and online
transaction
        volumes during the year up by 116 per
cent.
•
Business
          insurance and wealth management sales
continued
          to advance, supported by two new
dedicated insurance sales teams
          in Hong Kong. A
worksite
          marketing programme launched in Mexico,
and a programme across the Rest
          of Asia-Pacific to
increase
      the sale of structured investment products,
were also notable successes.
•
Having
          enhanced its systems, HSBC retained its
position
          as 'Best in Cash Management in Asia and
the Middle East',
          its number two ranking in the world
and
          its top five ranking for Europe, North America,
Latin America and Africa
          in
Euromoney
's 2005 Cash
Management
      Survey.
48
Back to Contents
•
Finance
          Asia
named
          HSBC 'Best Trade Bank in
Asia' for the ninth successive year, reflecting
HSBC's
    continuing development of new
products and services.
Europe
•
In the
        UK, HSBC continued to focus on
business
        start-ups and customers switching from
other banks to grow its customer
        base. As a
result,
        more customers moved their banking
relationships from other financial
        institutions to
HSBC
    than to any other established high street
bank.
•
Investment
        in customer service as a
differentiating
        factor continued, with the
recruitment of further relationship
        managers, the
improved
        deployment and training of over 600
dedicated small business specialists
        and a
substantial
    investment in mobile working
technology.
•
Recognising
        lack of scale, HSBC outsourced the
processing
        of its UK vehicle finance contract
hire product to a third party
        provider, Lex
Vehicle
        Leasing. As well as releasing capital,
this provided HSBC with access
        to Lex's IT
systems
        and expertise to enable a greater range
of services to be offered to
    customers.
•
In France,
        the most experienced relationship
managers
        focused on the largest 350 MME
customers in 2004, resulting
        in income growth
from
        this segment of 17 per cent in 2005. In
addition, a centralised and
        specialised
franchising
    team was established to increase
penetration of this significant and expanding
market.
•
A substantial
          investment was made to grow the
Commercial
          Banking franchise in Turkey with
the launch of SME banking, invoice
          discounting
and
          commercial cards.
Hong
    Kong
•
Loan balances
        increased as HSBC added
relationship
        managers and launched two new
pre-approved lending products,
        the 'Pre-approved
        Small Business Loan' and the 'Pre-approved Business Revolving
    Credit' account.
•
The first
        ever Commercial Banking brand
awareness
        campaign was launched in 2005.
SME
        sales outlets were also rebranded as 'SME
Centres' to
      strengthen the brand identity and
more closely align HSBC
    with this market
segment.
•
Supporting
            customer service, a new SME call
centre,
            employing 100 staff and incorporating a
dedicated sales hotline, took
            over four million
calls
        in 2005.
Rest
    of Asia-Pacific
•
Regional
            relationship management offering a
single
            point of contact across several countries
was implemented in the Middle
            East. A similar
approach
        was adopted in Hong Kong, mainland
China and Taiwan.
•
The
            sales distribution network was expanded in
key
            growth markets. In mainland China, three
new branches and an additional
            sub-branch,
with
            commercial banking presence, were
opened. In South Korea, four commercial
banking
        centres were established to extend
HSBC's presence in the MME market.
•
Across
        the region, several liability products
were
        tailored for individual markets. HSBC in
Bangladesh designed an innovative
        deposit
scheme, 'Double
        Your Money', and in Taiwan
HSBC launched a 'Cash Marketing
    Campaign'.
North
    America
•
HSBC's
        market share of small business
customers
        in New York City increased,
supported by the success of
        the BusinessSmart
Value
        package which added 41,000 new
accounts in 2005. HSBC Bank USA was voted
the
    No. 1 Small Business Administration lender
in New York State.
•
The MME
        and commercial real estate
businesses
        continued to expand in Boston,
Miami, Los Angeles, San Francisco
        and Seattle,
with
    new offices established in Washington DC,
Philadelphia and New Jersey.
•
HSBC Mexico
        was awarded 'The best initiative
in
        support of small and medium business owners
in Mexico' by the Mexican
        Minister of
Economy
    for 'Estimulo', a tailor-made financial
services package.
South
    America
•
40 commercial
        centres with 100 specialised staff
were
        established to expand sales activity and
address the banking needs of
        over 12,500 larger
SMEs
    in Brazil.
•
In Argentina,
        customer service was improved
through
        the launch of an in-house internet
banking solution, PC Banking
        Empresas, and a
dedicated
    inbound call centre.
49
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H
        S B C   H O L D I N G S   P L C
Financial
            Review
(continued)
Corporate, Investment Banking and Markets
Profit before tax
Year ended 31 December
2005
2004
US$m
US$m
Net interest income
3,001
3,994
Net fee income
2,967
2,764
Trading
    income excluding net
interest income
2,919
1,935
Net
    interest income
on
    trading activities
306
–
Net trading income
1
3,225
1,935
Net
    income from financial
instruments designated at fair
value
67
–
Net investment
income on assets
backing
policyholders'
liabilities
–
9
Gains
    less losses from financial
investments
475
197
Dividend income
79
548
Net earned insurance premiums
76
86
Other operating income
1,621
1,029
Total operating income
11,511
10,562
Net insurance claims
2
(54
)
(59
)
Net
                operating
income before loan
impairment
charges
and
                other
credit
      risk provisions
11,457
10,503
Net
              recovery of
loan impairment
charges
and other
credit
      risk
provisions
272
499
Net operating income
11,729
11,002
Total operating expenses
(6,838
)
(5,809
)
Operating profit
4,891
5,193
Share
    of profit in associates and
joint
    ventures
272
95
Profit before tax
5,163
5,288
By geographical region
Europe
2,114
1,668
Hong Kong
922
1,603
Rest of Asia-Pacific
1,207
942
North America
774
966
South America
146
109
Profit before tax
5,163
5,288
%
%
Share of HSBC's profit before tax
24.6
27.9
Cost efficiency ratio
59.7
55.3
For footnotes, see page 55.
Business highlights
•
Increased
          revenues marginally failed to cover
increased
          costs arising from continuing investment to
expand product capabilities
          and customer penetration. Notwithstanding
        a decline in balance sheet
management
        revenues of US$1 billion and a
US$1 billion increase in
        costs, pre-tax profit only fell
by
        2 per cent to US$5,163 million. On an underlying
basis, pre-tax profits
        fell by 4 per cent. Earnings grew
in
        key product areas and client sectors where HSBC
has invested, particularly
        in foreign-exchange
options,
        project and export finance, and securities
services, demonstrating the
        success of the strategy to
diversify
        revenue streams. Operating expenses
increased by 18 per cent. The
        rate of cost growth
peaked
        during the year as the investment phase of the
Corporate, Investment Banking
        and Markets
development
        plan neared completion. Some 3,600
additional people were recruited
        during 2005 and
2,220
        people departed. The cost efficiency ratio was
2 percentage points better in
        the second half of the
year
        than in the first half as net operating income
before loan impairment charges
      grew faster than
costs.
•
As the
          investment-led phase of the development
strategy
          moved to implementation, the competitive
advantage of HSBC's geographic
          network and
emerging
          market capabilities was underscored by
client demand for cross-border
          services. HSBC
advised
          on several cross-border acquisitions, notably
outward investment by clients
          in the Middle East and
inward
          investment into mainland China. The parallel
development of primary debt
          finance and secondary
debt
          trading capabilities allowed HSBC, acting as
bookrunner, to help 792 clients
          in 65 countries to
raise US$867.8
          billion in bond and loan financing in the
public markets. In Global Transaction
          Banking,
HSBC
          won several new multi-country mandates. Foreign
        exchange trading benefited from strong
income
      streams from emerging markets.
•
In Global
          Markets, client revenues and market share
rose
          in response to new investment. Money market
and balance sheet management
          income fell due to
rising
          short-term US dollar and Hong Kong dollar
interest rates, together with
          the flattening and in some
cases
          inversion of yield curves in the US, Hong
Kong, the UK, eurozone, Mexico
      and Brazil.
Credit
          and rates revenue rose. HSBC is now a
primary
          dealer in 10 European government bond
markets compared with eight
          at the end of 2004. Cash
equities
      commission revenue rose, reversing a four-
year declining trend.
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Management view of total operating income
Year ended 31 December
2005
2004
US$m
US$m
Global Markets
Money market and balance sheet
1,238
2,376
Foreign exchange
1,200
1,125
Credit and rates
931
655
Structured derivatives
387
386
Equities
324
256
4,080
4,798
Corporate and Investment Banking
Global Investment Banking
1,022
877
Corporate and Institutional
Banking
and
Global
Transaction
      Banking
3,433
2,937
Private Equity
648
207
5,103
4,021
Other
1
2,328
1,743
Total operating income
11,511
10,562
Selected balance sheet data
3
Loans and advances to:
– customers
    (net)
169,435
145,353
– banks
    (net)
106,123
128,032
Total assets
4
755,056
584,779
Customer accounts
202,361
177,449
Trading assets,
financial instruments
designated
at
              fair value, and
financial
      investments
373,787
252,459
Deposits by banks
65,853
80,443
1
'Other' includes the Corporate, Investment Banking and Markets business of HSBC Trinkaus & Burkhardt, Group Investment Businesses, and net interest earned on free
capital held in Corporate, Investment Banking and Markets not assigned to products.
For
        other footnotes, see page 55.
Structured
        derivatives activity rose strongly as a significant upgrade and expansion
        of the quantitative skill base and investment in systems allowed HSBC
        to complete higher volumes of derivatives transactions in 2005. In accordance
        with IFRSs, the inception profits on certain types of these transactions
      are deferred as described in Note 17 on the Financial Statements.
The strong
        momentum in client revenue was confirmed by industry surveys. In the
        Euromoney foreign exchange survey, HSBC ranked second in FX options in
        2005, up from fourth in 2004 and eighth in 2003. In addition, HSBC was
        ranked fourth in foreign exchange trading market share, retained the
        premier ranking in Hong Kong and was voted, for the first time, the best
      foreign exchange bank in London.
•
In Corporate
        and Institutional Banking, which
includes
        relationship management and lending
activities, market conditions
        and competitive
pressures
        resulted in spread contraction in all
regions. This was mitigated
        by a continued focus on
fee-generating
        business, cost management and a
favourable credit environment.
        HSBC introduced a
number
        of balance sheet management initiatives
including the implementation
        of a detailed review of
HSBC's
        portfolio and a balance sheet securitisation
programme to enhance return
      on capital employed.
•
In Global
        Investment Banking, an increase in market
share
        reflected HSBC's success in developing
customer relationships.
        In debt capital markets,
HSBC
        was ranked fifth in the international bond
league table, up from seventh
        in 2004. In project and
export
        finance,
Dealogic
ranked
        HSBC first in the
Global
        Financial Adviser, Project Finance
category.
In the
        advisory business, there was continued
momentum
        in both developed and emerging markets.
Notable transactions included
        advising Dubai
International
        Capital on its US$1.5 billion
acquisition of Tussauds Group
        and acting as adviser
to
      Autoroutes Paris-Rhin-Rhone on its privatisation.
Significant
        equity-related transactions, in which
HSBC
        acted as joint global coordinator, were the
US$2.8 billion Link Real
        Estate Investment Trust
('REIT')
        IPO, the largest ever real estate offering
and REIT IPO in the world,
        and the US$2.2 billion
IPO
      by the Bank of Communications.
•
In Global
        Transaction Banking, a move to offering a
wider
        range of integrated solutions to clients played
a large part in winning
        Unilever's first Asian pan-
regional
      cash management mandate, covering 17
countries and territories.
•
At the
          end of December 2005, Group Investment
Businesses
          managed US$272 billion of assets, a
33 per cent increase on 2004,
          driven mainly by
US$33
          billion of net flows from clients. Assets in
money market products exceeded
          US$60 billion.
HSBC
          manages two of the world's largest active
equity
          funds investing in India and China with
US$4.7 billion and US$1.9
          billion assets,
respectively.
          HSBC's presence in mainland China
was strengthened with an asset
          management joint
venture
          with Shanxi Trust and Investment
Corporation Limited.
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H
        S B C   H O L D I N G S   P L C
Financial
            Review
(continued)
Private Banking
Profit before tax
Year ended 31 December
2005
2004
US$m
US$m
Net interest income
848
718
Net fee income
1,080
962
Net trading income
1
317
257
Net expenses from
financial
instruments
designated
at
      fair value
(1
)
–
Gains
    less losses from financial
investments
45
39
Dividend income
9
5
Other operating income
68
24
Total operating income
2,366
2,005
Net insurance claims
2
–
–
Net operating
income before loan
impairment
charges
and
      other
credit
      risk provisions
2,366
2,005
Net recovery of
loan impairment
charges
and other
credit
      risk
provisions
12
11
Net operating income
2,378
2,016
Total operating expenses
(1,466
)
(1,319
)
Operating profit
912
697
Share
    of profit in associates and
joint
    ventures
–
–
Profit before tax
912
697
By geographical region
Europe
539
438
Hong Kong
190
131
Rest of Asia-Pacific
78
60
North America
104
68
South America
1
–
Profit before tax
912
697
%
%
Share of HSBC's profit before tax
4.4
3.7
Cost efficiency ratio
62.0
65.8
US$m
US$m
Selected balance sheet data
3
Loans
    and advances to customers
(net)
27,749
24,463
Total assets
4
59,827
56,751
Customer accounts
67,205
57,780
For footnotes, see page 55.
Business highlights
•
Pre-tax
          profit grew by 31 per cent compared with
2004,
          supported by strong growth in client assets and
lending. On an underlying
          basis, growth was also
31
          per cent. Operational efficiency was increased by
greater utilisation of Group
          Service Centres and the
cost
      efficiency ratio was reduced by 4 percentage points
to 62 per cent.
•
HSBC
          won a number of awards in the
Euromoney
third annual private banking survey. In the global
private
          banking awards, notable wins included '1st
Private Bank for Trust Services' for the second year
running, '1st
          Private Bank for Islamic Services' and
'1st Private Bank for Inheritance
          and Succession
Planning'.
      Overall, HSBC improved one place to
'3rd best Private Bank'.
•
Client
          assets increased
by 13 per cent to
US$282
billion, benefiting from net new money of
US$35.7
billion in 2005. On an underlying basis,
growth was 20 per cent.
Discretionary and advisory
asset
growth benefited from the establishment of
dedicated investment advisory
resources in all major
regions,
and also from growth in the Strategic
Investment Solutions product,
in which invested
assets
increased by US$1.9 billion to US$2.9 billion
during the year.
•
HSBC
          also continued to develop alternative
investment
          products. Total client investment in hedge
funds reached US$29.5 billion,
          and HSBC Private
Bank
          was named the third largest global provider of
hedge funds by capital invested
      by
Institutional
Investor
magazine.
•
Dedicated
          teams
working with Commercial Banking,
Personal
Financial Services and Corporate,
Investment Banking and Markets
produced a
significant
increase in intra-Group referrals in 2005.
A
closer alignment with the latter was also reflected
in
the manufacture of tailored structured products for
private
banking
clients. Bank of Bermuda's private
banking
operations were fully integrated during the
year.
•
The lending
          book grew strongly, as clients sought to
leverage
          their investments in the low interest rate
environments in North
          America, Europe and Asia. In
the
          UK and US, lending book growth was also
buoyed by strong growth in higher
      value mortgages.
52
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Europe
•
In France,
        HSBC Private Bank's subsidiary, Louvre
Gestion,
        was awarded second and fourth places for
overall performance over
        five and three years
respectively
        by
La Tribune
– Standard & Poor's.
A
        number of HSBC's individual funds also won
awards
    in the Lipper Fund Awards – France.
•
Private
        Banking expanded its onshore business
through
        the launch of regional offices in the UK and
France, bringing HSBC closer
        to customers and
strengthening
        referrals with the retail bank. Regional
offices were also launched in
        Russia, and
preparations
    were made for further expansion in
2006.
•
Client
        assets increased by 12 per cent, or 22 per cent
on
    an underlying basis, with net new money
reaching US$23.4 billion.
•
Euromoney
awarded
    HSBC 'Best Private Bank … in
Monaco … for Ultra High Net Worth Clients'.
Asia
•
Client
        assets increased by 17 per cent, or 19 per cent
on
        an underlying basis. Investment in Taiwan and
Japan continued and HSBC
        expanded its support of
clients
        from mainland China. Onshore operations
were launched in Dubai and India
        during the year,
and
        the expansion of the discretionary managed team
aided growth of 47 per cent
    in this asset class.
•
HSBC won
        awards from
Euromoney
as '1st
        for
Inheritance
        and Succession Planning', '1st for Tax
Guidance
        and Services' and '1st for Trust Services'
in
    Asia.
North
    America
•
HSBC extended
        its Private Banking capabilities
through
        front office recruitment in New York,
California and Florida, and
        expanded its Wealth and
Tax
    advisory business in Philadelphia through
recruitment and a small acquisition.
•
The business
        was streamlined through restructuring,
delivering
        front office synergies with Corporate,
Investment Banking and
        Markets, cross-selling with
Commercial
        Banking was enhanced, and a single
management structure was put
        in place to cover the
Hispanic
    customer base.
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H
        S B C   H O L D I N G S   P L C
Financial
            Review
(continued)
Other
6
Profit before tax
Year ended 31 December
2005
2004
US$m
US$m
Net interest (expense)/income
(472
)
90
Net fee income
220
171
Trading
    (expense)/income
excluding
    net interest income
(90
)
40
Net
    interest expense on trading
activities
(13
)
–
Net trading income
1
(103
)
40
Net
    income from financial
instruments designated at fair
value
406
–
Net investment
income on assets
backing
policyholders'
liabilities
–
44
Gains
    less losses from financial
investments
144
219
Dividend income
42
16
Net earned insurance premiums
260
558
Other operating income
2,634
2,050
Total operating income
3,131
3,188
Net insurance claims
2
(179
)
(359
)
Net operating
income before loan
impairment
charges
and
                other
credit
      risk provisions
2,952
2,829
Loan impairment
charges and other
credit
risk
provisions
(1
)
(1
)
Net operating income
2,951
2,828
Total operating expenses
(2,976
)
(2,493
)
Operating profit/(loss)
(25
)
335
Share
    of profit in associates and
joint ventures
51
69
Profit before tax
26
404
By geographical region
Europe
(168
)
366
Hong Kong
(178
)
129
Rest of Asia-Pacific
94
26
North America
169
(196
)
South America
109
79
Profit before tax
26
404
%
%
Share of HSBC's profit before tax
0.1
2.1
Cost efficiency ratio
100.8
88.1
US$m
US$m
Selected balance sheet data
3
Loans
    and advances to customers
(net)
1,893
2,339
Total assets
4
27,653
26,201
Customer accounts
507
557
For footnotes, see page 55.
Notes
•
For a
          description of the main items reported under
'Other',
      see footnote 6 on page 55.
•
Under
          IFRSs, from 1 January 2005 dividends payable
on
          preference securities classified as liabilities have
been
          recognised as an interest expense within 'Other'
in
          2005. In 2004, these dividends were shown as
non-
equity
minority interests. This change decreased net
interest
income by US$653 million compared
with
2004.
It also affected inter-regional dividends and this
increased
net interest income in Europe by
US$387
million, which was offset at a Group level by
an
equivalent reduction in net interest income in
Hong
Kong.
•
The US
          Technology Centre incurred and recharged
US$1,100
          million of expense, 18 per cent higher than
2004 as a result of increased
          activity in support of
both
          increased global IT requirements and the
development of new capabilities
          in Corporate,
Investment
      Banking and Markets.
•
Costs
          incurred in the Group Service Centres outside
the
          US increased by 75 per cent to US$302 million,
reflecting
          the ongoing migration of processing and
call
      centre activities.
•
Gains
          on the sale and revaluation of property and
investments
          in Hong Kong were US$65 million lower
than in 2004, at US$263
      million.
•
Increases
          in US interest rates led to higher net interest
income
          earnings on centrally held US dollar
denominated investments
          in Hong Kong and the Rest
of
      Asia-Pacific.
•
The reclassification
          of the Brazilian insurance
business
          from Other to Personal Financial Services
led to a US$16 million reduction
          in profit before tax,
though
          significant variances were observed on
operating income and operating
      expenses lines.
•
In Argentina,
          HSBC received compensation bonds in
2005
          related to the pesification in 2002. This,
together with reduced Amparos
          provisions and other
items
          related to the sovereign debt default, led to a
US$17 million increase in
      profit before tax.
•
Movement
          in the fair value of own debt designated at
fair
          value was US$386 million, arising in North
America and Europe. No
      movement was reported in
2004.
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By geographical region
In the analysis of profit by geographical region that follows, operating income and operating expenses include intra-HSBC items of US$938 million (2004: US$631 million).
Profit before tax
Year ended 31 December
2005
2004
US$m
%
US$m
%
Europe
6,356
30.3
5,756
30.4
Hong Kong
4,517
21.5
4,830
25.5
Rest of Asia-Pacific
2,574
12.3
1,847
9.8
North America
6,872
32.8
6,070
32.0
South America
647
3.1
440
2.3
20,966
100.0
18,943
100.0
Total assets
3,4
At 31 December
2005
2004
US$m
%
US$m
%
Europe
636,703
42.7
545,557
43.0
Hong Kong
4
222,822
15.0
213,458
16.8
Rest of Asia-Pacific
142,014
9.5
120,530
9.5
North America
463,143
31.1
371,183
29.3
South America
24,734
1.7
17,368
1.4
1,489,416
100.0
1,268,096
100.0
Basis of preparation
The results are presented in accordance with the accounting policies used in the preparation of HSBC's consolidated financial statements. HSBC's operations are closely
integrated and, accordingly, the presentation of customer group data includes internal allocations of certain items of income and expense. These allocations include the costs of certain support services and head office functions, to
the extent that these can be meaningfully attributed to operational business lines. While such allocations have been made on a systematic and consistent basis, they necessarily involve a
degree of subjectivity.
Where relevant, income and expense amounts presented include the results of inter-segment funding as well as inter-company and inter-business line
transactions. All such transactions are undertaken on arm's length terms.
Footnotes
    to 'Analysis by customer group and by geographical region'
1
Net trading income comprises all gains and losses from changes in the fair value of financial assets and financial liabilities classified as held for trading, together with
related external and internal interest income and interest expense, and dividends received.
2
Net insurance claims incurred and movement in policyholders' liabilities.
3
Third party only.
4
Excluding Hong Kong Government certificates of indebtedness.
5
Assets and liabilities recorded here were significant to Corporate, Investment Banking and Markets.
6
The main items reported under 'Other' are the income and expenses of wholesale insurance operations, certain property activities, unallocated investment activities
including hsbc.com, centrally held investment companies, movements in the fair value of own debt designated at fair value, and HSBC's holding company and financing operations. The results include net interest earned on free capital held
centrally and operating costs incurred by the head office operations in providing stewardship and central management services to HSBC. Net operating income of the Group's wholesale insurance operations amounted to US$460 million in 2005
(2004: US$511 million). 'Other' also includes the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries.
55
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H S B C   H O L
D I N G S   P L C
Financial
      Review
(continued)
Europe
Profit/(loss) before tax by country within customer group
Year
    ended 31 December
2005
2004
US$m
US$m
Personal Financial
Services
1,932
1,621
United Kingdom
1
1,475
1,340
France
2
223
205
Turkey
134
29
Other
100
47
Commercial Banking
1,939
1,663
United Kingdom
1,495
1,258
France
2
278
272
Turkey
39
25
Other
127
108
Corporate, Investment
Banking and Markets
2,114
1,668
United Kingdom
1,186
1,021
France
2
472
337
Turkey
92
88
Other
364
222
Private Banking
539
438
United Kingdom
171
135
France
2
7
(22
)
Switzerland
254
203
Other
107
122
Other
(168
)
366
United Kingdom
(47
)
477
France
2
(147
)
(123
)
Other
26
12
Total
6,356
5,756
United Kingdom
4,280
4,231
France
2
833
669
Turkey
265
142
Switzerland
254
203
Other
724
511
1
In the UK, the Personal Financial Services business primarily comprises HSBC Bank and the UK subsidiary of HSBC Finance. The latter's results included within UK Personal
Financial Services in 2005 were a loss of US$76 million (2004: profit US$97 million).
2
France primarily comprises the domestic operations of HSBC France and the Paris branch of HSBC Bank.
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Profit before tax
Year
    ended 31 December
2005
2004
Europe
US$m
US$m
Net interest income
8,221
9,098
Net fee income
6,299
5,980
Net trading income
3,036
997
Net income from financial
instruments designated at fair value
362
–
Net investment income
on assets backing policyholders' liabilities
–
571
Gains less losses from
financial investments
439
154
Dividend income
63
558
Net earned insurance premiums
1,599
1,875
Other operating income
1,603
1,175
Total operating
income
21,622
20,408
Net insurance claims incurred
and movement in policyholders' liabilities
(818
)
(1,628
)
Net operating income before loan impairment charges and other credit risk
provisions
20,804
18,780
Loan impairment charges
and other credit risk provisions
(1,929
)
(1,033
)
Net operating
income
18,875
17,747
Total operating expenses
(12,639
)
(12,028
)
Operating profit
6,236
5,719
Share of profit in associates
and joint ventures
120
37
Profit before
tax
6,356
5,756
%
%
Share of HSBC's profit
before tax
30.3
30.4
Cost efficiency ratio
60.8
64.0
Year-end staff numbers
(full-time equivalent)
77,755
74,861
US$m
US$m
Selected balance
    sheet data
1
Loans and advances to
customers (net)
312,537
277,560
Loans and advances to
banks (net)
44,360
56,049
Financial investments, trading assets, and financial instruments designated at
fair value
146,777
139,183
Total assets
636,703
545,557
Deposits by banks
47,202
55,720
Customer accounts
334,200
292,568
1
Third
    party only
.
Growth in the
UK
economy remained
subdued during 2005 at 1.8 per cent, the lowest rate since 1992. Consumer spending and housing activity slowed sharply during the first nine months of the year, staging a minor recovery in the final quarter. Doubts remained over the strength of
consumer spending, given the rise in unemployment in ten consecutive months and reduced confidence in the housing market. The boost to the economy from government spending in recent years was also not expected to be as significant. The recovery in
exports was maintained, helped in large part by the strength of the global economy, though the industrial sector continued to struggle. Industrial output contracted in 2005 for the fourth time in the past five years. Companies remained reluctant to
invest despite a general profit recovery, stronger balance
sheets and an impressive equity market performance. Although commodity prices rose sharply, inflation remained well contained at around 2 per cent and wage growth eased. In response to
weaker economic activity, the Bank of England cut interest rates in August to 4.5 per cent.
The
eurozone
experienced lacklustre economic growth in 2005 of 1.4 per cent, although momentum accelerated during the course of the year. With consumer spending growth remaining subdued, the strongest areas were exports and fixed investment.
There was, as usual, considerable divergence between countries: Italy and Portugal saw hardly any economic growth while Spain, Greece and Ireland grew by over 3 per cent. Growth in France slowed from 2.1 per cent in 2004 to 1.4 per cent in 2005 but
both investment and consumer spending revived a
57
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H S B C   H O L
D I N G S   P L C
Financial
      Review
(continued)
little in the
    second half of the year. Weak domestic demand continued to constrain German
    gross domestic product ('GDP') growth, which slowed from 1.1 per
    cent in 2004 to 0.9 per cent in 2005, despite a strong increase in exports,
    particularly capital goods. Eurozone inflation averaged a little over 2 per
    cent in 2005, with higher energy prices boosting inflation by around 0.5
    per cent. The European Central Bank raised
interest rates from 2.0 per cent to 2.25 per cent in early December, the first
increase for almost five years.
The performance of the Turkish economy in 2005 remained very positive. GDP grew by approximately 5.5 per cent, while inflation continued to fall, to 7.7 per
cent in December from 9.7 per cent a year earlier. Economic policy remained anchored by the government's agreement with the IMF. Turkey's current account deficit, which reached US$23.1 billion, or approximately 6.3 per cent of GDP in
2005, is increasingly being financed by longer-term foreign direct investment into the country, which should help reduce Turkey's vulnerability to a sudden reversal in short-term capital flows.
European operations reported a pre-tax profit of US$6,356 million compared with US$5,756 million in 2004, an increase of 10 per cent. IFRSs changes
to the treatment of preference share dividends led to a US$275 million reduction in pre-tax profits. On an underlying basis, pre-tax profits grew by 25 per cent and represented around 30 per cent of HSBC's equivalent total profits. In the
UK, strong revenue growth in Personal Financial Services and good cost discipline were partially tempered by a weaker credit experience. A quadrupling of pre-tax profits in Turkey reflected the strong growth in customer acquisition and retention
achieved in the country. In Commercial Banking, HSBC's strong service proposition attracted a 5 per cent growth in customers with consequent growth in deposits, receivables and service revenues. Corporate, Investment Banking and Markets
delivered strong revenue growth in Europe, notably in client related trading activities, Global Transaction Banking and securities services. In aggregate, European Corporate, Investment Banking and Markets' revenues grew by 15 per cent against
a 9 per cent increase in operating expenses.
The commentary that follows is on an underlying basis.
Personal Financial Services
reported a pre-tax profit of US$1,932
million, an increase of 16 per cent compared with 2004, driven by revenue growth and productivity improvements in the UK and
expansion in Turkey, where pre-tax profit more than quadrupled to US$134 million. In France, revenue growth benefited from the rebranding of CCF and four subsidiary banks to
'HSBC France', with a notable increase in international products, particularly mortgage lending to overseas customers.
Continued emphasis was placed on streamlining the business to improve productivity, and on sales and channel management, particularly in the UK, where one
third of sales were made through direct channels in 2005. Attention was also paid to further simplifying HSBC's product range in the UK, and on integrating the M&S Money business in its first full year since acquisition. A number of
innovative marketing campaigns and promotions during 2005 heightened brand awareness, leading to greater customer consideration of HSBC products. This was evidenced in strong balance growth and market share gains across most major product lines. In
Turkey, an emphasis on business expansion and customer acquisition delivered increased card sales and utilisation combined with higher mortgage sales. In France, marketing campaigns in conjunction with the rebranding exercise boosted mortgage
lending and sales of insurance and investment products.
Net interest income increased by 10 per cent to US$5,309 million. This arose substantially in the UK through increases in mortgage and credit card
lending, and in Turkey, mainly in credit cards. Increased net interest income from balance sheet growth in France was offset by spread compression.
Despite a more subdued housing market, net interest income from UK mortgages increased by 37 per cent, driven by balance growth of 22 per cent and
improvements in customer retention. Spreads also increased, reflecting the inclusion from 1 January 2005 of fee income within the effective interest rate calculation under IFRSs. New lending was strongest in the first time buyer market, where
successful pricing and marketing strategies helped gain market share of new sales in a market which contracted overall.
Net interest income from UK credit cards increased by 24 per cent, driven by balance growth and the IFRSs impact noted above. Increased card utilisation by
existing customers, as well as new customers attracted by competitive pricing, marketing and cross-sales, contributed to an increase of 16 per cent in average balances. HSBC-branded cards increased market share of new cards issued; sales of the John
Lewis branded credit card also increased. Income benefited from the roll-off of balance transfers introduced in the '0 per cent' campaign at the end of 2004, while more
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sophisticated risk-based pricing enabled customer rates to be differentiated more acutely.
Net interest income from other unsecured lending in the UK increased by 4 per cent. The launch of differentiated pricing initiatives in April, notably
through preferential personal lending rate offers to lower-risk customers, helped boost average loan balances by 9 per cent, and increase HSBC's market share of gross advances from 10.7 to 11.7 per cent. Focused sales and marketing, notably the
'January sale', also contributed to higher balances. As indebtedness levels grew, growth was curtailed through a tightening of underwriting criteria in the more difficult credit environment. The introduction of preferential pricing, and a
mix change towards higher value but lower-yielding loans, led to a 48 basis point narrowing of spreads.
Recruitment of new current account customers was strong, and HSBC's market share of new current accounts increased to 14.7 per cent, largely through
brand-led awareness and marketing. The launch of two new current account propositions, including HSBC's first value-driven packaged account in the UK market, and improved cross-sales aided growth of 6 per cent in overall customer accounts. This
led to an increase in net interest income from UK current accounts of 5 per cent to US$1.0 billion, broadly in line with the 6 per cent increase in average balances.
Sales of new UK savings accounts increased markedly, and average balances rose by 15 per cent, driven by a greater front-line focus, competitive pricing and
the launch of new products, including 'Regular Saver' and 'Online Saver'. Included in this was growth of over US$1.2 billion in First Direct's 'e-savings' product, launched in September 2004. Net interest
income, however, fell by 5 per cent, largely due to the non-recurrence of the benefit to spreads from base rate rises in 2004, and a slight reduction in margin. The latter arose from competitive pricing initiatives partly designed to improve brand
awareness and widen product consideration.
In Turkey, innovative marketing initiatives and advertising campaigns, with an emphasis on attracting new customers, contributed to strong growth in net
interest income, which more than doubled compared with 2004. Average card balances increased by 66 per cent to US$0.9 billion, and average mortgage balances more than doubled to US$0.6 billion. Higher card usage by existing customers, higher
average mortgage advances and a 7 per cent increase in overall customer numbers contributed to the growth.
In France, net interest income was broadly in line with 2004. Marketing campaigns in the run-up to the rebranding exercise contributed to a 54 per cent
increase in mortgage sales in a buoyant market, and a resulting 18 per cent increase in average balances. Cross-sales of current and special regulated savings accounts were strong, and average deposit balances grew by 4 per cent to US$14.9
billion. The benefit of this balance sheet expansion was largely offset by lower spreads, as competitive pricing reduced yields on lending products, and the maturing of older, higher-yielding investments reduced the funding benefit from
deposits.
Excluding net interest income, net operating income before loan impairment charges grew by 16 per cent to US$3,386 million, of which 12 percentage points
was in the UK and largely attributable to increased fees associated with the increase in personal lending, mortgage and credit card volumes described above. Increased card utilisation also led to higher cash advance fees and currency conversion
income. An improved investment fund offering, following the depolarisation of the previously tied sales force, was reflected in a 5 per cent increase in related commissions. In Turkey, fee income benefited from increased lending activity. In France,
privatisations boosted brokerage income, and new product launches and marketing aided growth in insurance and investment sales.
Under IFRSs, changes in presentation from 1 January 2005, notably for certain contracts previously accounted for as insurance, and with the designation of
insurance-related assets at fair value, caused large movements within certain individual income lines. These had negligible impact on income overall. There was also a US$32 million gain from the fair value measurement of options linked to French
home-savings products.
Loan impairment charges of US$1,711 million were 73 per cent higher than 2004, the majority of which occurred in the UK. In large part, this reflected
the strong growth in higher margin credit card and other unsecured lending in recent years. Weakening economic conditions and sharply rising personal bankruptcies, following the change in legislation in 2004, were also significant
contributors.
Loan impairment charges as a percentage of period end net customer advances rose from 0.8 to 1.4 per cent.
HSBC responded to the weaker UK credit environment by further refining its credit eligibility criteria, and by enhancing its credit scorecards with
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      Review
(continued)
full positive
    credit reference data. HSBC became the first UK high street clearing bank
    to share full customer credit performance data in 2005.
Underwriting
    activity was also further centralised. Collections capabilities were enhanced,
    resulting in an increase in amounts collected, and resources were added to
    the Retail Credit  Risk Management function. As a result, lending activity
    in the second half of the year indicated that the credit quality of more
    recent unsecured lending had improved.
Higher charges in Turkey were broadly in line with balance sheet growth, while credit quality in France remained sound.
Operating expenses were broadly in line with 2004. The 7.5 percentage point fall in the cost efficiency ratio, to 58 per cent, was largely driven by
productivity improvements in the UK. This reflected the benefits of the cost reduction strategy introduced in 2004. Increased focus on direct channels, and the greater centralisation of support functions enabled by this, reduced the UK cost base in
2005, which also benefited from the non-recurrence of the restructuring costs incurred in implementing this strategy. Costs in 2004 also included amounts for compensation expected to be payable to UK customers for shortfalls on certain mortgage
endowment policies and investment products. Operating expenses in 2005 included the initial phase of a UK branch refurbishment programme designed to improve customer experience, which added US$73 million to costs.
In France, a 2 per cent increase in operating expenses was driven by the recruitment of additional sales staff, as well as the rebranding exercise and
associated marketing expenditure. In Turkey, marketing costs increased by 30 per cent and staff costs by 33 per cent, largely in support of the growing credit card business.
Commercial Banking
reported pre-tax profits of US$1,939 million, an
increase of 18 per cent. In highly competitive markets, revenues grew by 6 per cent and profit improvement largely reflected reduced costs, more than offsetting higher loan impairment charges.
In the UK, improved market segmentation led to a more acute focus on the needs of individual customers and underpinned a 20 per cent increase in pre-tax
profits. The establishment in 2004 of Corporate Banking Centres to improve the service offered to MMEs, and Commercial Centres focusing on larger SMEs, together with the recruitment of additional sales staff, contributed to a 6 per cent increase in
customers and strong growth in lending. Revenues responded strongly, and costs were lower
following a reorganisation in the UK in 2004 to improve efficiency. UK credit quality experienced some weakening in the fourth quarter of 2005, reflecting higher interest rates and the
resulting slowdown in consumer spending. However, the quality of HSBC's commercial lending book remained strong overall with impairment charges continuing to run below historic levels: as in prior periods, loan impairment charges principally
reflected allowances against a small number of accounts.
Net interest income increased by 16 per cent. In the UK, lending and overdraft balances increased by 23 per cent, or US$6.6 billion, as a result of
strong customer demand. HSBC increased its lending market share, with particularly strong growth in the property, distribution and services sectors. In invoice financing, a 12 per cent increase in customer numbers supported by a sales force
realignment led to higher balances and a 10 per cent increase in net interest income. Risk-based pricing improved overdraft spreads by 15 basis points, while term lending margins were in line with 2004.
A campaign designed to secure a greater share of the commercial savings market, in part through more competitive pricing, contributed to an 11 per cent
increase in UK deposit balances, with spreads falling by 16 basis points. Overall, UK commercial customer liability balances benefited from both deposit growth and a 12 per cent increase in current account balances. Current account customer numbers
rose to over 700,000 with over 20,000 customers switching their business to HSBC following marketing and advertising campaigns in 2005. In the UK, HSBC attracted over 90,000 start-up accounts, representing a 20 per cent market share. Spreads on
sterling current accounts fell as customers continued to migrate to interest-paying current accounts. Increases in US interest rates led to a widening of spreads on international and foreign currency current accounts.
Net interest income in Turkey increased by 29 per cent, principally as a result of higher lending and deposit balances, which increased by 25 per cent and 19
per cent respectively. HSBC deepened its relationships with its larger commercial banking customers and recruited additional sales staff to support the launch of SME banking in the second half of 2005.
In France, increased marketing activity highlighting HSBC's international capabilities as CCF rebranded to HSBC France, together with a programme to
align the bank's 350 largest Commercial Banking customers with the most
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experienced relationship managers, led to a 10 per cent increase in medium term loan balances. Sight deposit balances grew by 7 per cent, though deposit spreads decreased as maturing
funds were placed at lower prevailing interest rates.
Net fee income increased by 2 per cent to US$1,621 million, net of IFRSs changes to switch some fees into the effective interest rate calculation, which
led to a 15 per cent reduction in fee income. In the UK, higher new business volumes and lending activity contributed to a US$77 million, or 27 per cent, increase in loan and overdraft fee income. Increased customer numbers, coupled with the
introduction of a new small business tariff in January 2005, led to a 13 per cent increase in current account fee income. Card acquiring income increased by 8 per cent, despite a slowdown in consumer spending driven by a 6 per cent increase in
transaction volumes, reflecting merchant acquisition. A 21 per cent increase in card customer numbers contributed to higher card issuing income.
HSBC benefited from the recruitment of additional sales staff, development of profitable relationships with brokers and the success of dedicated corporate
and commercial centres. Invoice financing fee income increased by 9 per cent, benefiting from an expanded client base, while a tariff review contributed to a 16 per cent increase in treasury income. The recruitment, in both 2004 and 2005, of
commercial independent financial advisors, together with the development of existing sales staff, led to a 13 per cent increase in insurance and investment income, with fee income from savings and investment products increasing by a third. Income in
the vehicle and equipment leasing businesses decreased by 13 per cent, following an agreement to outsource the operational functions of the UK vehicle finance contract hire business to Lex Vehicle Leasing, which took effect from November 2005.
Excluding the transfer, net fee income from leasing increased by 5 per cent.
Loan impairment charges and other credit risk provisions increased by 26 per cent to US$378 million. In the UK, lending growth and sizeable allowances
against a small number of accounts led to a US$162 million increase in charges. Overall credit quality remained relatively strong, although some deterioration was evident in the market in the last three months of 2005 as consumer spending
declined. In France, new individually assessed allowances were largely offset by higher recoveries, while in Malta net releases decreased as a large release against a single customer in 2004 was not repeated.
Operating expenses decreased by 5 per cent and, together with increased income, resulted in a 6 percentage point improvement in the cost efficiency ratio. In
the UK, the non-recurrence of cost reduction expenditure in 2004, together with the resulting fall in staff numbers and strong cost control, contributed to a 10 per cent decrease in operating expenses. Although overall staff numbers declined,
additional sales staff were hired to take advantage of business opportunities in support of revenue growth. These sales staff were supported by press and other advertising campaigns aimed at attracting customers switching banks and start-up
businesses to HSBC, together with a campaign targeting SMEs which contributed to an increase in marketing costs.
In France, staff recruitment, increased marketing activity and re-branding led to an 8 per cent increase in costs. Staff costs rose as HSBC France recruited
additional sales staff to support business expansion, and success led to higher performance-related remuneration. Campaigns targeting top tier commercial customers and supporting product launches led to an increase in marketing expenditure, while
rebranding and supporting activity to emphasise the 'HSBC' name change also contributed.
In an economy which grew by 5.5 per cent in 2005, increased business activity, the launch of SME banking and the recruitment of additional sales and support
staff in Turkey contributed to a rise in income and a 17 per cent increase in operating expenses.
Corporate, Investment Banking and Markets
reported a pre-tax profit of
US$2,114 million, an increase of 27 per cent, compared with 2004. Revenues from all major client-related trading activities increased, particularly from the credit and rates, equities and structured derivatives businesses where HSBC has invested
in upgrading its capabilities. Operating expenses rose, reflecting the first full-year cost of the expanded sales and execution capabilities. However, cost growth slowed in the second half of 2005 and in aggregate in Europe, revenue growth
comfortably surpassed growth in costs. In Europe, 2005 marked the transition from the investment phase of Corporate, Investment Banking and Markets' development strategy to a focus on implementation.
Total operating income increased by 15 per cent to US$5,510 million. Balance sheet management and money market revenues declined by approximately 46 per
cent reflecting a challenging interest rate
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environment of higher short-term rates and a flattening yield curve.
Corporate lending spreads remained under pressure as customers refinanced and negotiated better terms in response to falling credit spreads on virtually all
publicly traded debt instruments and strong liquidity in the banking system. In the UK, the adverse impact of a 23 basis point decrease in spreads on customer lending was partly mitigated by a 7 per cent increase in lending balances. Corporate and
Institutional Banking also implemented a balance sheet securitisation programme to enhance returns. In Global Transaction Banking, net interest income increased, primarily due to an increase in balances held on behalf of customers, coupled with the
favourable impact of rising short-term rates. Customer deposit balances increased by 23 per cent and spreads improved by 9 basis points.
Net fees rose by 7 per cent, partly due to an increase in earnings from the equity capital markets business. Additionally, as equity markets became more
buoyant, HSBC Securities Services fees increased and assets under custody grew by 15 per cent to US$3,242 billion, primarily due to new business and market value appreciation. The asset-backed securities product also generated higher fees with
several notable transactions closing in 2005. In Germany, a 31 per cent rise in net fees was driven by origination activity and higher sales of structured solutions.
The increase in income from trading activities arose from positive revenue trends on core products within Global Markets in response to the investment made
in client-facing trading capabilities. Fixed income revenues were boosted by higher volumes processed through electronic trading platforms and by the expansion of primary dealing activity in European government bond markets. In the UK, a strong
performance in structured derivatives reflected investment in new hybrid derivatives and structured fund derivatives businesses, while income in the credit and rates business rose by 25 per cent as a result of higher revenues from securities
trading, asset-backed securities and credit default swaps. There was growth in income from currency derivatives on the back of increasing client business.
Other income was boosted by gains from the restructuring and syndication of existing assets in Global Investment Banking.
Gains from sales of financial investments increased significantly to US$396 million, due to higher realisations from Private Equity.
The overall credit environment remained favourable, with a net recovery in 2005 as in 2004. There were, however, lower recoveries of loan impairment charges
in the UK and France, as HSBC had benefited from a number of successful refinancings in 2004. In Italy, a net recovery reflected relatively lower allowances against loan impairment, coupled with releases of provisions made in 2004.
Operating expenses increased by 9 per cent to US$3,647 million, partly from the first full year effect of recruitment in 2004 and partly from a further
980 people recruited in 2005 to deliver the expanded capabilities reflected in the revenue gains described above. Extensive investment was also made to develop the infrastructure and technology platform required to integrate and support the business
expansion. In Global Markets, costs rose as new capabilities were added to the cash equities platform, the structured derivatives business in the UK and the credit and rates business. An increase in operational costs, particularly in Global
Transaction Banking, was due to higher transaction volumes.
Private Banking
reported a pre-tax profit of US$539 million, an increase
of 23 per cent compared with 2004, driven by strong growth in client assets, transaction volumes and the lending book. Operating expenses rose with a recruitment-driven increase in staff costs partly offset by efficiency savings and the
non-recurrence of restructuring costs in France in 2004.
Net interest income increased by 31 per cent, driven by strong balance sheet growth in the UK, Switzerland and, to a lesser extent, Germany. Overall, lending
balances increased by 21 per cent to US$16.7 billion, as clients borrowed in the low interest rate environment to make alternative investments. This included strong growth in UK mortgage balances, which increased by 39 per cent, in part
reflecting synergies with HSBC's residential property advisory business. Deposits increased by 20 per cent to US$38.6 billion, as new clients placed cash prior to investment.
Client assets, including deposits, increased by 22 per cent to US$174.7 billion. Net new money of US$23.4 billion reflected notably strong inflows in
Switzerland, Germany, Monaco and the UK. In Switzerland, an increased marketing effort and successful product placement aided net new money of US$9.6 billion. In Germany, US$7.6 billion of new money was predominantly due to the success of a
new wealth management team. In Monaco, a focus on building the onshore business generated inflows of US$4.1 billion, while in the UK, cross-referrals
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      Review
(continued)
with the wider
    Group contributed to nearly one quarter of the US$1.6 billion of new
money.
A US$20 million lower performance fee from a public equity fund dedicated to Russia was more than offset by increased core fees and commissions in line
with growth in client assets, and transactional income as new clients invested. Higher fee income also reflected growth in discretionary and advisory managed assets, and volume growth, which was boosted by the success of new products launched in
2005, notably in alternative investments. Gains from financial investments in both 2004 and 2005 were mainly on the sale of debt instruments. The overall gain in 2005 of US$27 million was 17 per cent lower than in the previous year.
The net release of loan impairment charges in 2005 related largely to specific clients; improved credit quality overall also led to a release of collective
impairment provisions.
Operating expenses rose by 11 per cent, of which front office recruitment and increased performance-related remuneration comprised 4 and 5 percentage points
respectively. Investment costs, largely in IT and marketing, and supporting business growth contributed further to the increase. These were in part offset by back office efficiency savings and lower restructuring costs following 2004's merger
of HSBC's four French private banks.
Within
Other
, net operating income benefited from the change to the presentation of inter-company preference share dividends received from Hong Kong under IFRSs from 1 January 2005. Head office operating expenses increased, reflecting higher
brand advertising and marketing costs, increased professional fees incurred to comply with additional regulatory requirements including Sarbanes-Oxley and Basel II, and restructuring costs. In 2004, operating expenses benefited from the release of
litigation provisions.
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D I N G S   P L C
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      Review
(continued)
Profit/(loss) before
tax by customer group
Year
    ended 31 December 2005
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
Europe
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net interest income
5,309
2,659
827
548
95
(1,217
)
8,221
Net fee income
2,314
1,621
1,339
730
295
–
6,299
Trading
              income/(expense) excluding
              net interest
income
81
16
1,493
93
(23
)
–
1,660
Net
              interest income/
(expense)
              on trading activities
3
2
159
–
(5
)
1,217
1,376
Net
            trading income/(expense)
84
18
1,652
93
(28
)
1,217
3,036
Net
              income/(expense) from
financial  instruments
designated
                at fair value .
305
71
17
–
(31
)
–
362
Gains less losses from
financial
              investments
(4
)
4
396
27
16
–
439
Dividend income
2
7
27
9
18
–
63
Net earned insurance
premiums
1,220
115
–
–
264
–
1,599
Other operating income
42
178
1,252
18
329
(216
)
1,603
Total operating
income
9,272
4,673
5,510
1,425
958
(216
)
21,622
Net insurance claims
1
(577
)
(62
)
–
–
(179
)
–
(818
)
Net operating
income
before
                loan
impairment
                charges and
other
                credit risk
provisions
8,695
4,611
5,510
1,425
779
(216
)
20,804
Loan impairment charges
and
              other credit risk
provisions
(1,711
)
(378
)
155
5
–
–
(1,929
)
Net operating
income
6,984
4,233
5,665
1,430
779
(216
)
18,875
Total operating expenses
(5,058
)
(2,301
)
(3,647
)
(891
)
(958
)
216
(12,639
)
Operating profit/(loss)
1,926
1,932
2,018
539
(179
)
–
6,236
Share of profit/(loss)
in
associates
              and joint
ventures
6
7
96
–
11
–
120
Profit/(loss)
before tax
1,932
1,939
2,114
539
(168
)
–
6,356
%
%
%
%
%
%
Share of HSBC's profit
before
              tax
9.2
9.2
10.1
2.6
(0.8
)
30.3
Cost efficiency ratio
58.2
49.9
66.2
62.5
122.9
60.8
US$m
US$m
US$m
US$m
US$m
US$m
Selected balance
    sheet data
2
Loans and advances to
customers
              (net)
120,302
66,965
107,899
17,368
3
312,537
Total assets
143,095
80,864
367,893
40,971
3,880
636,703
Customer accounts
122,118
61,789
109,086
41,206
1
334,200
Loans and advances to
banks
              (net)
3
34,218
Trading assets, financial
instruments
              designated at
fair
              value, and financial
investments
3
168,062
Deposits by banks
3
45,075
1
Net insurance claims incurred and movement in policyholders' liabilities.
2
Third party only.
3
These assets and liabilities were significant to Corporate, Investment Banking and Markets.
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Year
      ended
      31 December
    2004
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
Europe
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net interest income
4,644
2,305
1,403
421
325
–
9,098
Net fee income
2,110
1,593
1,261
658
358
–
5,980
Trading income
–
116
735
104
42
–
997
Net investment income/
(expense)
            on assets
backing
            policyholders'
liabilities
445
127
–
–
(1
)
–
571
Gains less losses from
financial
            investments
–
1
122
33
(2
)
–
154
Dividend income/(expense)
–
36
526
5
(9
)
–
558
Net
              earned insurance
premiums
1,254
409
12
–
200
–
1,875
Other operating income
26
285
770
19
255
(180
)
1,175
Total operating income
8,479
4,872
4,829
1,240
1,168
(180
)
20,408
Net insurance claims
1
(1,026
)
(487
)
–
–
(115
)
–
(1,628
)
Net operating income
before
            loan impairment
charges
            and other credit
risk
            provisions
7,453
4,385
4,829
1,240
1,053
(180
)
18,780
Loan impairment charges
and
            other credit risk
provisions
(939
)
(306
)
207
4
1
–
(1,033
)
Net operating income
6,514
4,079
5,036
1,244
1,054
(180
)
17,747
Total operating
    expenses
(4,898
)
(2,422
)
(3,380
)
(806
)
(702
)
180
(12,028
)
Operating profit
1,616
1,657
1,656
438
352
–
5,719
Share of profit in associates
and
            joint ventures
5
6
12
–
14
–
37
Profit before tax
1,621
1,663
1,668
438
366
–
5,756
%
%
%
%
%
%
Share of HSBC's profit
before
            tax
8.6
8.8
8.8
2.3
1.9
30.4
Cost efficiency ratio
65.7
55.2
70.0
65.0
66.7
64.0
US$m
US$m
US$m
US$m
US$m
US$m
Selected balance sheet
data
2
Loans and advances to
customers
              (net)
118,796
67,458
75,628
15,676
2
277,560
Total assets
143,515
83,289
273,906
40,140
4,707
545,557
Customer accounts
121,599
57,798
78,031
35,140
–
292,568
The following assets and
liabilities
            were significant
to
            Corporate, Investment
Banking
            and Markets:
Loans and advances to
banks
            (net)
47,802
Trading assets, financial
instruments
            designated at
fair
            value, and financial
investments
116,492
Deposits by banks
53,646
1
Net insurance claims incurred and movement in policyholders' liabilities.
2
Third party only.
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H S B C   H
  O L D I N G S   P L C
Financial
  Review
(continued)
Hong
      Kong
Profit
      before tax by customer group
Year
      ended 31 December
2005
2004
US$m
US$m
Personal
      Financial Services
2,628
2,063
Commercial
      Banking
955
904
Corporate,
      Investment Banking and Markets
922
1,603
Private
      Banking
190
131
Other
(178
)
129
4,517
4,830
Profit before tax
Year
      ended 31 December
2005
2004
US$m
US$m
Net
      interest income
4,064
3,638
Net
      fee income
1,674
1,703
Trading
      income
546
659
Net
      expense from financial instruments designated at fair value
(6
)
–
Net
      investment income on assets backing policyholders' liabilities
–
314
Gains
      less losses from financial investments
108
175
Dividend
      income
41
27
Net
      earned insurance premiums
2,334
2,247
Other
      operating income
805
536
Total
      operating income
9,566
9,299
Net
      insurance claims incurred and movement in policyholders' liabilities
(2,059
)
(2,154
)
Net
      operating income before loan impairment charges and other credit risk provisions
7,507
7,145
Loan
      impairment charges and other credit risk provisions
(146
)
220
Net
      operating income
7,361
7,365
Total
      operating expenses
(2,867
)
(2,558
)
Operating
      profit
4,494
4,807
Share
      of profit in associates and joint ventures
23
23
Profit
      before tax
4,517
4,830
%
%
Share
      of HSBC's profit before tax
21.5
25.5
Cost
      efficiency ratio
38.2
35.8
Year-end
      staff numbers (full-time equivalent)
25,931
25,552
US$m
US$m
Selected
      balance sheet data
1
Loans
      and advances to customers (net)
83,208
78,824
Loans
      and advances to banks (net)
42,751
45,710
Trading
      assets, financial instruments designated at fair value, and financial investments
81,631
75,721
Total
      assets
2
222,822
213,458
Deposits
      by banks
4,708
4,325
Customer
      accounts
173,726
178,033
1
Third
      party only.
2
Excluding
      Hong Kong Government certificates of indebtedness.
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Hong
  Kong's
economy grew by 7.3 per cent in 2005, down from the growth of 8.6 per cent achieved
  in 2004. Robust domestic demand provided strong support, particularly in the
  second half of the year, and external trade maintained its rapid rate of growth.
  Despite a substantial rise of more than 3 per cent in local interest rates in
  2005, domestic demand continued to expand, reflecting a sustained improvement
  in business and consumer confidence. Increased consumer spending, spurred by
  greater job security as unemployment fell, and improving household incomes,
  became a key driver of growth in the latter part of the year. The rise in domestic
  spending more than offset the slower growth in tourists' spending which
  occurred in 2005, particularly among mainland visitors, and consumer optimism
  remained unaffected by a cooling in the property market induced by the higher
  interest rate environment. Hong Kong's strong export performance also propelled
  growth, benefiting from sustained external demand and foreign importers building
  up inventories as trade talks continued on textile quotas between mainland China
  and its major trading partners. Domestic exports also picked up, reflecting
  increased local production. In 2005, inflation rose to 1.1 per cent, mainly
  driven by increased demand for property rentals.
HSBC's operations in Hong Kong reported a pre-tax profit of US$4,517 million, compared with US$4,830 million in 2004. IFRSs changes to the
treatment of preference share dividends led to a US$387 million decrease in pre-tax profits. Excluding this, profits increased by 2 per cent. Subdued profit growth was largely attributable to a turnaround in loan impairment charges, as 2004
benefited from non-recurring releases from general provisions, and a fall in balance sheet management revenues. Pre-tax profits in Hong Kong represented around 22 per cent of HSBC's total profit at this level. In Corporate, Investment Banking
and Markets, balance sheet management revenues were negatively affected by the influence of short-term interest rate rises and a flattening yield curve. Expense growth in Corporate, Investment Banking and Markets reflected the first full-year effect
of the investment made to support business expansion. Pre-tax profits of Personal Financial Services and Commercial Banking grew by 27 per cent and 6 per cent respectively, benefiting from a sharp rise in deposit spreads as short-term interest rates
increased in a benign credit environment.
The commentary that follows is on an underlying basis.
Personal Financial Services
reported a pre-tax profit of US$2,628
million, 27 per cent higher than
in 2004. This was largely due to widening deposit spreads, deposit growth and improved credit quality. During the year, HSBC placed considerable emphasis on maintaining its leadership
position and meeting customer needs in both the credit cards and insurance businesses. Market share of both spend and balances grew in respect of credit cards along with strong insurance revenue growth.
Net interest income grew by 30 per cent to US$2,618 million. During 2005, interest rates in Hong Kong rose significantly, reflecting rising US dollar
interest rates. In addition, adjustments to the Hong Kong: US dollar linked exchange rate system reduced the likelihood of an upward realignment of the Hong Kong dollar, prompting a reversal of much of the inward flows from investors that had
depressed local market rates in 2004. Consequently, deposit spreads widened to more normal levels after the exceptionally low spreads experienced in 2004. Interest rate rises also helped stimulate growth in average deposit balances as investor
sentiment moved away from long-term equity-related investments into shorter-term liquid deposits. Despite the competitive deposit market, average balances grew by US$2.9 billion, or 3 per cent.
The mortgage market remained highly competitive during 2005. During the first half of the year, HSBC did not aggressively compete on price but maintained a
selective approach to mortgage approvals, mainly by offering competitive rates to the existing customer base. Yields gradually improved during the year, as HSBC repriced upwards following a series of interest rates increases. Spreads declined
compared with 2004, as improvements in yields were more than offset by higher funding costs following rising interest rates. Average mortgage balances, excluding the reduction in balances under the suspended Hong Kong Government Home Ownership
Scheme ('GHOS') grew by 1 per cent, despite the highly competitive environment.
Average credit card balances grew by 10 per cent, and HSBC's market share of card balances also increased by 550 basis points led by targeted
promotional campaigns and rewards programmes. These volume benefits were more than offset by lower spreads, mainly due to higher funding costs as interest rates rose.
Net fees fell by 6 per cent to US$740 million, driven mainly by lower sales of unit trusts and capital guaranteed funds, partly offset by higher sales of
structured deposit products and open-ended funds. A 34 per cent fall in unit trust fee income was driven by a change in market sentiment during 2005.
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Financial
  Review
(continued)
The combined effect of higher interest rates and a flattening yield curve reduced customer demand for capital guaranteed funds and longer-term equity related investment products.
Investors preferred shorter-term investment products which in turn generated lower fees. Revenues from open-ended fund sales reflected this, increasing by 32 per cent to US$95 million with the introduction of 173 new funds increasing the choice
of funds available to investors. This was an important strategic initiative to position HSBC as the leading investment service provider in Hong Kong, where customers can now choose from over 300 funds.
Revenues from structured deposit products grew, with strong sales volumes aided by new products launched. The success of the Exclusive Placement Service,
launched in 2004 for HSBC
Premier
customers, continued with year-on-year revenue growth of 178
per cent. The service offers an extensive product range of yield enhancement options, re-priced daily and linked to foreign exchange or interest rates. IPO certificate of deposit offerings doubled. These were partly offset by lower revenues from
'Deposit plus' and 'Equity linked note' products.
Fee income from credit cards grew by 9 per cent, reflecting a 21 per cent increase in spending along with a 15 per cent rise in the number of cards in
circulation to four million. In stockbroking and custody services, new services were launched aimed at facilitating securities management by customers. Competitive pricing and a high quality of service on the internet led to a 15 per cent growth in
customers holding securities with HSBC.
HSBC continued to place significant emphasis on the growth and development of its insurance business, and increased the range of products offered. Insurance
revenues grew by 20 per cent, aided by new products launched which included the 'Five year excel' and the 'Three year express wealth' joint life insurance and wealth products. HSBC was Hong Kong's leading online insurance
provider, offering 12 insurance products. This, coupled with competitive pricing, led to a 91 per cent growth in online insurance revenues. Medical insurance products were enhanced and heavily marketed in response to the growing public demand for
private medical protection to complement new medical reforms being introduced.
Improvements in credit conditions, which benefited from economic growth, higher property prices and lower bankruptices, underpinned a net release of loan
impairment charges and other credit risk provisions of US$11 million in 2005, compared
with a net charge of US$56 million in 2004. This was mainly driven by continued improvement in credit quality within the credit card portfolio, and a collective provision release of
US$23 million in respect of prior year impairment allowances on the restructured lending portfolio. The strong housing market also enabled individually assessed allowance releases of US$24 million in the mortgage portfolio. There was also a
release of US$11 million in respect of collective loan impairment allowances, benefiting from the improved economic conditions highlighted above.
Operating expenses fell by 4 per cent to US$1,305 million. This was largely due to a change in the method by which centrally incurred costs are allocated
to the customer groups. IT development costs rose in support of future growth initiatives, and higher marketing and advertising expenditures were incurred on behalf of organic growth. Staff costs were marginally lower this year. Branch teams were
restructured to dedicate more staff to sales and customer service, and significant improvements were made to the reward structure to ensure retention of high calibre individuals. Overall, headcount in the branch network fell by 4 per cent,
reflecting operating efficiency improvements and higher utilisation of the Group Service Centres.
Pre-tax profits in
Commercial Banking
increased by 6 per cent to US$955 million. Increased deposit spreads and a rise in lending and deposit balances led to higher net interest income, though this was partly offset by larger loan
impairment charges and the non-recurrence of loan allowance releases.
Net
interest income increased by 60 per cent as a result of increased deposit spreads
and growth in both assets and liabilities. The appointment of a number  of experienced
relationship managers to service key accounts, together with the establishment
of core business banking centres, contributed to growth in both deposits and
lending. Interest rate rises led to a 67 basis point increase in deposit
spreads and, together with active management of the deposit base, contributed
to increased customer demand for savings products which resulted in a 6 per cent
increase in deposit balances to US$28.7 billion. The introduction of a pre-approved
 lending programme for SMEs, together with strong demand for credit in the property,
manufacturing, trading and retail sectors, contributed to a 29 per cent increase
in lending balances. However, increased competition reduced lending spreads by
43
basis points. Current account customers rose by 2 per cent to 329,000 and, together
with higher spreads, contributed to an 81 per cent increase in current account
net interest income.
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The 'BusinessVantage' all-in-one account continued to perform strongly, with customers increasing by 23 per cent, which led to income more than doubling in 2005.
Net fee income increased by 10 per cent to US$402 million as a result of efforts to encourage cross-sales, which led to an increase in average products
per customer. Investment in HSBC's insurance business, including the establishment of a new Commercial Banking insurance division in October 2005, delivered a 10 per cent increase in insurance income. Enhanced product offerings and focused
sales efforts in the areas of currency and interest rate management products more than doubled income. Growth in the number of merchant customers following targeted marketing campaigns, together with higher consumer spending, led to a 22 per cent
increase in card income. However, these increases were partly offset by a reduced contribution from investment products, even though sales increased by 20 per cent, reflecting changes in the product mix, as demand for capital protected funds
decreased in the rising interest rate environment.
Loan impairment charges and other credit risk provisions of US$168 million contrasted with net recoveries in 2004, and included a significant charge
against a client in the manufacturing sector. Releases and recoveries in 2005 were lower, although impaired loans as a proportion of lending balances decreased.
Operating expenses were 3 per cent higher, principally as a result of staff recruitment to support business development and expansion. This was particularly
true with respect to business with mainland China, where additional resources were focused on increasing cross-sales and insurance income. Expenditure on new marketing campaigns promoted HSBC's lower-cost delivery channels. These campaigns,
together with additional investment to increase customer access to ATMs and cheque deposit machines, grew the proportion of transactions using low cost channels to 35 per cent from 25 per cent in 2004. This released staff to concentrate on
increasing sales and offering enhanced customer service.
Corporate, Investment Banking and Markets
reported a pre-tax profit of
US$922 million, 43 per cent lower than in 2004, primarily driven by a decline in net interest income in Global Markets and lower recoveries and releases of loan impairment allowances. In addition, operating expenses increased in line with
initiatives taken to extend the product range in Global Markets and to strengthen
the Global Investment Banking advisory platform for Asia in Hong Kong.
A 19 per cent decline in total operating income was driven by a 74 per cent fall in balance sheet management and money market revenues due to rising
short-term US and Hong Kong interest rates and flattening yield curves.
In Corporate and Institutional Banking, deposit spreads increased in line with higher local interest rates, although this was offset by lending spreads which
fell amidst fierce local competition. In Global Transaction Banking revenues increased, benefiting from the improvement in deposit spreads, together with higher deposit balances as business volumes grew from the upgraded cash management service
delivered through HSBCnet.
Net fees fell by 19 per cent, driven primarily by a reduction in structured finance revenues. However, a number of significant equity related transactions
were concluded. Fee income from Group Investment Businesses was boosted by sales of investment products and a US$3.7 billion growth in funds under management.
Income from trading activities rose as new structured product capabilities were added in respect of credit, equities, interest rate and foreign exchange
trading. Higher foreign exchange derivatives revenues reflected an increased focus on sales and execution. These gains were partly offset by a decline in sales of structured product solutions to the personal and commercial businesses, as retail
investors switched to shorter deposit products in the higher interest rate environment. Losses were also incurred on the trading of Asian high-yield bonds, where revenues fell following the downgrading of the automobile sector in the first half of
2005.
The overall credit environment remained favourable and there was a small net release of loan impairment charges, although this was below levels seen in 2004
when HSBC benefited from corporate restructuring and refinancing in the property, industrial and telecommunications sectors.
A 20 per cent rise in operating expenses was due to the first full-year impact of the investment made in Hong Kong's Corporate, Investment Banking and
Markets businesses. Employee compensation and benefits rose by 24 per cent, in part driven by an increase in senior relationship managers recruited to extend coverage along industry sector lines. In total, over 90 people were recruited to support
the expansion. Technology and infrastructure costs rose as support and control functions added new
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Financial
  Review
(continued)
resources and
  improved services to facilitate business expansion.
Private Banking
contributed a pre-tax profit of US$190 million, an
increase of 45 per cent compared with 2004. The benefits of strong growth in client assets, and consequently higher brokerage and trading income, were partly offset by the adverse effect of a flattening yield curve on income from the investment of
surplus liquidity.
Net
operating income was 29 per cent higher than in 2004. A 25 per cent increase
in fee income reflected higher client assets, as well as the benefits of a  strategy
to increase the level of higher fee generating discretionary managed assets,
which increased by 50 per cent during the year. Trading income increased by 39
per cent, boosted by higher volumes which reflected growth in the customer base,
and
a generally buoyant market. Revenue from bond trading increased by 13 per cent,
and from foreign exchange and sales of structured products by 6 and 21 per cent
respectively. Gains from financial investments of US$16 million were mainly
from the
sale of debt instruments.
Overall, client assets increased by 17 per cent to US$47.3 billion. Net new money inflows of US$5.8 billion were notably strong, with recruitment of
front office staff, the success of last year's launch of the 'HSBC Private Bank' brand, and cross-referrals with the wider Group all contributing to the growth. Marketing, successful product placement and the enhancement of the
related front office teams also aided in the increase of discretionary managed assets, with a near doubling of assets invested in the Strategic Investment Solutions product.
Operating expenses increased by 14 per cent. Costs from front office recruitment, and higher expenditure on marketing in support of the growing customer
base, were partly offset by the non-recurrence of rebranding costs in 2004.
In
Other
, gains on the sale of investments and properties decreased by US$136 million in 2005, following significant sales in 2004. These were partly offset by increased gains on the revaluation of properties of US$70 million. Net
interest income decreased as, from 1 January 2005 under IFRSs, dividends paid on certain intra-group preference shares were reclassified from non-equity minority interests to net interest income; this was partly offset by higher earnings on US
dollar denominated assets following interest rate rises in the US.
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Profit/(loss) before tax by customer group
Year
      ended 31 December 2005
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking
      &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
Hong
      Kong
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income/(expense)
2,618
1,096
607
75
(529
)
197
4,064
Net
      fee income
740
402
431
93
8
–
1,674
Trading
      income/(expense)
excluding
      net interest
income
67
48
601
140
(83
)
–
773
Net
      interest income/(expense)
on
      trading activities
–
–
(40
)
–
10
(197
)
(227
)
Net
      trading income/(expense)
67
48
561
140
(73
)
(197
)
546
Net
      income/(expense) from
financial
      instruments
designated
      at fair value
41
(84
)
14
–
23
–
(6
)
Gains
      less losses from
financial
      investments
–
–
–
16
92
–
108
Dividend
      income
1
2
18
–
20
–
41
Net
      earned insurance
premiums
2,238
77
19
–
–
–
2,334
Other
      operating income
230
35
83
13
682
(238
)
805
Total
      operating income
5,935
1,576
1,733
337
223
(238
)
9,566
Net
      insurance claims
1
(2,016
)
(34
)
(9
)
–
–
–
(2,059
)
Net
      operating income before
loan
      impairment charges
and
      other credit risk
provisions
3,919
1,542
1,724
337
223
(238
)
7,507
Loan
      impairment
charges/(recoveries)
      and other
credit
      risk provisions
11
(168
)
7
3
1
–
(146
)
Net
      operating income
3,930
1,374
1,731
340
224
(238
)
7,361
Total
      operating expenses
(1,305
)
(419
)
(809
)
(150
)
(422
)
238
(2,867
)
Operating
      profit/(loss)
2,625
955
922
190
(198
)
–
4,494
Share
      of profit in associates
and
      joint ventures
3
–
–
–
20
–
23
Profit/(loss)
      before tax
2,628
955
922
190
(178
)
–
4,517
%
%
%
%
%
%
Share
      of HSBC's profit
before
      tax
12.5
4.6
4.4
0.9
(0.9
)
21.5
Cost
      efficiency ratio
33.3
27.2
46.9
44.5
189.0
38.2
US$m
US$m
US$m
US$m
US$m
US$m
Selected
      balance sheet data
2
Loans
      and advances to
customers
      (net)
34,318
20,292
23,712
3,107
1,779
83,208
Total
      assets
3
40,244
25,625
133,005
7,621
16,327
222,822
Customer
      accounts
105,801
37,417
21,070
9,216
222
173,726
Loans
      and advances to
banks
      (net)
4
39,164
Trading assets, financial instruments designated at fair  value, and financial
investments
4
63,813
Deposits
      by banks
4
4,373
1
Net
           insurance claims incurred and movement in policyholders' liabilities.
2
Third
      party only.
3
Excluding
      Hong Kong Government certificates of indebtedness.
4
These
      assets and liabilities were significant to Corporate, Investment Banking
      and Markets.
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Financial
  Review
(continued)
Profit/(loss) before
  tax by customer group
(continued)
Year
      ended 31 December 2004
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking
      &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
Hong
      Kong
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income/(expense)
2,015
684
998
85
(144
)
–
3,638
Net
      fee income/(expense)
786
365
529
75
(52
)
–
1,703
Trading
      income/(expense)
47
39
476
101
(4
)
–
659
Net
      investment income on
assets
      backing policy-
holders'
      liabilities
118
196
–
–
–
–
314
Gains
      less losses from
financial
      investments
(2
)
–
2
–
175
–
175
Dividend
      income
2
1
2
–
22
–
27
Net
      earned insurance
premiums
1,620
609
19
–
(1
)
–
2,247
Other
      operating income
294
52
101
(2
)
561
(470
)
536
Total
      operating income
4,880
1,946
2,127
259
557
(470
)
9,299
Net
      insurance claims
1
(1,400
)
(742
)
(12
)
–
–
–
(2,154
)
Net
      operating income before
loan
      impairment charges and
other
      credit risk provisions
3,480
1,204
2,115
259
557
(470
)
7,145
Loan
      impairment charges and
other
      credit risk provisions
(56
)
110
164
4
(2
)
–
220
Net
      operating income
3,424
1,314
2,279
263
555
(470
)
7,365
Total
      operating expenses
(1,364
)
(406
)
(674
)
(132
)
(452
)
470
(2,558
)
Operating
      profit
2,060
908
1,605
131
103
–
4,807
Share
      of profit/(loss) in
associates
      and joint ventures
3
(4
)
(2
)
–
26
–
23
Profit
      before tax
2,063
904
1,603
131
129
–
4,830
%
%
%
%
%
%
Share
      of HSBC's profit
before
      tax
10.9
4.7
8.5
0.7
0.7
25.5
Cost
      efficiency ratio
39.2
33.7
31.9
51.0
81.1
35.8
US$m
US$m
US$m
US$m
US$m
US$m
Selected
      balance sheet data
2
Loans
      and advances to
customers
      (net)
33,646
17,883
22,440
2,954
1,901
78,824
Total
      assets
3
37,742
23,272
129,986
7,490
14,968
213,458
Customer
      accounts
114,302
35,226
18,903
9,264
338
178,033
The
        following assets and liabilities were significant to Corporate, Investment
        Banking and Markets:
Loans
      and advances to
banks
      (net)
42,515
Trading assets, financial instruments
      designated at fair value, and financial
investments
59,703
Deposits
      by banks
4,205
1
Net
           insurance claims incurred and movement in policyholders' liabilities.
2
Third
      party only.
3
Excluding
      Hong Kong Government certificates of indebtedness.
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Rest
  of Asia-Pacific (including the Middle East)
Profit/(loss) before
  tax by customer group and by country
Year
      ended 31 December
2005
2004
US$m
US$m
Personal
      Financial Services
377
336
Commercial
      Banking
818
483
Corporate,
      Investment Banking and Markets
1,207
942
Private
      Banking
78
60
Other
94
26
2,574
1,847
Year
      ended 31 December
2005
2004
US$m
US$m
Australia
      and New Zealand
111
84
Brunei
35
33
India
212
178
Indonesia
113
76
Japan
(1
)
50
Mainland
      China
334
32
Malaysia
236
214
Middle
      East (excluding Saudi Arabia)
481
298
Philippines
41
38
Saudi
      Arabia
236
122
Singapore
289
272
South
      Korea
94
89
Taiwan
68
107
Thailand
61
60
Other
264
194
2,574
1,847
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H S B C   H
  O L D I N G S   P L C
Financial
  Review
(continued)
Profit before tax
Year
      ended 31 December
2005
2004
Rest
      of Asia-Pacific (including the Middle East)
US$m
US$m
Net
      interest income
2,412
2,060
Net
      fee income
1,340
1,041
Trading
      income
860
494
Net
      income from financial instruments designated at fair value
58
–
Net
      investment income on assets backing policyholders' liabilities
–
32
Gains
      less losses from financial investments
18
17
Dividend
      income
5
3
Net
      earned insurance premiums
155
97
Other
      operating income
335
146
Total
      operating income
5,183
3,890
Net
      insurance claims incurred and movement in policyholders' liabilities
(166
)
(82
)
Net
      operating income before loan impairment charges and other credit risk provisions
5,017
3,808
Loan
      impairment charges and other credit risk provisions
(134
)
(89
)
Net
      operating income
4,883
3,719
Total
      operating expenses
(2,762
)
(2,087
)
Operating
      profit
2,121
1,632
Share
      of profit in associates and joint ventures
453
215
Profit
      before tax
2,574
1,847
%
%
Share
      of HSBC's profit before tax
12.3
9.8
Cost
      efficiency ratio
55.1
54.8
Year-end
      staff numbers (full-time equivalent)
55,577
41,031
US$m
US$m
Selected
      balance sheet data
1
Loans
      and advances to customers (net)
70,016
60,663
Loans
      and advances to banks (net)
19,559
14,887
Trading
      assets, financial instruments designated at fair value, and financial investments
30,348
31,065
Total
      assets
142,014
120,530
Deposits
      by banks
7,439
8,046
Customer
      accounts
89,118
78,613
1
Third
      party only.
Mainland
  China's
economy grew by 9.9 per cent in 2005. Despite ongoing monetary tightening, total
  urban fixed asset investment growth showed no sign of slowing, though investment
  in steel and real estate sectors moderated. Consumer spending also remained
  strong, with retail sales growing by 13 per cent in 2005. Producer price inflation
  slowed, but still remained above 3 per cent thanks to strong investment demand.
  In July 2005, the People's Bank of China announced that, with immediate
  effect, the arrangement by which the renminbi ('RMB') was pegged to
  the US dollar would be replaced with a managed float. Initially, the exchange
  rate was set at US$1 to RMB8.11, equivalent to an appreciation of approximately
  2 per cent. This had little impact on export growth, which remained very strong,
  boosting China's annual trade surplus from US$32 billion in
2004 to US$102 billion in 2005. Growth in food prices slowed as China's grain production increased 3 per cent in 2005. This lowered consumer price inflation to 1.8 per cent from 3.9
per cent at the end of 2004.
Japan's
economy in 2005 achieved its strongest growth in five years,
and the long process of structural readjustment following the collapse in asset prices was largely completed. In particular, the excess corporate capacity, employment and debt of the past decade was eliminated, and bank impaired loans returned to
historically normal levels. After a downturn which began in mid-2004, exports began to recover vigorously in March 2005, led by strong demand from mainland China. The decline in corporate borrowing ceased, and the end of net corporate debt reduction
freed up cash which drove
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stronger growth in private capital investment. The tightening of the labour market boosted employment and led to a sustained rise in real wages for the first time in five years, providing
strong support for consumer spending. The rise in the core consumer price index in November 2005 set the stage for the end of the Bank of Japan's quantitative easing policy.
Elsewhere in the region, most economies performed impressively in 2005, in particular India's. The main drivers of growth were exports, demand for
technology, and domestic consumption. Investment demand, by contrast, remained weak. Strong domestic growth and continued firmness in energy prices resulted in an increase in inflationary pressures, especially in Indonesia and Thailand, where fuel
subsidies were lowered or removed. Central banks in both these countries increased rates substantially. Elsewhere, particularly in South Korea and Taiwan, energy prices did not significantly affect headline inflation, and the benign inflationary
environment was maintained with less need for monetary tightening. Most Asian currencies ended the year strongly against the US dollar.
2005 was a good year economically for the
Middle East
, where growth was boosted by high oil prices and additional capacity in downstream oil and gas, real estate, transportation and tourism. Long-term growth was reinforced through economic
liberalisation. The result was to encourage private sector investment in both established and new sectors of the region's economy. Regional interest rates mirrored US dollar rate increases during the year without any noticeable effect on credit
growth, though inflationary pressures arose from the US dollar's weakness and general economic expansion. GDP growth is estimated by the International Monetary Fund to have been over 6 per cent in Saudi Arabia in 2005. Economies in the region
which are not as dependent on oil also performed well, with the United Arab Emirates, for example, registering strong growth in non-oil sectors such as financial services and tourism.
HSBC's operations in the Rest of Asia-Pacific reported a pre-tax profit of US$2,574 million, compared with US$1,847 million in 2004,
representing an increase of 39 per cent. On an underlying basis, pre-tax profits grew by 29 per cent and represented around 12 per cent of HSBC's equivalent total profit. Strong growth across the majority of countries in the region resulted in
higher revenues across all customer groups.
The commentary that follows is on an underlying basis.
Personal Financial Services
reported a pre-tax profit of US$377 million,
an increase of 6 per cent compared with 2004, reflecting higher net interest income led by strong asset and deposit growth, increased fee income and higher income from investments in the Middle East and mainland China. Costs in support of business
expansion rose and were broadly in line with revenue growth. Higher loan impairment charges reflected growth in credit card lending and the non-recurrence in 2005 of loan impairment provision releases in 2004.
Net interest income grew by 25 per cent to US$1,208 million, reflecting strong growth across the majority of countries in the region.
D
eposit balances generally grew strongly during 2005. This was due in part to the range of new products launched during the year,
including dual currency, floating rate and higher-yielding time deposits. The number of
Premier
account holders rose significantly, with a 40 per cent growth across the region generating US$3.5 billion of additional balances. In mainland China, organic expansion continued, with the opening of ten new branches and sub-branches. The deposit
base grew by 80 per cent, as considerable emphasis was placed on the provision of wealth management services through the HSBC
Premier
account service. Deposit spreads also widened as interest rates rose, contributing to higher net interest income in mainland China, Singapore and India.
In the Middle East, a rise of 37 per cent in net interest income was driven by a combination of widening deposit spreads and strong loan growth, partly
offset by lower asset spreads as funding costs increased following interest rate rises.
Average mortgage balances increased by 27 per cent to US$16.7 billion. This growth reflected marketing campaigns in India, Malaysia and Singapore
alongside new products introduced in Australia and Korea. Higher sales volumes were also generated by direct sales forces across the region, notably in India, where mortgage balances grew by 43 per cent. The benefits of higher mortgage balances were
partly offset by lower spreads as pricing stayed highly competitive.
The credit card business continued to expand in a number of countries. Credit card spending increased by 33 per cent, contributing to a 42 per cent growth in
average card balances. Other notable developments included promotional campaigns, new product launches and a series of customer acquisition strategies including the exclusive rewards programme, 'Home and Away'. At the end of the year, the
number of cards in circulation stood at
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6.3 million, representing an increase of 34 per cent over 2004. In India, the number of cards in circulation exceeded one million for the first time. Higher card balances led to higher
net interest income in Indonesia, India, Taiwan, Malaysia and the Philippines.
Net fee income grew by 46 per cent to US$419 million, largely attributable to strong sales of investment and insurance products, and increased account
service fees. Credit card fee incomes rose, driven by the strong growth in cardholder spending. Commissions from sales of unit trusts and funds under management were particularly strong in Singapore, India and Taiwan. Sales of investment products,
comprising unit trusts, bonds and structured notes, grew by 43 per cent to US$6.5 billion, generating a 56 per cent increase in fee income. The launch of over 217 tranches of structured notes and deposit products in 11 countries across the
region achieved total sales of US$952 million. Total funds under management rose by 33 per cent or US$7.2 billion, led by increased marketing activity and the considerable focus placed on wealth management services during the year. HSBC Bank
Malaysia maintained its position as the leading international institutional unit trust agent in the country. Brokerage and custody fees grew, particularly in Australia, where a 13 per cent rise reflected increased stock market activity.
HSBC continued to emphasise the expansion of its insurance business across the region. The number of policies in force increased by 27 per cent and revenues
grew by 16 per cent.
Loan impairment charges and other credit risk provisions doubled compared with 2004. This was due to the non-recurrence of a release of a general provision
in Malaysia in 2004, and a sharp rise in credit card provisions in Taiwan, reflecting deteriorating credit conditions. Growth in personal unsecured lending and credit cards across the region contributed further to the increased charge.
Operating expenses increased by 29 per cent to US$1,245 million in support of business growth. HSBC spent considerable amounts in the region enhancing
its existing infrastructure in order to benefit fully from the opportunities presented by the Asian growth economies. Staff costs of US$469 million rose by 23 per cent, as employee numbers increased to support business growth and to increase
sales and wealth management activities. Performance-related remuneration costs were also higher as a result of the strong growth in profitability.
Marketing costs rose as major campaigns were run to support product promotions in mortgages,
credit cards, insurance and investment products. Continued emphasis was placed on brand awareness in order to generate additional business and reinforce HSBC's position as the
world's local bank across the region, and this further increased costs. Various growth initiatives required investment in technology, and the development of new distribution channels resulted in higher IT costs. Other expenses, including
professional fees and communications costs, rose in support of business expansion.
Increased contributions from HSBC's investments in Bank of Communications and Industrial Bank in mainland China, together with record earnings from The
Saudi British Bank, contributed to strong growth in profit from associates.
Commercial Banking
reported a pre-tax profit of US$818 million, 45 per
cent higher than that delivered in 2004. The increase was mainly due to higher net interest income as growth in customer numbers and strong credit demand to fund infrastructure investment drove balance sheet growth. Higher contributions from Bank of
Communications and Industrial Bank in China, as well as a strong performance in The Saudi British Bank, produced higher income from associates. Lending balances increased by 16 per cent, exceeded by a 24 per cent rise in deposits.
Net interest income increased by 33 per cent to US$631 million, reflecting growth in the Middle East, Singapore, mainland China, Indonesia and Taiwan. In
the Middle East, strong regional economies and significant government backed infrastructure and property projects, principally in the United Arab Emirates, contributed to a 37 per cent growth in lending balances and a 42 per cent increase in
customer account balances. Higher trade flows generated a 25 per cent increase in net interest income from trade services, while higher interest rates raised liability spreads by 118 basis points. A new Amanah term investment product was launched in
May 2005, attracting US$120 million of deposits, principally from new customers seeking Shariah-compliant investment opportunities.
In mainland China, strong economic growth, expansion of the branch network and the recruitment of additional sales staff resulted in a 39 per cent increase
in lending balances. Deposit balances also benefited from economic growth, increasing by 38 per cent, while deposit spreads widened by 76 basis points following increases in US interest rates.
In Singapore, interest rate rises prompted increased demand for savings products and
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consequently deposit balances grew by 13 per cent, while deposit spreads increased by 13 basis points. Lending balances rose by 27 per cent, following the selective recruitment of more
experienced relationship managers and a reorganisation of customers into key industrial sectors to provide greater focus on identifying service opportunities. Asset spreads decreased by 42 basis points as a result of competitive pressures and market
liquidity.
In Taiwan, a loyalty campaign designed to increase deposits, together with higher current account income and an increase in deposit spreads, contributed to
an 80 per cent increase in net interest income. In Mauritius, net interest income doubled as a result of liability balance growth. In India, increased trade contributed to higher trade services net interest income and strong economic growth led to
higher demand for credit. This resulted in lending balances increasing by 72 per cent, while customer acquisition increased average current account balances by 37 per cent. Liability spreads widened by 73 basis points following interest rate rises.
In Indonesia, increased sales efforts and a more focused approach to customer relationship management contributed to an 84 per cent growth in asset balances and a 66 per cent increase in net interest income.
Net fee income of US$307 million was 15 per cent higher than in 2004. In the Middle East, increased trade flows led to a 17 per cent increase in trade
services income, while current account income increased by 80 per cent, benefiting from the introduction of new cash management capabilities. Short-term IPO loan funding reflecting, in part, robust regional capital market, also contributed to a 40
per cent increase in net fee income. In mainland China, a 31 per cent increase in trade customers and a significant rise in imports led to higher trade services income, while a 49 per cent increase in current account customers and higher lending
fees also contributed to an 8 per cent increase in fee income. Increased lending, current account and trade activities raised net fee income by 30 per cent in Indonesia. A number of sites, including Vietnam and Thailand, also reported strong growth,
driven by the success of HSBC's strategy of focusing on business opportunities involving international trade.
There was a net release of loan impairment charges of US$67 million, following net charges in 2004. Credit quality in the Middle East improved. In
mainland China there was a significant reduction in loan impairment charges as higher collective impairment charges were more than offset by the release of allowances against a small number of accounts and the non-recurrence of a significant charge
against a single customer in 2004. In India,
strong economic growth led to improved credit quality, while in Malaysia, Singapore and Indonesia, credit quality improved significantly although releases of impairment charges were lower
than in 2004.
Operating expenses were 27 per cent higher than last year, broadly in line with revenue growth. In the Middle East, the recruitment of sales and support
staff substantially increased income, leading to higher incentive payments. In mainland China, revenue growth was driven by branch expansion, increased sales and support staff and higher marketing expenditure. In Malaysia, the direct sales teams
were expanded and business banking units were extended to all branches in support of the bank's growth strategy, resulting in a 16 per cent increase in costs.
In India, the recruitment of additional sales staff boosted customer facing staff by 85 per cent in 2005. In South Korea, staff recruitment and heightened
marketing activity supported HSBC's four recently established commercial banking centres, contributing to an increase in costs. Higher costs throughout the rest of the region largely reflected increases in sales and support staff and
initiatives to support business expansion.
Increased income from associates reflected strong performance in The Saudi British Bank and gains on the sale of HSBC's stake in MISR International, an
Egyptian Bank. Income from the bank's strategic investments in China, Bank of Communications and Industrial Bank, which were acquired in 2004, also increased.
Corporate, Investment Banking and Markets
reported a pre-tax profit of
US$1,207 million, an increase of 22 per cent compared with 2004. HSBC's progress in this region was marked by positive revenue trends across most countries, with strong growth being reported in the Middle East, Malaysia, South Korea, India
and mainland China.
Operating
    income rose by 25 per cent to US$1,769 million. Higher Corporate and Institutional
    Banking revenues reflected a 53 per cent increase in lending balances in mainland
    China, a result of strong demand for corporate credit, primarily from the
    industrial and technology sector. Deposit balances increased by 36 per cent
    and, together with a 40 basis point rise in deposit spreads, this also contributed
    to the growth in revenues.
HSBC's operations in the Middle East reported a 63 per cent rise in customer advances, primarily due to strong demand for corporate credit, driven by
government spending on regional infrastructure
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projects.
Global Transaction Banking revenues increased, as payments and cash management benefited from an increase in regional mandates which added to average
balances, together with a widening of deposit spreads, notably in Singapore, India and Thailand.
In Global Markets, balance sheet management and money market revenues fell, particularly in Singapore and Japan, due to the effect of rising short-term
interest rates and a flattening of the yield curves.
Net fees increased by 17 per cent. In Global Transaction Banking, the expansion in business capabilities which took place in the latter part of 2004 drove an
increase in volumes, with marked improvements in Singapore, South Korea and India. Revenues from the custody business increased against the backdrop of rising local stock market indices as investment sentiment in the region improved. Additionally,
securities services in India generated higher business volumes, with assets under custody growing by US$9 billion to US$34 billion. In Singapore, fee income increased by 55 per cent, reflecting an increase in revenues from securities
services activities as HSBC leveraged its relationship strength and product capabilities to attract new business.
In the Middle East, corporate lending and trade finance activity generated higher customer volumes as regional economies strengthened from an increase in
foreign investment, tourism and higher real estate and oil prices. Global Investment Banking benefited from the resulting demand for cross-border business, with an increase in fees from advisory and project and export finance services.
Income from trading activities increased, in part due to higher revenues from foreign exchange and structured derivatives driven by enhanced distribution and
expanded product capabilities. In South Korea, volatility in the Korean won against the US dollar encouraged strong customer flows in foreign exchange. In Malaysia, a rise in customer demand, following the move to a managed float for the Malaysian
ringgit, improved trading volumes in foreign exchange. Global Markets in Taiwan generated higher revenues, due to improved sales of structured derivative products. Falling interest rates in the Philippines resulted in favourable price movements on
government bond portfolios. In the Middle East, HSBC's enhanced capability in structured transactions and greater focus on trading in the regional currencies drove volumes higher in a volatile market.
Gains from the disposal of the Group's asset management business in Australia added US$8 million to other operating income.
Net recoveries on loan impairment charges were marginally lower than in 2004
.
Operating expenses increased by 21 per cent to US$733 million, broadly in line with the growth in operating income and reflecting higher
performance-related incentives. 2005 bore the first full-year effect of the recruitment in 2004 of over 600 additional staff, of which more than half were in Global Transaction Banking. The upgrade of corporate and support teams across the region
within Corporate and Institutional Banking resulted in some 280 additional people. The cost base was further affected by investment in HSBCnet and other technology costs incurred to support business expansion.
Income from associates included increased contribution from HSBC's investments in Bank of Communications and Industrial Bank, which were acquired in
2004.
Private Banking
reported a pre-tax profit of US$78 million, an increase
of 32 per cent compared with 2004. Investment in the business over the past two years was reflected in strong growth in client assets and net new money inflows of US$2.3 billion, against a backdrop of intense competition in the region. Net
operating income increased by 17 per cent, predominantly due to higher trading income.
Net interest income fell by 29 per cent to US$30 million compared with 2004. Balance sheet growth was mainly in Singapore and Japan, where client
deposits increased by 44 and 64 per cent respectively. Lending to customers also grew strongly, with the loan book increasing by some 26 per cent. The net interest income benefits of these were more than offset by lower treasury margins earned in
the rising interest rate environment, and the reclassification under IFRSs from 1 January 2005 of net interest income on certain derivatives to 'net trading income'.
Trading income increased by 62 per cent. Strong growth in bond trading and sales of structured products, which increased by 28 and 20 per cent respectively,
was compounded by the reclassification from net interest income mentioned above. Fee income was broadly in line with 2004, with the benefit of growth in client assets largely offset by the non-recurrence of exceptionally high brokerage volumes
driven by the market recovery last year.
Client assets increased by 23 per cent to US$13.7 billion. Front office recruitment and marketing campaigns, and inflows from the
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operations launched in Dubai in 2005 and Malaysia in 2004, boosted asset growth in the region. Net new money of US$2.3 billion was 22 per cent higher than last year, with inflows
strongest in Singapore and Japan.
Operating expenses increased by only 6 per cent, leading to a 5 percentage point improvement in the cost efficiency ratio. Front office recruitment in most
countries contributed to a small increase in staff costs, and expenditure on marketing and administrative expenses rose to support business growth.
In
Other
, the Group's Service Centres continued to expand to support HSBC's productivity improvements, incurring US$129 million of incremental costs, offset by higher recharges to other customer groups. Higher interest rates
led to increased earnings on centrally held investments. In Thailand, the sale of a residential property led to a gain of US$11 million and in India, litigation provisions raised in 2004 were not repeated.
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Profit/(loss) before
  tax by customer group
Year
      ended 31 December 2005
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking
      &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
Rest
      of Asia-Pacific (including the Middle East)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income
1,208
631
614
30
54
(125
)
2,412
Net
      fee income
419
307
498
43
73
–
1,340
Trading
      income/(expense)
excluding
      net interest
income
37
70
579
74
(7
)
–
753
Net
      interest income/(expense)
on
      trading activities
1
(1
)
(21
)
–
3
125
107
Net
      trading income
38
69
558
74
(4
)
125
860
Net
      income from financial
instruments
      designated at
fair
      value
44
1
4
–
9
–
58
Gains
      less losses from
financial
      investments
–
4
12
2
–
18
Dividend
      income
–
–
1
–
4
–
5
Net
      earned insurance
premiums
134
21
–
–
–
–
155
Other
      operating income
37
9
82
4
287
(84
)
335
Total
      operating income
1,880
1,042
1,769
153
423
(84
)
5,183
Net
      insurance claims
1
(157
)
(9
)
–
–
–
–
(166
)
Net
      operating income before
loan
      impairment charges
and
      other credit risk
provisions
1,723
1,033
1,769
153
423
(84
)
5,017
Loan
      impairment charges and
other
      credit risk provisions
(236
)
67
35
2
(2
)
–
(134
)
Net
      operating income
1,487
1,100
1,804
155
421
(84
)
4,883
Total
      operating expenses
(1,245
)
(452
)
(733
)
(77
)
(339
)
84
(2,762
)
Operating
      profit
242
648
1,071
78
82
–
2,121
Share
      of profit in associates
and
      joint ventures
135
170
136
–
12
–
453
Profit
      before tax
377
818
1,207
78
94
–
2,574
%
%
%
%
%
%
Share
      of HSBC's profit
before
      tax
1.8
3.9
5.8
0.4
0.4
12.3
Cost
      efficiency ratio
72.3
43.8
41.4
50.3
80.1
55.1
US$m
US$m
US$m
US$m
US$m
US$m
Selected
      balance sheet data
2
Loans
      and advances to
customers
      (net)
27,433
18,694
21,431
2,347
111
70,016
Total
      assets
32,224
22,570
76,026
5,359
5,835
142,014
Customer
      accounts
31,250
18,612
32,102
7,092
62
89,118
The
        following assets and liabilities were significant to Corporate, Investment
        Banking and Markets:
Loans
      and advances to
banks
      (net)
15,352
Trading
        assets, financial instruments designated at fair value, and financial
        investments
26,113
Deposits
      by banks
7,041
1
Net
      insurance claims incurred and movement in policyholders' liabilities.
2
Third
      party only
.
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Year
      ended 31 December 2004
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking
      &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
Rest
      of Asia-Pacific (including the Middle East)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income
948
472
596
42
2
–
2,060
Net
      fee income
284
266
421
41
29
–
1,041
Trading
      income
43
59
344
46
2
–
494
Net
      investment income on
assets
      backing policyholders'
liabilities
32
–
–
–
–
–
32
Gains
      less losses from
financial
      investments
1
–
6
–
10
–
17
Dividend
      income
–
–
–
–
3
–
3
Net
      earned insurance
premiums
77
20
–
–
–
–
97
Other
      operating income
28
13
26
2
157
(80
)
146
Total
      operating income
1,413
830
1,393
131
203
(80
)
3,890
Net
      insurance claims
1
(72
)
(10
)
–
–
–
–
(82
)
Net
      operating income before
loan
      impairment charges and
other
      credit risk provisions
1,341
820
1,393
131
203
(80
)
3,808
Loan
      impairment charges and
other
      credit risk provisions
(117
)
(20
)
47
1
–
–
(89
)
Net
      operating income
1,224
800
1,440
132
203
(80
)
3,719
Total
      operating expenses
(949
)
(350
)
(598
)
(72
)
(198
)
80
(2,087
)
Operating
      profit
275
450
842
60
5
–
1,632
Share
      of profit in associates
and
      joint ventures
61
33
100
–
21
–
215
Profit
      before tax
336
483
942
60
26
–
1,847
%
%
%
%
%
%
Share
      of HSBC's profit
before
      tax
1.8
2.6
5.0
0.3
0.1
9.8
Cost
      efficiency ratio
70.8
42.7
43.0
55.0
97.5
54.8
US$m
US$m
US$m
US$m
US$m
US$m
Selected
      balance sheet data
2
Loans
      and advances to
customers
      (net)
22,886
16,444
19,276
1,960
97
60,663
Total
      assets
25,577
18,845
66,438
4,549
5,121
120,530
Customer
      accounts
28,961
15,381
28,620
5,543
108
78,613
The
        following assets and liabilities were significant to Corporate, Investment
        Banking and Markets:
Loans
      and advances to
banks
      (net)
12,119
Trading
        assets, financial instruments designated at fair value, and financial
        investments
26,555
Deposits
      by banks
7,156
1
Net
      insurance claims incurred and movement in policyholders' liabilities.
2
Third
      party only
.
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North America
Profit/(loss) before tax by country within customer group
Year ended 31 December
2005
2004
US$m
US$m
Personal Financial Services
4,761
4,384
United States
3,853
3,642
Canada
310
157
Mexico
570
549
Other
28
36
Commercial Banking
1,064
848
United States
447
417
Canada
403
239
Mexico
161
140
Other
53
52
Corporate, Investment Banking and Markets
774
966
United States
373
741
Canada
154
134
Mexico
192
85
Other
55
6
Private Banking
104
68
United States
104
65
Other
–
3
Other
169
(196
)
United States
158
(201
)
Canada
(12)
–
Other
23
5
Total
6,872
6,070
United States
4,935
4,664
Canada
855
530
Mexico
923
774
Other
159
102
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Profit
      before tax
Year ended 31 December
2005
2004
North America
US$m
US$m
Net interest income
14,887
14,993
Net fee income
4,606
3,765
Trading income
1,013
582
Net expense from financial instruments designated at fair value
434
–
Net investment income from assets backing policyholders' liabilities
–
–
Gains less losses from financial investments
88
160
Dividend income
42
32
Net earned insurance premiums
602
553
Other operating income
740
359
Total operating income
22,412
20,444
Net insurance claims incurred and movement in policyholders' liabilities
(333
)
(312
)
Net operating income before loan impairment charges and other credit risk provisions
22,079
20,132
Loan impairment charges and other credit risk provisions
(5,038
)
(5,022
)
Net operating income
17,041
15,110
Total operating expenses
(10,217
)
(9,032
)
Operating profit
6,824
6,078
Share of profit/(loss) in associates and joint ventures
48
(8
)
Profit before tax
6,872
6,070
%
%
Share of HSBC's profit before tax
32.8
32.0
Cost efficiency ratio
46.3
44.9
Year-end staff numbers (full-time equivalent)
75,926
69,781
US$m
US$m
Selected balance sheet data
1
Loans and advances to customers (net)
264,934
248,616
Loans and advances to banks (net)
14,013
24,179
Trading assets, financial instruments designated at fair value, and financial investments
116,269
57,666
Total assets
463,143
371,183
Deposits by banks
9,126
15,284
Customer accounts
125,830
132,900
1
Third
    party only
Despite cooling in the fourth quarter, GDP growth in the
US
was 3.5 per cent in 2005. Consumer spending grew by a healthy 3.6 per cent in 2005 despite slowing in the fourth quarter
because of the hurricanes, higher energy costs and lower auto sales. Growth in equipment and software investment was robust, rising 11 per cent. Unemployment fell by 0.5 per cent to 4.9 per cent in 2005, with 2 million new jobs created. The Federal
Reserve's favoured inflation measure, the core personal consumption expenditure deflator, was contained, rising 2.0 per cent in 2005. Headline inflation in 2005 was higher due to increased energy prices, as the full year consumer price index
rose 3.4 per cent. The Federal Reserve raised interest rates eight times during the year, from 2.25 per cent to 4.25 per cent. 10-year bond yields and equity markets rose moderately during 2005 as the US dollar strengthened, ending
the year at US$1.18 to the euro compared with US$1.35 at the end of 2004.
Canada's
growth was 2.9 per cent in 2005, as strong employment growth
and, late in the year, rising earnings, boosted consumer spending. The unemployment rate fell to 6.4 per cent, the lowest level since 1976. In the second half of the year, exports rose, boosted by strong global demand. In the energy sector,
investment and profits rose strongly as oil prices soared, with the positive economic impact being most pronounced in Western Canada. Gasoline prices lifted headline inflation to a peak of 3.4 per cent in September, but it fell back sharply and core
inflation was 1.6 per cent by the year-end. Having been kept on hold for much of the year, interest rates were raised by 75 basis points between September and December. The Bank of
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Canada has indicated that further increases may be required.
Mexico's
GDP growth was 3.0 per cent compared with 4.2 per cent in
2004, in line with lower external demand from the US. The fiscal accounts for the year showed a reduced deficit of 0.9 per cent, mostly from windfall earnings from high oil prices. As in 2004, high oil receipts and increasing levels of workers'
remittances helped minimise the current account deficit at an estimated less than 1 per cent of GDP. The biggest achievement was the reduction in headline inflation from 5.2 per cent at the end of 2004 to 3.3 per cent in December 2005, with core
inflation finishing the year at 3.1 per cent. HSBC views macroeconomic stability as encouragingly robust ahead of what looks likely to be a keenly contested presidential election in mid-2006.
HSBC's operations in North America reported a pre-tax profit of US$6,872 million, compared with US$6,070 million in 2004, representing an
increase of 13 per cent. On an underlying basis, pre-tax profits grew by 12 per cent and represented around 33 per cent of HSBC's equivalent total profit. In the US, the benefits from strong deposit growth in Personal Financial Services were
partly negated by narrowing spreads on lending in a rising interest rate environment. In Commercial Banking, growth in pre-tax profits was largely driven by lending and deposit balance growth and improved liability interest margins. In Corporate,
Investment Banking and Markets, growth in revenues was offset by investment expenditure to build the required platform and infrastructure for future growth
.
The commentary that follows is on an underlying basis.
Personal Financial Services
, including the consumer finance business,
generated a pre-tax profit of US$4,761 million, 8 per cent higher than in 2004. Under IFRSs, from 1 January 2005, HSBC changed the accounting treatment for certain debt issued and related interest rate swaps. This did not change the underlying
economics of the transactions. The resulting revenues of US$618 million in 2004 are excluded from the following commentary. In addition, interest income earned on mortgage balances held on HSBC's balance sheet pending sale into the US
secondary mortgage market has been reported under trading income. In 2004 this was reported in net interest income. This difference in treatment has also been excluded from the following commentary.
In the US, profit before tax rose 28 per cent to US$3,853 million. The rise in profit was largely
driven by widening deposit spreads, strong deposit and customer loan growth and higher fee income, partly offset by lower asset spreads due to higher funding costs. Loan impairment
charges fell, notwithstanding the higher charges due to the combined impacts of Hurricane Katrina and changes in bankruptcy legislation. In Mexico, excluding the transfer of some customers to the Commercial Banking segment due to alignment with
Group standards, pre-tax profits rose. This was driven by strong revenue growth from higher deposit balances and widening spreads, strong loan growth and higher fee income, partly offset by the non-recurrence in 2005 of loan impairment provision
releases in 2004.
Net interest income grew by 5 per cent to US$12,753 million, largely from increases in the US and Mexico. In the US, net interest income rose by 3 per
cent largely driven by higher deposit balances and widening deposit spreads. Average loan balances grew strongly, in particular from prime and non-prime residential mortgages. With ongoing strong demand for unsecured lending, the credit card,
private label card and personal non-credit card, portfolios continued to grow. The benefits of strong asset growth were largely offset by lower spreads as interest rates rose.
Additional resources were focused on the core retail banking business in the US as high priority was given to growing the deposit base. Investment in the
retail branch network continued, to ensure a presence in locations with high growth potential. During the year, 27 new branches were opened, each tailored to meet the needs of the local market. The launch of two new deposit products, HSBC's
first national savings product, 'Online Savings', and 'HSBC
Premier
Savings',
augmented by a 45 per cent rise in new personal account openings, led to a 4 per cent growth in average deposit balances to US$26.7 billion.
Overall, average mortgage balances including US$3.3 billion held for resale were US$112.1 billion, representing a 27 per cent increase. This was due
to the significant expansion of adjustable rate mortgages ('ARMs') originated during 2004 in the US bank and strong growth within the mortgage services and branch-based consumer lending businesses. These volume benefits were largely offset
by narrowing spreads as yields fell due to changes in product mix and higher funding costs.
Prime mortgages originated in 2005 were largely sold into the large government sponsored mortgage associations, reflecting a strategic decision to focus on
loans originated through the retail
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channel, and reduce HSBC's reliance on lower spread business generated by the network of mortgage correspondents. The improvements in retail channel sales were achieved by
capitalising on the HSBC brand, and the newly expanded branch network and customer base. As interest rates rose, demand for ARM products in 2005 declined as customers migrated towards longer-term fixed rate mortgages. ARM-originated loans fell from
67 per cent of all loans originated in 2004 to 30 per cent this year. Spreads narrowed on prime mortgages, largely because of higher funding costs, together with marginally lower yields due to the full year effect of the strong growth of
lower-yielding ARMs originated in 2004.
HSBC continued to grow its sub-prime and near-prime mortgage portfolios, primarily within the mortgage services and branch-based consumer lending businesses.
The mortgage services business, which purchases mortgage loans from a network of correspondents, recorded strong average loan growth of 42 per cent to US$39.1 billion, of which US$1.7 billion related to mortgages held for resale. Continued
focus on growing the second lien portfolio, widening the first lien product offering and expanding sources for the purchase of loans from 'flow' correspondents contributed further to the increase. Within the branch-based consumer lending
business, average mortgage balances grew by 19 per cent to US$35.7 billion, reflecting a combination of increased marketing activity and higher sales volume of near-prime and ARMs, first introduced in the second half of 2004. In addition, the
consumer lending business purchased US$1.7 billion of largely sub-prime mortgage loans through a portfolio acquisition programme. The benefits of higher sub-prime and near-prime balances were largely offset by lower spreads. Yields fell, due to
the combined effects of strong refinancing activity, significant amounts of older higher-yielding loans maturing, continued product expansion into the near-prime customer segments and competitive pricing pressures. The higher cost of funds due to
rising interest rates also contributed to the decline in spreads.
Average loan balances within the consumer finance credit cards business rose by 7 per cent to US$19.8 billion, despite the highly competitive
environment, where overall market growth remained weak. By increasing the level of marketing promotions, HSBC was able to grow organically the HSBC branded prime, Union Privilege and non-prime portfolios. The benefit of higher balances was more than
offset by higher funding costs. Yields, however, improved due to a combination of higher-
yielding sub-prime receivable balances, increased pricing on variable rate products and other re-pricing initiatives.
In the retail services cards business, average loan balances grew by 7 per cent to US$15.9 billion. This growth was driven by new loan originations and
the agreement of new merchant relationships with The Neiman Marcus Group Inc, Bon Ton Stores Inc and OfficeMax, which contributed US$506 million of the overall increase. The benefit of higher loan balances was more than offset by lower spreads.
Spreads declined as a large proportion of the loan book, priced at fixed rates, was affected by higher funding costs as interest rates rose. Spreads also narrowed as changes in the product mix reflected strong growth of lower-yielding recreational
vehicle balances and external pricing pressures. Changes in contractual obligations associated with a merchant also had an adverse effect, but this resulted in lower merchant fees payable.
The vehicle finance business reported strong organic growth, with a 14 per cent increase in average loan balances, largely due to increases in the near-prime
portfolio. This growth in balances was mainly driven by a combination of higher new loan originations acquired from the dealer network, in part due to the success of the 'employee pricing' incentive programmes introduced by a number of the
large car manufacturers, and strong growth in the consumer direct loan programme. A new strategic alliance helped grow loans further, generating US$234 million of new balances. These volume benefits were largely offset by lower spreads, due to
higher funding costs and lower yields. Yields fell due to product expansion into the near-prime portfolio, coupled with competitive pricing pressures due to excess market capacity.
Personal non-credit card average loan balances in the consumer finance business grew by 8 per cent to US$16.0 billion, reflecting the success of several
large direct mail campaigns and increased availability of this product in the US market. Improvements in underwriting processes, aided by continued improvements in the US economy, also contributed to the increase. These benefits were partly offset
by lower spreads, due to higher funding costs.
In Mexico, net interest income rose, primarily due to strong deposit and loan growth, coupled with the widening of deposit spreads. In 2005, HSBC in Mexico
widened its competitive funding advantage, maintaining the lowest funding cost in the market. There was strong growth in consumer lending, although asset spreads declined, reflecting a
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reduction in yields in an increasingly competitive market. Funding costs rose, due to higher average interest rates.
HSBC
in Mexico continued to lead the market in customer deposit growth, with a 1.5
per cent increase in market share to 15.9 per cent, despite a highly  competitive
market place. This was largely due to the success of the 'Tu Cuenta' product,
the only integrated financial services product of its kind offered locally. Since
its launch in February 2005, over 600,000 accounts have been  opened, averaging
some 2,300 new customers per day.
The continued success of HSBC's competitive fixed rate mortgage product in Mexico, helped by strong demand from first time buyers, led to average
mortgage balances increasing by 93 per cent to US$522 million, and market share reached 10.7 per cent. In Mexico, HSBC continued to be the leader in vehicle finance with a market share of 26.5 per cent. A unique new internet based product
'Venta Directa' was launched during the year, enabling the direct sales of used cars between customers using HSBC's financing and website as the intermediary. The targeting of new customer segments and more competitive pricing drove
average vehicle finance loans higher by US$228 million to US$796 million, a 40 per cent increase over 2004. Average payroll loan balances more than doubled to US$253 million, reflecting HSBC's unique position in the market granting
pre-approved personal loans through its ATM network. Average credit card balances were 55 per cent higher, with cards in circulation increasing by 80 per cent to over 1.1 million cards. This was largely driven by cross-selling to the existing
customer base using CRM and the successful launch of the 'Tarjeta inmediata' or Instant credit card, which generated 109,000 new cards.
In Canada, net interest income grew by 21 per cent, due to growth in average loan and deposit balances, augmented by widening deposit spreads. Branch
expansion in the consumer finance business generated higher average loan balances in real estate secured and unsecured lending. Credit card balances also grew, following the successful launch of a MasterCard programme.
Net fee income grew by 20 per cent to US$3,511 million, driven by strong performances in the US and Mexico. In the US, the 23 per cent increase was mainly from retail and credit card services, the mortgage banking
business and the taxpayer financial services business. Fee income within the consumer finance credit cards business increased by 19 per cent, or US$300
million, largely
because of increased transaction volumes, loan balance growth and improved interchange rates. Greater use of the 'intellicheck' product, which enables customers to pay their
credit card balances over the telephone, contributed an additional US$33m of revenues. Revenues from ancillary services rose US$77 million, reflecting higher sales volumes, new product launches and expansion into new customer
segments.
Within the US retail services business, fee income rose, mainly from lower merchant partnership payments due to changes in contractual obligations with
certain clients. In part, this reflected lower loan spreads associated with lower merchant payments.
Fee income from the US mortgage-banking business increased. As interest rates gradually rose, refinancing prepayments of mortgages declined, with levels of
loan refinancing activity falling from 50 per cent of total loans originated in 2004 to 44 per cent in 2005. This led to lower amortisation charges and the subsequent release of temporary impairment provisions on mortgage servicing
rights. Furthermore, the value of servicing rights was better protected by an improved economic hedging programme using a combination of derivative financial instruments and investment
securities. A revised fee structure, introduced in the second half of 2004, produced a 6 per cent increase in fee income from deposit-related services in the US Bank.
Within the US taxpayer financial services business, fee income grew by 12 per cent, driven by higher average loan balances and the sale of previously
written-off loan balances. HSBC is the sole provider of bank products to H&R Block, the largest retail tax preparation firm in the US, and in September 2005 extended this arrangement by signing a new five-year contract. Since June 2004, HSBC has
retained in-house the clearing business for refund anticipation payments, previously carried out by a third party. This generated additional revenues of US$19 million for HSBC in the US.
HSBC in Mexico reported strong growth in fee income, driven by higher revenues from credit cards, remittances, mortgages and ATM transactions. The increase
in the number of credit cards in circulation contributed to the 85 per cent increase in credit card fee income. Fees from the 'Afore' pension funds business continued to perform strongly, with 50 per cent growth and 394,000 new customers.
Fee income from international remittances rose by 55 per cent, partly led by the continued success of 'La Efectiva', HSBC's electronic remittance card. Monthly transactions exceeded one million, representing a
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20 per cent market share and a near seven-fold increase since December 2002. Strong sales of insurance products resulted from increased cross-selling through the branch network and
combining sales with other Personal Financial Services products containing insurance components. Mutual fund balances grew by 58 per cent, partly attributable to the successful launch of new funds targeting different market segments, along with
strong cross-sales among HSBC's extensive customer base.
Trading income in 2005 was in line with 2004. In the US mortgage banking business revenues increased, largely as a result of more originations and sales
related income, which reflected improved gains on each individual sale and a 41 per cent increase in the volume of originated loans sold. In addition, a higher percentage of ARM loans that previously would have been held on balance sheet were sold
in 2005. This was partly offset by lower gains on Decision One sales in the mortgage services business.
The increase in other income was largely due to the US. Losses from sales of properties repossessed after customers default on their mortgage payments, which
are recorded as a reduction in other income, were US$96 million lower than in 2004. This was attributable to improvements in the process by which fair market value is determined at the time of repossession, and to a reduction in the number of
properties falling into repossession as credit quality improved.
Loan impairment charges and other credit risk provisions of US$5,086 million were marginally lower than in 2004. In the US, charges were lower
notwithstanding the adverse effect of Hurricane Katrina and higher bankruptcy filings following changes in bankruptcy legislation. Partly offsetting these impacts was the non-recurrence of US$47 million charges from adopting Federal Financial
Institutions Examination Council charge-off policies relating to retail and credit card balances in 2004. Excluding these factors, the lower charge reflected favourable credit conditions in the US. Higher levels of secured lending, continued
targeting of higher credit quality customers and improvements in underwriting contributed to the reduction. In Mexico loan impairment charges rose in line with higher lending volumes and the non-recurrence in 2005 of loan impairment provision
releases in 2004, while underlying credit quality remained stable. In Canada, charges were in line with prior year, as higher charges in the consumer lending business due to loan growth were offset by provision releases in the core bank
business.
Operating expenses grew by 6 per cent to US$7,382 million, largely in the US and Mexico. In the US, costs increased by 3 per cent, as staff and marketing
costs rose in the consumer finance business to support revenue growth. Acquisition costs were incurred following the Metris purchase. In the credit cards business, higher marketing spend was incurred on the non-prime portfolios and investment in new
initiatives. Higher marketing expenses were also incurred following changes in contractual obligations associated with the General Motors' co-branded credit card portfolio in July 2004, but these were partly offset by improved income through
lower account origination fees.
In the US Bank, costs grew to support business expansion and new branch openings. Brand awareness programmes in the second and fourth quarters increased
marketing costs, and expenditure was incurred on promoting the online savings product. The benefit of these initiatives was reflected in a significant increase in customer awareness of the HSBC brand. Within the retail brokerage business, cost
increases reflected more stringent regulatory requirements.
In Mexico, operating expenses grew by 21 per cent, driven by a combination of higher staff, marketing and IT costs. Staff costs grew by 12 per cent,
reflecting increases incurred to improve customer service levels within the branch network and bonus costs in line with increased sales. Marketing costs grew to support the credit cards business, evidenced by the 80 per cent increase in the number
of cards in circulation. IT costs rose as new systems to meet Group standards, such as the WHIRL credit card platform, were rolled out. In Canada, operating expenses grew due to the opening of new branches within the consumer finance business, and
expansion of the mortgage and credit cards businesses.
Commercial Banking
's pre-tax profits increased by 23 per cent to
US$1,064 million, primarily due to lending growth and improved liability interest spreads.
Net interest income increased by 23 per cent to US$1,449 million. In the US, deposit growth, particularly among small businesses, contributed to a 20 per
cent increase in net interest income. The recruitment of additional sales and support staff and expansion on both the East and West coasts led to a 15 per cent increase in deposits and a 16 per cent increase in lending balances, with income from
commercial real estate lending increasing by 27 per cent. HSBC achieved particularly strong growth in the SME market and maintained its market leading
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position in small business administration lending in New York state. Following its launch in the first half of 2005, the 'Select Investor' product, which offers competitive
tiered interest rates, attracted US$420 million of deposits. 'Business Smart', a product offering free checking and other value offerings to commercial customers, performed strongly following its launch at the end of 2004, attracting
41,000 new customers and balances of over US$1.0 billion.
In Canada, net interest income increased by 16 per cent, as higher oil and other natural resource prices led to strong economic growth and low interest rates
increased demand for lending products. Average lending balances increased by 20 per cent, as leasing balances grew by 33 per cent and commercial real estate lending rose by 19 per cent. Average deposit and current account balances increased by 21
per cent and 24 per cent respectively, reflecting the buoyant economy, the launch of HSBCnet in Canada and more brand advertising. Both asset and liability spreads were broadly in line with 2004.
In Mexico, the transfer of a number of customers from Personal Financial Services increased both revenues and costs. Net interest income increased by 42 per
cent, due in part to a 22 per cent increase in Commercial Banking customers. Deposit balances grew by 38 per cent as a result of expansion into the SME market, while deposit spreads increased by 76 basis points following interest rate rises. Loan
balances rose by 21 per cent, principally in the services and commerce sectors, though competitive pricing led to a tightening of lending spreads. The 'Estimulo' combined loan and overdraft product, which was launched at the end of 2004,
performed strongly, attracting balances of US$155 million.
Other income lines, including net fee income, increased by 11 per cent to US$541 million. In Mexico, marketing campaigns, tariff reductions and the
promotion of business internet banking, together with increased customer numbers, contributed to a 31 per cent increase in payment and cash management fees, while card fees increased following the launch of a credit card as part of the
'Estimulo' suite of products. Trade services fee income increased by 63 per cent as a result of customer acquisition and increased cross-sales to existing customers, nearly doubling the bank's market share in a growing market. In the
US, higher gains on the sale of properties and investments contributed to a 4 per cent increase in other income.
Loan impairment charges were US$13 million, following net releases in 2004. Significant releases in Canada were more than offset by higher charges,
driven by lending growth, in the US and Mexico. In Canada, improved credit quality led to a US$34 million net release of loan impairment provisions. In the US, credit quality remained high in the favourable economic conditions, with impaired
loans as a proportion of assets decreasing by 49 basis points. In Mexico, growth in the lending portfolio led to a US$49 million increase in loan impairment charges, although underlying credit quality improved.
Operating expenses increased by 13 per cent to US$913 million, driven by increases in the US and Mexico. In the US, expansion in the SME and MME markets
and in the commercial mortgage sector led to a 17 per cent increase in staff numbers. New MME offices were opened in Philadelphia and New Jersey, following the establishment of offices in Los Angeles and San Francisco in 2004. The launch of
'Select Investor' and promotion of 'Business Smart' led to higher marketing costs. In Mexico, operating expenses increased by 29 per cent, due to an 11 per cent increase in staff numbers to support business growth, higher
incentive payments reflecting strong income growth, and increased 'Estimulo' marketing expenditure.
Corporate, Investment Banking and Markets
reported a pre-tax profit of
US$774 million, 22 per cent lower than in 2004. The overall increase in revenue was exceeded by higher expenses, which reflected the full year cost of the expanded operations in the US and the continuing investment in a number of specific
initiatives designed to build stronger execution and delivery capabilities.
Total operating income rose by 12 per cent. In Mexico, net income more than doubled, due to the strong performance in balance sheet management, which
benefited from higher volumes and successful strategic positioning against a rising short-term interest rate environment, with an overall flattening of the yield curve in the first part of 2005. In the latter half of the year, positions were
effectively managed to take advantage of the decline in local rates. In the US and Canada, balance sheet management and money market revenues declined by US$353 million, as rising US dollar short-term interest rates led to further flattening of
the yield curve.
Net interest income from the payments and cash management business in the US grew by 65 per cent, principally due to an 82 per cent growth in
balances.
Net fees increased by 25 per cent, primarily due
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to higher volumes in Global Investment Banking, reflecting positive momentum from an extension of the product range, particularly in debt capital markets, where earnings grew by 67 per
cent. Equity capital markets revenue improved from a low base and higher income streams were generated from a regular flow of new deals from asset-backed securities. Global Transaction Banking fees rose, reflecting higher customer volumes in
payments and cash management, particularly in Mexico.
Income from trading activities increased, due in part to higher revenues in the US from credit trading, following losses in 2004, and a tightening of credit
spreads. Business lines in which HSBC has invested, such as equities and structured derivatives, also showed strong year-on-year gains. In addition, foreign exchange and derivatives trading was facilitated by the introduction of the Group's
standard derivatives system in Mexico.
There was a reduction of US$28 million in the net release of loan impairment allowances, primarily due to the non-recurrence of a number of large
releases. New impairment allowances against corporate clients remained broadly in line with last year.
Operating expenses increased by 45 per cent to US$1,511 million. In 2005, the proportionately greater investment in North America compared with other
regions reflected HSBC's commitment to strengthen global reach by developing its presence in this region. HSBC continued to invest throughout the year in expanding product capabilities, particularly in structured derivatives, equities,
research, mortgage-backed securities and advisory, and the build out of specialist sector teams in the US and Mexico. Nearly half of the incremental cost was attributable to this investment.
Staff costs rose by 43 per cent, reflecting the full year of recruitment in the latter part of 2004 and selective hiring in 2005, which resulted in an
increase of 870 staff in Corporate, Investment Banking and Markets in North America.
Non-staff costs grew correspondingly and included the expense incurred in building critical infrastructure and investment in new technology.
Private Banking
contributed a pre-tax profit of US$104 million, an
increase of 55 per cent on 2004, driven by growth in client assets and the balance
sheet, and the expansion of Wealth and Tax Advisory Services ('WTAS').
Net interest income increased by 13 per cent. Lending balances rose by over 30 per cent as clients borrowed on a secured basis to make alternative
investments. Mortgage lending also grew, supported by the launch of a 'Tailored Mortgage' product during the year. Spreads on current accounts increased by 40 basis points, reflecting the benefit of interest rate increases during the
year.
A number of smaller trust accounts were sold in 2005, generating one-off income of US$9 million. This was partly offset by the non-recurrence of gains
from financial investments arising from the sale of seed capital investments in 2004. WTAS expanded its presence in New York, Philadelphia, Los Angeles, San Francisco and Virginia through the recruitment of fee-generating staff, and grew organically
through referrals, contributing to an increase of 15 per cent in fee income.
Client assets grew by 12 per cent to US$46.2 billion, contributing to the rise in fee and other operating income. US$4.2 billion of net new money reflected client acquisition in the US and in Mexico, following the
launch of Private Banking there in 2004. This was partly offset by the divestment of trust accounts referred to above. The 'Strategic Investment Solutions' product, launched in March 2004, was markedly successful in attracting new funds.
Discretionary managed assets invested in this product reached US$0.9 billion.
Operating expenses of US$334 million were 13 per cent higher than last year. The recruitment of front office staff in Private Banking, and new
fee-generating staff in WTAS, added to the cost base. This was partly offset by headcount savings through restructuring and the sale of the trust account business referred to above.
Increased activity at HSBC's North American technology centre led to an increase in both costs and net operating income in
Other
, as higher network and systems maintenance costs and development expenditure to meet increased technological
requirements were recharged to other customer groups. Movements in the fair value of own debt and the associated swaps designated at fair value led to a US$401 million increase in total operating income.
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Profit/(loss)
    before tax by customer group
Year ended 31 December 2005
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
North America
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
    interest income/
(expense)
12,753
1,449
842
190
(115
)
(232
)
14,887
Net fee income/
(expense) .
3,511
425
626
203
(159
)
–
4,606
Trading
    income excluding
net interest income
160
12
168
10
21
–
371
Net interest
        income/
(expense)
    on trading
activities
210
(4
)
225
–
(21
)
232
642
Net
    trading
income/
    (expense)
370
8
393
10
–
232
1,013
Net
              income from financial
instruments
    designated
at
    fair value
10
–
23
(1
)
402
–
434
Gains less losses
from
financial investments
22
1
64
–
1
–
88
Dividend income
9
–
33
–
–
–
42
Net
    earned insurance
premiums
603
–
–
–
(1
)
–
602
Other operating income
285
107
205
34
1,279
(1,170
)
740
Total operating income
17,563
1,990
2,186
436
1,407
(1,170
)
22,412
Net insurance claims
1
(334
)
–
–
–
1
–
(333
)
Net
                    operating income
before
                loan impairment
charges and other
credit
    risk provisions
17,229
1,990
2,186
436
1,408
(1,170
)
22,079
Loan impairment
        charges
and
    other credit risk
provisions
(5,086
)
(13
)
60
2
(1
)
–
(5,038
)
Net operating income
12,143
1,977
2,246
438
1,407
(1,170
)
17,041
Total operating expenses
(7,382
)
(913
)
(1,511
)
(334
)
(1,247
)
1,170
(10,217
)
Operating profit/(loss)
4,761
1,064
735
104
160
–
6,824
Share
              of profit in associates
and
              joint ventures
–
–
39
–
9
–
48
Profit/(loss) before tax
4,761
1,064
774
104
169
–
6,872
%
%
%
%
%
%
Share of HSBC's
profit
before tax
22.7
5.1
3.7
0.5
0.8
32.8
Cost efficiency ratio
42.8
45.9
69.1
76.6
88.6
46.3
US$m
US$m
US$m
US$m
US$m
US$m
Selected
                balance sheet
data
2
Loans
    and advances to
customers (net)
212,058
32,700
15,250
4,926
–
264,934
Total assets
247,928
40,821
168,524
5,870
–
463,143
Customer accounts
57,401
26,324
32,514
9,590
1
125,830
Loans
              and advances to
banks (net)
3
13,658
Trading
              assets,
financial
instruments
designated at
fair
              value, and financial investments
3
112,000
Deposits by banks
3
8,561
1
Net insurance claims incurred and movement in policyholders' liabilities.
2
Third party only.
3
These assets and liabilities were significant to Corporate, Investment Banking and Markets.
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Year
        en
ded
    31 December 2004
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
North America
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
    interest
income/(expense)
12,915
1,147
870
166
(105
)
–
14,993
Net fee income/(expense).
2,885
302
491
176
(89
)
–
3,765
Trading income
221
15
339
6
1
–
582
Gains
    less losses from
financial
    investments
80
5
68
6
1
–
160
Dividend income
14
–
20
–
(2
)
–
32
Net earned insurance
premiums
553
–
–
–
–
–
553
Other operating income
(7
)
154
129
4
1,065
(986
)
359
Total operating income
16,661
1,623
1,917
358
871
(986
)
20,444
Net insurance claims
1
(312
)
–
–
–
–
–
(312
)
Net operating income
before loan impairment
charges
    and other credit risk provisions
16,349
1,623
1,917
358
871
(986
)
20,132
Loan impairment
charges
and
    other credit risk
provisions
(5,120
)
9
88
2
(1
)
–
(5,022
)
Net operating income
11,229
1,632
2,005
360
870
(986
)
15,110
Total operating expenses
(6,845
)
(784
)
(1,024
)
(292
)
(1,073
)
986
(9,032
)
Operating profit/(loss)
4,384
848
981
68
(203
)
–
6,078
Share
                of profit/(loss)
in
associates and
joint
ventures
–
–
(15
)
–
7
–
(8
)
Profit/(loss) before tax
4,384
848
966
68
(196
)
–
6,070
%
%
%
%
%
%
Share of HSBC's
profit
before tax
23.1
4.5
5.1
0.3
(1.0
)
32.0
Cost efficiency ratio
41.9
48.3
53.4
81.6
123.2
44.9
US$m
US$m
US$m
US$m
US$m
US$m
Selected balance sheet data
2
Loans and
    advances to
customers (net)
191,727
26,850
26,166
3,871
2
248,616
Total assets
228,451
31,407
106,713
4,538
74
371,183
Customer accounts
51,165
27,167
46,745
7,822
1
132,900
The
              following assets and
liabilities
    were significant
to
              Corporate, Investment
Banking
    and Markets:
Loans and advances
to
banks (net)
23,817
Trading
              assets, financial
instruments
    designated at
fair
    value, and financial investments
46,700
Deposits by banks
14,887
1
Net insurance claims incurred and movement in policyholders' liabilities.
2
Third party only.
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H S B C   H O L
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(continued)
South America
Profit/(loss) before tax by country within customer group
Year
    ended 31 December
2005
2004
US$m
US$m
Personal Financial Services
206
93
Brazil
167
98
Argentina
37
(5
)
Other
2
–
Commercial Banking
185
159
Brazil
147
108
Argentina
35
50
Other
3
1
Corporate, Investment Banking and Markets
146
109
Brazil
95
92
Argentina
56
8
Other
(5
)
9
Private Banking
1
–
Brazil
1
1
Other
–
(1
)
Other
109
79
Brazil
(4)
(18
)
Argentina
116
101
Other
(3
)
(4
)
Total
647
440
Brazil
406
281
Argentina
244
154
Other
(3
)
5
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Profit before tax
Year
            ended 31 December
2005
2004
South America
US$m
US$m
Net interest income
1,750
1,310
Net fee income
537
459
Trading income
409
54
Net income from financial instruments designated at fair value
186
–
Net investment income on assets backing policyholders' liabilities
–
95
Gains less losses from financial investments
39
34
Dividend income
4
2
Net earned insurance premiums
746
596
Other operating income
188
28
Total operating income
3,859
2,578
Net insurance claims incurred and movement in policyholders' liabilities
(691
)
(459
)
Net operating income before loan impairment charges and other credit risk provisions
3,168
2,119
Loan impairment charges and other credit risk provisions
(554
)
(267
)
Net operating income
2,614
1,852
Total operating expenses
(1,967
)
(1,413
)
Operating profit
647
439
Share of profit in associates and joint ventures
–
1
Profit before tax
647
440
%
%
Share of HSBC's profit before tax
3.1
2.3
Cost efficiency ratio
62.1
66.7
Year-end staff numbers (full-time equivalent)
33,282
32,108
US$m
US$m
Selected balance sheet data
1
Loans and advances to customers (net)
9,307
7,228
Loans and advances to banks (net)
5,282
2,624
Trading assets, financial instruments designated at fair value, and financial investments
6,579
3,857
Total assets
24,734
17,368
Deposits by banks
1,252
680
Customer accounts
16,545
10,958
1
Third
    party only.
In
Brazil
, the cyclical slowdown
  which began in late 2004 continued throughout 2005, with full-year GDP growth of 2.3 per cent compared with 4.9 per cent in 2004. This modest performance was the result of tight monetary policy, political uncertainty and the appreciation of the
  Brazilian real. External demand provided support, with exports growing by 23 per cent in 2005 to record levels, helping to create trade and current account surpluses of US$45 billion and US$14 billion respectively, and increasing net
  international reserves by 96 per cent to US$54 billion. The tight monetary policy, with real interest rates among the highest in the world at 10.5 per cent, slowed inflation from 7.6 per cent in 2004 to 5.7 per cent in 2005, in line to achieve
  the Central Bank's 4.5 per cent inflation target for 2006. Having established its anti-inflationary credentials, the Central Bank cut interest rates by 175 basis points
between September and the end of 2005 in order to stimulate growth and ease the pressure on the real.
In
Argentina
, the recovery from the crisis of 2001 continued in 2005, helped by a favourable external environment and the success of the offer to exchange replacement discount bonds issued in June for defaulted debt. Average GDP growth was
9.1 per cent in 2005. Fiscal performance remained strong, with the public sector posting an overall surplus of approximately 3.3 per cent of GDP. This surplus helped to offset the expansionary effect on money supply growth of the large foreign
exchange interventions of the Central Bank, which continued to pursue a nominal rate policy of near stability against the US dollar despite strong upward pressure on the Argentine peso. This policy was supported by newly introduced controls on
capital inflows. Inflation remained a concern, however, having accelerated to
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H S B C   H O L
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      Review
(continued)
12.3 per cent in December 2005. Following the example of Brazil, at the end of the year the authorities decided to make an early repayment of Argentina's US$9.8 billion debt owed
to the International Monetary Fund.
HSBC's operations in South America reported a pre-tax profit of US$647 million, compared with US$440 million in 2004, representing an increase
of 47 per cent. On an underlying basis, pre-tax profits grew by 28 per cent and represented around 3 per cent of HSBC's equivalent total profit. Growth was achieved, in part, as a result of a US$89 million gain on the sale of Brazil's
property and casualty insurance business. HSBC in Argentina benefited from a strong economic recovery and certain one-off items including the receipt of compensation bonds.
The commentary that follows is on an underlying basis.
Personal Financial Services
reported a pre-tax profit of US$206 million,
an increase of 76 per cent, partly as a result of gains on the sale of the Brazilian property and casualty insurance business. The remaining increase was driven by strong loan growth in vehicle finance and personal lending, together with record
credit card sales. The cost efficiency ratio improved by 5 percentage points, even though higher income was partly offset by increased costs to support business expansion and develop alternative sales channels. The investment in alternative channels
led to a 15 per cent increase in direct sales volumes to over 3.2 million, with particularly strong growth in personal lending, cards and insurance. Loan impairment charges increased, reflecting lending growth in Brazil and an increase in
delinquency rates in the consumer finance business. In 2005, the reporting of the Brazilian insurance business transferred from 'Other' to Personal Financial Services. Profit before tax increased by US$16 million as a result, though
individual account lines showed much larger variances: where appropriate, these are noted below.
Net interest income rose by 35 per cent compared with 2004. Consumer demand for credit remained strong, fuelled by lower unemployment across the region and
declining inflation in Brazil. This contributed to significant growth in personal lending, vehicle finance loans and credit cards.
In Brazil, HSBC continued to position itself for future growth, investing in infrastructure to ensure the delivery of integrated solutions to customers.
Enhancements to distribution, together with marketing campaigns and promotions, including partnerships with motor finance dealers, drove a 49 per cent rise in vehicle finance loans.
A combination of increased customers and targeted marketing initiatives contributed to 40 per cent growth in personal lending. Personal lending balances also
benefited from the successful launch in the first half of 2005 of pension-linked loans offering attractive rates of interest, with repayments drawn directly from the borrower's pension income. Balances of pension-linked loans increased to
US$110 million, partly as a result of an agreement to acquire the pension-linked loan production of Banco Schahin, a small local bank.
The cards business continued to expand, due to both the continued strength of consumer expenditure and the development of a private label card with Petrobras
gas stations, launched in 2004. During 2005, HSBC improved its competitive position, issuing over a million credit cards and having over two million in circulation, an increase of 21 per cent. Card utilisation grew and cardholder spending increased,
while average card balances rose by 30 per cent to US$373 million. Credit card spreads increased as HSBC repositioned its card proposition by increasing interest rates to fall broadly in line with the bank's major competitors.
In Argentina, considerable focus was placed on pre-approved sales mailings and developing direct sales channels. Net interest income more than doubled,
driven by a 59 per cent increase in asset balances. The strong demand for credit resulted in personal unsecured lending more than doubling. Credit cards in circulation increased by 25 per cent, following a discount campaign launched in June 2005 and
the launch of a private label card with C&A which contributed to a 53 per cent increase in card balances. Savings and deposit balances increased by 34 per cent, reflecting the improved economic environment.
Net fee income decreased by 21 per cent, driven by both the inclusion of HSBC's Brazilian insurance business, previously reported in the
'Other' business segment, and IFRSs related changes to the reporting of effective interest rates, which together led to a 52 per cent fall in fees. These decreases were mitigated by higher current account, credit card and lending fees.
Recruitment of new customers, particularly through the payroll portfolio, led to a 21 per cent rise in HSBC's current account base which, together with revised tariffs, increased account service fees by 21 per cent. Growth in lending volumes
and the introduction of a new pricing structure contributed to a 36 per cent increase in credit-related fee income. Higher credit card spending and additional performance-driven fees from credit card companies generated a 72 per cent increase in
credit card fee income. In Argentina, net
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fee income increased by US$27 million, reflecting a 29 per cent increase in credit card fees and a 29 per cent increase in current account fee income, driven by increased transaction
volumes in a recovering economy.
The sale of HSBC's Brazilian property and casualty insurance business, HSBC Seguros de Automoveis e Bens Limitada, to HDI Seguros S.A., led to the
recognition of an US$89 million gain, reported in other operating income.
Loan impairment charges and other credit risk provisions increased to US$515 million, reflecting strong growth in unsecured lending. Credit quality in
Brazil remained stable in the majority of product lines, but there was a 5 per cent increase in impaired loans as a proportion of assets in the consumer finance business. The consumer finance sector experienced increased credit availability, which
led to indebtedness exceeding customers' repayment capacity, increasing delinquencies. However, tightening of credit approval policies and improvements in the credit scoring model led to an improvement in the charge as a proportion of assets in
the fourth quarter. Credit quality in Argentina improved, reflecting generally better economic conditions.
Operating expenses increased by 27 per cent. In Brazil, the acquisition of Valeu Promotora de Vendas and CrediMatone S.A. led to a significant increase in
average staff numbers, though by the end of 2005 staff numbers were 2 per cent lower than at December 2004, following a restructuring of the consumer finance business. The increased average number of full-time employees, the impact of a mandatory
national salary increase and the transfer of the Brazilian insurance business from the 'Other' business segment contributed to a 25 per cent increase in Brazilian staff costs. Other expenses grew to support business expansion and the
development of direct sales channels, while transactional taxes increased by 21 per cent, driven by higher operating income. In Argentina, costs were 3 per cent up on 2004 as increased performance-related remuneration and union agreed salary
increases led to higher staff costs.
Commercial Banking
reported pre-tax profits of US$185 million, 2 per
cent higher than 2004. In Brazil, pre-tax profits increased by 12 per cent as asset growth drove higher revenues, which were mitigated by increased loan impairment charges and higher costs. In Argentina, pre-tax profits declined by 31 per cent, as
significant loan recoveries were not repeated.
Net interest income increased by 49 per cent, driven by asset growth. In Brazil, a growing economy and a 30 per cent rise in customer numbers led to
increases in both assets and liabilities. Overdraft balances grew by 41 per cent as both the number and the average size of facilities grew, contributing US$40 million of additional income. Overdraft spreads increased by 3 percentage points as a
result of increases in the rate charged to new borrowers. The continuing success of
Giro fácil
, a revolving loan and overdraft facility, resulted in a 13 per cent increase in customer numbers which, together with an increase in facility utilisation, resulted in a 77 per cent increase in balances. Invoice financing balances
rose by 30 per cent, benefiting from both increased marketing and higher sales to Losango clients, approximately a third of whom now have a commercial banking relationship with HSBC.
Deposit balances in Brazil increased by 21 per cent, reflecting initiatives to incentivise staff to prioritise sales of liability products. However,
competitive pressures contributed to a 5 percentage points decrease in spreads on loans and advances to customers, while deposit spreads were 13 basis points lower. In Argentina, deposits from commercial customers increased by 42 per cent,
reflecting the continuing economic recovery, while loans and overdrafts more than doubled and current account balances increased by 38 per cent. HSBC increased its market share in both loans and deposits.
Net fee income was 14 per cent lower than 2004, driven by IFRSs changes to accounting for effective interest rates, which reduced fee income by 40 per cent.
Excluding this effect, net fee income increased, due to higher fees from payments and cash management, current accounts, and lending in Brazil. Current account fees increased by 26 per cent, reflecting tariff increases, improved collection
procedures and higher transaction volumes, while lending fees benefited from higher business volumes. In Argentina, the launch of a commercial banking call centre in the first half of 2005 enhanced the customer service proposition. This, together
with the recruitment of additional relationship managers, supported a 14 per cent increase in customer numbers and, as a result, current account fee income increased by 21 per cent. Improvements in the Argentinian economic climate contributed to
increased trade flows which, together with the establishment of a dedicated trade service sales team, led to a 22 per cent increase in trade services income.
Loan impairment charges and other credit risk provisions were US$55 million, following a small net release in 2004. In Brazil, asset growth contributed
to a US$47 million increase in charges. Impaired loans
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H S B C   H O L
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      Review
(continued)
as a proportion of assets increased by 3 percentage points in the SME portfolio, in line with overall market performance, and MME credit quality also declined slightly. In Argentina, net
recoveries decreased as significant releases from amounts recognised at the time of the sovereign debt default and pesification were not repeated. However, underlying credit quality improved substantially and impaired loans as a percentage of assets
more than halved.
Operating expenses of US$368 million were 19 per cent higher than in 2004, though the cost efficiency ratio improved by 3 percentage points as income
grew faster than costs. Staff numbers in Brazil increased by 34 per cent following a recruitment drive initiated in the second half of 2004 to support expansion of the SME business. Higher incentive payments, reflecting increased income, and union
agreed pay increases also contributed to an increase in staff costs. New marketing campaigns, including the award winning '30, 60, 90 Dias de Apuros' campaign focusing on invoice financing, increased advertising and marketing costs.
Expenses in Argentina increased by 24 per cent, driven by higher staff costs, reflecting pay rises agreed with local unions, together with a 9 per cent increase in headcount in support of business expansion.
Corporate, Investment Banking and Markets
reported a pre-tax profit of
US$146 million, an increase of 12 per cent, driven by higher net interest income in Argentina and a decline in loan impairment charges in Brazil.
Total operating income at US$313 million decreased by 7 per cent compared with 2004. In Argentina, a reduction in funding costs in Global Markets was
augmented by the positive impact of an appreciating CER (an inflation-linked index) on holdings of government bonds. Continuing economic growth and improved market confidence stimulated demand for credit, resulting in a 67 per cent growth in
balances. Brazil reported a decrease in balance
sheet management and money market revenues as a result of high short-term interest rates and an inverted yield curve.
Trading activities generated higher income as Global Markets in Brazil benefited from a wider product range and the addition of new delivery capabilities.
This investment and the relatively buoyant local market resulted in higher business volumes, particularly in foreign exchange. In Argentina, Global Markets income rose in line with increased trading activity in response to the sovereign debt
swap.
In Brazil, a US$15 million net release of loan impairment charges compared favourably with a net charge in 2004. A recovery in the energy sector was
accompanied by the non-recurrence of allowances raised against two specific corporate accounts in 2004.
Operating expenses of US$138 million were 8 per cent lower than in 2004, primarily due to a reduction in profit share and bonus payments in Brazil. This
was partly offset by higher centralised support function staff costs, driven by pay rises agreed with local unions. In Argentina, operating expenses were broadly in line with 2004.
Private Banking
reported a pre-tax profit of US$1 million, a modest
increase on 2004. The business was reorganised in 2005, with the transfer of smaller accounts to Personal Financial Services in Brazil, following a resegmentation of the customer base.
In Brazil, HSBC's insurance business was reclassified from
Other
to Personal Financial Services. As a result, operating income decreased by US$106 million and operating expenses were US$90 million lower. In
Argentina, the receipt of compensation bonds and other items related to the pesification in 2002 led to a US$17 million increase in profit before tax.
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Profit
      before tax
  by customer group
Year
    ended 31 Decem
ber 2005
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
South America
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net interest income
1,463
475
111
5
23
(327
)
1,750
Net fee income
329
121
73
11
3
–
537
Trading income
excluding
net interest income
15
4
78
–
2
–
99
Net
    interest expense on
trading activities
–
–
(17
)
–
–
327
310
Net trading income
15
4
61
–
2
327
409
Net
              income from
financial
instruments
designated
at
fair value
174
–
9
–
3
–
186
Gains less losses
from
financial investments
1
–
3
–
35
–
39
Dividend income
4
–
–
–
–
–
4
Net earned insurance
premiums
669
23
57
–
(3
)
–
746
Other operating income
135
(2
)
(1
)
(1
)
57
–
188
Total operating income
2,790
621
313
15
120
–
3,859
Net insurance claims
1
(632
)
(13
)
(45
)
–
(1
)
–
(691
)
Net
                operating
income
before
loan
impairment
charges and other
credit risk provisions
2,158
608
268
15
119
–
3,168
Loan
              impairment
charges
and
other credit
risk
provisions
(515
)
(55
)
15
–
1
–
(554
)
Net operating income
1,643
553
283
15
120
–
2,614
Total operating expenses
(1,437
)
(368
)
(138
)
(14
)
(10
)
–
(1,967
)
Operating profit
206
185
145
1
110
–
647
Share of profit
in associates
and joint ventures
–
–
1
–
(1
)
–
–
Profit before tax
206
185
146
1
109
–
647
%
%
%
%
%
%
Share of HSBC's
profit
before tax
1.0
0.9
0.7
–
0.5
3.1
Cost efficiency ratio
66.6
60.5
51.5
93.3
8.4
62.1
US$m
US$m
US$m
US$m
US$m
US$m
Selected
balance sheet
data
2
Loans and advances
to
customers (net)
4,773
3,390
1,143
1
–
9,307
Total assets
8,270
5,240
9,608
6
1,610
24,734
Customer accounts
4,670
3,964
7,589
101
221
16,545
Loans and advances
to
banks (net)
3
3,731
Trading
              assets,
financial
instruments
designated at
fair
              value, and financial
investments
3
3,799
Deposits by banks
3
803
1
Net insurance claims incurred and movement in policyholders' liabilities.
2
Third party only.
3
These assets and liabilities were significant to Corporate, Investment Banking and Markets.
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Financial
        Review
(continued)
Profit before
tax by customer group
(continued)
Year
        en
ded
    31 December 2004
Corporate,
Personal
Investment
Inter-
Financial
Commercial
Banking &
Private
segment
Services
Banking
Markets
Banking
Other
elimination
Total
South America
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net interest income
900
267
127
4
12
–
1,310
Net fee income/(expense)
341
119
62
12
(75
)
–
459
Trading income/(expense)
9
5
41
–
(1
)
–
54
Net investment
income
on
    assets backing
policyholders' liabilities
40
1
9
–
45
–
95
Gains less losses
from
financial investments
–
–
(1
)
–
35
–
34
Dividend income
–
–
–
–
2
–
2
Net earned insurance
premiums
148
34
55
–
359
–
596
Other operating income
19
9
3
1
12
(16
)
28
Total operating income
1,457
435
296
17
389
(16
)
2,578
Net insurance claims
1
(143
)
(25
)
(47
)
–
(244
)
–
(459
)
Net
              operating income
before
    loan impairment
charges
    and other
credit
risk provisions
1,314
410
249
17
145
(16
)
2,119
Loan
              impairment
charges
and
other credit risk
provisions
(268
)
7
(7
)
–
1
–
(267
)
Net operating income
1,046
417
242
17
146
(16
)
1,852
Total operating expenses
(953
)
(258
)
(133
)
(17
)
(68
)
16
(1,413
)
Operating profit
93
159
109
–
78
–
439
Share of profit
in associates
and joint ventures
–
–
–
–
1
–
1
Profit before tax
93
159
109
–
79
–
440
%
%
%
%
%
%
Share of HSBC's
profit
before tax
0.5
0.8
0.6
–
0.4
2.3
Cost efficiency ratio
72.5
62.9
53.4
100.0
46.9
66.7
US$m
US$m
US$m
US$m
US$m
US$m
Selected balance sheet data
2
Loans and advances
to
customers (net)
3,521
1,525
1,843
2
337
7,228
Total assets
5,829
2,438
7,736
34
1,331
17,368
Customer accounts
3,458
2,229
5,150
11
110
10,958
The
              following assets
and
liabilities
were significant
to
Corporate,
Investment
Banking and Markets:
Loans and advances
to
banks (net)
1,779
Trading
              assets,
financial
instruments
designated at
fair
    value, and financial
investments
3,009
Deposits by banks
549
1
Net insurance claim incurred and movement in policyholders' liabilities.
2
Third party only.
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Critical
          accounting policies
(audited
    information)
Introduction
The results of HSBC are sensitive to the accounting policies, assumptions and
estimates that underlie the preparation of its consolidated financial statements.
The accounting policies used in the preparation of the consolidated financial
statements are described in detail in Note 2 on the Financial Statements.
When
      preparing the financial statements, it is the directors' responsibility
      under UK company law to select suitable accounting policies and to make
  judgements and estimates that are reasonable and prudent.
The
      accounting policies that are deemed critical to HSBC's IFRSs results
      and financial position, in terms of the materiality of the items to which
      the policy is applied, or which involve a high degree of judgement and
  estimation, are discussed below.
Impairment of loans
HSBC's
    accounting policy for losses in relation to the impairment of customer loans
  and advances is described in Note 2(f) on the Financial Statements.
Losses
      in respect of impaired loans are reported in HSBC's income statement under the caption 'Loan impairment charges and other credit risk
provisions'. Any increase in these losses has the effect of reducing HSBC's
profit for the period by a corresponding amount (while any decrease in impairment
charges or reversal of impairment charges would have the opposite
effect).
Losses for impaired loans are recognised promptly when there is objective evidence that impairment of a loan or portfolio of loans has occurred. Impairment
losses are calculated on individual loans and on loans assessed collectively. Losses expected from future events, no matter how likely, are not recognised.
Individually assessed loans
At each balance sheet date, HSBC assesses on a case-by-case basis whether there is any objective evidence that a loan is impaired. This procedure is applied to all accounts that are
considered individually significant. In determining impairment losses on these loans, the following factors are considered:
•
HSBC's
    aggregate exposure to the customer;
•
the
        viability of the customer's business model and the capacity to
        trade
successfully out of
financial
    difficulties and generate sufficient cash flow to service  debt obligations;
•
the
    amount and timing of expected receipts and recoveries;
•
the
    likely dividend available on liquidation or bankruptcy;
•
the
        extent of other creditors' commitments ranking ahead of, or
pari
        passu
with,
        HSBC and the likelihood of other creditors continuing to support the
    company;
•
the
        complexity of determining the aggregate amount and ranking of all creditor
        claims and the extent to which legal and insurance uncertainties are
    evident;
•
the
        realisable value of security (or other credit mitigants) and likelihood
        of
successful repossession;
•
the
        likely deduction of any costs involved in recovery of amounts
outstanding;
•
the
        ability of the borrower to obtain, and make payments in, the currency
        of
the loan if not local currency; and
•
when
    available, the secondary market price of the debt.
Impairment
      losses are calculated by discounting the expected future cash flows of
      a loan at its original effective interest rate, and comparing the resultant
      present value with the loan's current carrying amount. The carrying
      amount of impaired loans on the balance sheet is reduced through the use
  of an allowance account.
HSBC's
      policy requires a review of the level of impairment allowances on individual
      facilities above materiality thresholds at least half-yearly, or more regularly
      when individual circumstances require. This will normally include a review
      of collateral held (including re-confirmation of its enforceability) and
  an assessment of actual and anticipated receipts.
Collectively assessed loans
Impairment is assessed on a collective basis in two different scenarios:
•
for
        loans subject to individual assessment, to cover losses which have been
    incurred but have not yet been identified; and
•
for
        homogeneous groups of loans that are not considered individually
significant.
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Review
(continued)
Incurred but not yet identified impairment
Individually assessed loans for which no evidence of loss has been identified are grouped together according to their credit risk characteristics for the purpose of calculating an
estimated collective loss. This arises from impairment at the balance sheet date which will only be individually identified in the future.
The collective impairment allowance is determined after taking into account:
•
historical
        loss experience in portfolios of similar credit risk characteristics
      (for example, by industry sector, loan grade or product);
•
the estimated
        period between impairment
occurring
        and the loss being identified and
evidenced by the establishment
        of an
appropriate
    allowance against the individual
loan; and
•
management's
        experienced judgement as to
whether
        current economic and credit conditions
are such that the actual level
        of inherent losses is
likely
    to be greater or less than that suggested by
historical experience.
The period between a loss occurring and its identification is estimated by local management for each identified portfolio.
Homogeneous groups of loans
For homogeneous groups of loans that are not considered individually significant,
two alternative methods are used to calculate allowances on a portfolio basis:
•
When appropriate
        empirical information is
available,
        HSBC utilises roll-rate methodology.
This
        methodology employs a statistical analysis
of
      historical trends of the probability of default
and the amount of consequential
      loss, assessed
at
      each time period for which the customer's
contractual payments are overdue.
      The
estimated
      loss is the difference between the
present value of expected future cash flows,
discounted
      at the original effective interest rate
of the portfolio, and the carrying amount of the
portfolio.
      Other historical data and current
economic conditions are also evaluated when
calculating
      the appropriate level of allowance
required to cover inherent loss. In certain highly
developed
      markets, sophisticated models also
take into account behavioural and account
management
    trends as revealed in, for example,
bankruptcy and rescheduling statistics.
•
In other
      cases, when the portfolio size is small
or when
        information is insufficient or not reliable enough to adopt a roll-rate
        methodology, HSBC adopts a formulaic approach which allocates progressively
        higher percentage loss rates in line with the period of time for which
        a customer's loan is overdue. Loss rates are calculated from the
      discounted expected future cash flows from a portfolio.
Roll rates, loss rates and the expected timing of future recoveries are regularly benchmarked
    against actual outcomes to ensure they remain appropriate.
The portfolio approach is applied to accounts in the following portfolios:
•
low value,
        homogeneous small business
accounts
    in certain jurisdictions;
•
residential
      mortgages less than 90 days overdue;
•
credit
        cards and other unsecured consumer
lending
    products; and
•
motor vehicle
    financing.
These portfolio allowances are generally
reassessed monthly and charges for new allowances, or reversals of existing allowances, are calculated for each separately identified portfolio.
Loan write-offs
Loans (and the related impairment allowance accounts) are normally written
    off, either partially or in full, when there is no realistic prospect of
    recovery of these amounts and, for collateralised loans, when the proceeds
  from realising the security have been received.
Reversals of impairment
If the amount of an impairment loss decreases in a subsequent period, and
    the decrease can be related objectively to an event occurring after the impairment
    was recognised, the excess is written back by reducing the loan impairment
  allowance account accordingly. The reversal is recognised in the income statement.
Assets acquired in exchange for loans
Non-financial assets acquired in exchange for loans in order to achieve an
    orderly realisation are recorded as assets held for sale and reported in 'Other
    assets'. The asset acquired is recorded at the lower of its fair value
    (less costs to sell) and the carrying amount of the loan (net of impairment
    allowance) at the date of exchange. No depreciation is provided in respect
    of assets held for sale. Any subsequent write-down of the acquired asset
  to fair
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value less costs to sell is recorded as an impairment loss and included in the income statement. Any subsequent increase in the fair value less costs to sell, to the extent this does not
exceed the cumulative impairment loss, is recognised in the income statement.
Renegotiated loans
Retail loans, which are generally subject to collective impairment assessment, whose terms have been renegotiated, are no longer considered to be past due but are treated as new loans
only after the minimum required number of payments under the new arrangements have been received.
Loans subject to individual impairment assessment, whose terms have been renegotiated, are subject to ongoing review to determine whether they remain
impaired or are considered to be past due.
Goodwill impairment
HSBC's accounting policy for goodwill is described in Note 2(o) on the
  Financial Statements.
Goodwill arises on business combinations,
    including the acquisition of subsidiaries, joint ventures or associates,
    when the cost of acquisition exceeds the fair value of HSBC's share
    of the identifiable assets, liabilities and contingent liabilities acquired.
    By contrast, if HSBC's interest in the fair value of the identifiable
    assets, liabilities and contingent liabilities of an acquired business is
    greater than the cost to acquire, the excess is recognised immediately in
  the income statement.
Goodwill is allocated to cash-generating
    units for the purpose of impairment testing, which is undertaken at the lowest
    level at which goodwill is monitored for internal management purposes. Impairment
    testing is performed annually by comparing the present value of the expected
    future cash flows from a business with the carrying amount of its net assets,
  including attributable goodwill.
Significant management judgement
    is involved in two aspects of the process of identifying and evaluating goodwill
  impairment.
First, the cost of capital assigned
    to an individual cash-generating unit and used to discount its future cash
    flows can have a significant effect on its valuation. The cost of capital
    percentage is generally derived from an appropriate Capital Asset Pricing
    Model, which itself depends on inputs reflecting a number of financial and
    economic variables including the risk-free rate in the country concerned
  and a premium to reflect the inherent risk
of the business being evaluated. These variables are established on the basis
of management judgement.
Second,
      management judgement is required in estimating the future cash flows of
      the cash-generating units. These values are sensitive to the cash flows
      projected for the periods for which detailed forecasts are available, and
      to assumptions regarding the long-term sustainable pattern of cash flows
      thereafter. While the acceptable range within which underlying assumptions
      can be applied is governed
by the requirement for resulting forecasts to be compared with actual performance
      and verifiable economic data in future years, the cash flow forecasts necessarily
      and appropriately reflect management's view of future business
prospects.
When
      the analysis demonstrates that the expected cash flows of a cash-generating
      unit have declined and/or that its cost of capital has increased, the effect
      will be to reduce the estimated fair value of the cash-generating unit.
      If this results in an estimated recoverable amount that is lower than the
      carrying value of the cash-generating unit, a charge for impairment of
      goodwill will be recorded,
thereby reducing by a corresponding amount HSBC's profit for the year. Goodwill
is stated at cost less accumulated impairment losses.
Goodwill
  on acquisitions of joint ventures or associates is included in 'Interests in associates and joint ventures'.
At
      the date of disposal of a business, attributable goodwill is included in
      HSBC's share of net assets in the calculation of the gain or loss
      on
disposal.
Valuation of financial instruments
HSBC's accounting policy for valuation of financial instruments is described
in Note 2(d) on the Financial Statements.
All financial instruments are recognised initially at fair value. The fair value of a financial instrument on initial recognition is normally the transaction
price, i.e. the fair value of the consideration given or received. In certain circumstances, however, the initial fair value may be based on other observable current market transactions in the same instrument, without modification or repackaging, or
on a valuation technique whose variables include only data from observable markets.
Subsequent to initial recognition, the fair values of financial instruments measured at fair value that are quoted in active markets are based on bid prices
for assets held and offer prices liabilities. When independent prices are not available, fair values are determined by using valuation techniques which
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H S B C   H O L D I N G S   P L C
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        Review
(continued)
refer to observable market data. These include comparison with similar instruments where market observable prices exist, discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants.
The main factors which management considers when applying a model are:
•
the likelihood
        and expected timing of future
cash
        flows on the instrument. These cash flows
are usually governed by the
        terms of the
instrument,
        although management judgement
may be required in situations where the ability
of
        the counterparty to service the instrument in
accordance with the contractual terms is in
doubt;
    and
•
an appropriate
        discount rate for the instrument.
Management
        determines this rate, based on its
assessment of the appropriate
        spread of the rate
for
    the instrument over the risk-free rate.
When valuing instruments by reference to comparable instruments, management takes into account the maturity, structure and rating of the instrument with
which the position held is being compared.
When valuing instruments on a model basis using the fair value of underlying components, management considers, in addition, the need for adjustments to take
account of a number of factors such as bid-offer spread, credit profile, servicing costs of portfolios and model uncertainty. These adjustments are based on defined policies which are applied consistently across HSBC.
When unobservable market data have a significant impact on the valuation of derivatives, the entire initial change in fair value indicated by the valuation
model is not recognised immediately in the income statement but is recognised over the life of the transaction on an appropriate basis or is recognised in the income statement when the inputs become observable, or when the transaction matures or is
closed out.
•
Financial
          instruments measured at fair value through profit or loss comprise
          financial instruments held for trading and financial instruments designated
          at fair value. Changes in their fair value directly impact HSBC's
      income statement in the period in which they occur.
•
A
          change in the fair value of a financial instrument which is classified
          as 'available-for-sale' is recorded directly in equity until
          the financial instrument is sold, at which point the cumulative change
          in fair value is charged or credited to the income statement. For those
          debt and equity securities classified as available-for-sale, consideration
          as to whether any such assets should be written down to reflect an
          impairment is taken into account in the fair value of the relevant
          security. Any impairment in the value of debt and equity securities
          held as available-for-sale is reported in the income statement and
          hence reduces
HSBC's operating profit for the period.
The
      table below summarises HSBC's trading portfolios by valuation methodology
  at 31 December 2005:
Assets
Liabilities
Trading
Trading
securities
securities
purchased
Derivatives
sold
Derivatives
%
%
%
%
Fair
          value based on:
Quoted
        market prices
87.6
6.0
96.0
5.7
Internal
        models with significant observable market parameters
1
12.4
91.5
4.0
92.4
Internal
        models with significant unobservable market parameters
–
2.5
–
1.9
100.0
100.0
100.0
100.0
1
Including
    instruments valued on the basis of comparable instruments.
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IFRSs
      compared with US GAAP
2005
2004
US$m
US$m
Net income
US GAAP
14,703
12,506
IFRSs
15,081
12,918
Shareholders' equity
US GAAP
93,524
90,082
IFRSs
92,432
85,522
HSBC provides details of its net income and shareholders' equity calculated
in accordance with US GAAP, which differs in certain respects from IFRSs. Differences
in net income and
shareholders' equity are explained in Note 47 on the Financial Statements
on pages 375 to 402.
Future
      accounting developments
At 31 December 2005, HSBC adopted all IFRSs or interpretations that had been
issued by the International Accounting Standards Board and endorsed by the EU
with the exception of the 'Amendments to IAS 39 and IFRS 4 – Financial
Guarantee Contracts'.
Financial
      guarantee contracts are currently accounted for under IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' as
      contingent liabilities and are disclosed as off-balance sheet items. Under
      the amendment, the issuer of a financial guarantee contract should classify
      such a contract as a financial instrument liability in accordance with
      IAS 39. An exception is made for
issuers of guarantees deemed to be insurance contracts, who, subject to certain
      conditions, may irrevocably elect to account for such contracts as financial
      liabilities under IAS 39 or as insurance contract liabilities under IFRS
  4.
HSBC is required to adopt this amendment for the year ending 31 December 2006 and is currently assessing the impact this will have both in the Group and the
parent company.
The
      Financial Accounting Standards Board ('FASB') has issued the
      following accounting standards, which will become fully effective in future
  financial statements.
In
      May 2005 the FASB issued Statement of Financial Accounting Standards ('SFAS') No. 154 'Accounting Changes and Error Corrections'. In
many, but not all aspects, SFAS 154 converges with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' in
the accounting and reporting of accounting changes and corrections of errors.
SFAS 154 is effective for fiscal years beginning after 15 December 2005. Adoption
is not expected to have
a material impact on the US GAAP information in HSBC's financial
statements.
In
      June 2005, the FASB Emerging Issues Task Force ('EITF') issued EITF 04-5 'Determining whether a General Partner, or General Partners as a
Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights'. EITF 04-5 has a presumption that the general partner in a limited partnership or similar entity, such as a limited liability company, has
control unless the limited partners have substantive kick-out rights or participating rights. The guidance contained in the EITF is effective after 29 June 2005 for all new partnerships formed and for existing partnerships that are modified after
that date, and for all other existing partnerships it is effective no later than the beginning of the first reporting period beginning after 15 December 2005. The impact of EITF 04-5 on the US GAAP information in HSBC's
financial statements is
not expected to be material.
In
      November 2005 the FASB released FASB Staff Position FSP FAS 115-1 'The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments' which supersedes the guidance provided by EITF 03-1 'The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments'. FSP FAS 115-1 clarifies when an investment is considered impaired, whether
that impairment is other than temporary, and the measurement of an impairment loss. FSP FAS 115-1 is effective for fiscal years beginning after 15 December 2005. Adoption is not expected to have a material impact on the US GAAP information in
HSBC's financial statements.
SFAS
      155 'Accounting for Certain Hybrid Financial Instruments' was
      issued by the FASB in February 2006. SFAS 155 permits fair value measurement
      for any hybrid financial instrument that contains an embedded derivative
      that would otherwise require bifurcation. An irrevocable election may be
      made to initially and subsequently measure such a hybrid financial instrument
      at fair value, with changes
in fair value recognised through income. Such election needs to be supported
      by concurrent documentation. SFAS 155 is effective for financial years
      beginning after 15 September 2006, with early adoption permitted. HSBC
      is currently considering the impact that adoption of SFAS 155 will have
  on its US GAAP financial statements.
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Average balance sheet and net
interest income
Average balances and the related interest are shown for the domestic operations of HSBC's principal commercial banks by geographic region with all other commercial banking and investment banking balances and transactions included in 'Other operations'.
Net interest margin numbers are calculated by dividing net interest income as reported in the income statement by the average interest earning assets from
which interest income is reported within the 'Net interest income' line of the income statement. Interest income and interest expense arising from trading assets and liabilities and the funding thereof is included within 'Net trading
income' in the income statement.
Assets
Year ended 31 December
2005
2004
Average
Interest
Average
Interest
balance
income
Yield
balance
income
Yield
US$m
US$m
%
US$m
US$m
%
Short-term funds and loans and advances to banks
Europe
HSBC Bank
21,875
774
3.54
24,173
669
2.77
HSBC
                Private Banking
Holdings
    (Suisse)
3,606
156
4.33
2,644
89
3.37
HSBC France
16,829
387
2.30
26,007
960
3.69
Hong Kong
Hang Seng Bank
8,061
288
3.57
8,328
221
2.65
The
                Hongkong and Shanghai
Banking
    Corporation
36,904
1,058
2.87
28,172
538
1.91
Rest of Asia-Pacific
The
              Hongkong and Shanghai
Banking
              Corporation
11,667
351
3.01
9,180
198
2.16
HSBC Bank Malaysia
1,767
49
2.77
1,348
36
2.67
HSBC Bank Middle East
3,262
111
3.40
1,619
29
1.79
North America
HSBC Bank USA
3,579
151
4.22
2,323
56
2.41
HSBC Bank Canada
2,115
62
2.93
2,163
45
2.08
HSBC Mexico
2,994
228
7.62
3,771
227
6.02
South America
Brazilian operations
1
3,305
565
17.10
1,954
237
12.13
HSBC Bank Argentina
264
7
2.65
250
3
1.20
Other operations
15,023
456
3.04
19,515
329
1.69
131,251
4,643
3.54
131,447
3,637
2.77
Trading assets
2
Europe
HSBC Bank
29,183
1,147
3.93
HSBC France
13,663
365
2.67
Hong Kong
Hang Seng Bank
369
13
3.52
The
              Hongkong and Shanghai
Banking
    Corporation
11,209
298
2.66
Rest of Asia-Pacific
The
    Hongkong and Shanghai
Banking Corporation
2,487
101
4.06
HSBC Bank Malaysia
145
4
2.76
North America
HSBC Bank USA
5,447
115
2.11
HSBC Bank Canada
1,177
25
2.12
HSBC Markets Inc
11,543
421
3.65
HSBC Mexico
2,957
173
5.86
South America
Brazilian operations
1
843
128
15.18
HSBC Bank Argentina
19
1
5.26
Other operations
5,661
232
4.10
84,703
3,023
3.57
For footnotes, see page 113.
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Assets
(continued)
Year ended 31 December
2005
2004
Average
Interest
Average
Interest
Balance
income
Yield
balance
income
Yield
US$m
US$m
%
US$m
US$m
%
Loans and advances to customers
Europe
HSBC Bank
203,568
12,223
6.00
170,939
9,521
5.57
HSBC
                Private Banking
Holdings (Suisse)
5,795
211
3.64
4,700
115
2.45
HSBC France
41,977
1,710
4.07
42,149
1,892
4.49
HSBC Finance
9,951
1,086
10.91
9,276
1,055
11.37
Hong Kong
Hang Seng Bank
32,893
1,323
4.02
31,234
882
2.82
The
                Hongkong and Shanghai
Banking
    Corporation
43,971
2,061
4.69
41,901
1,406
3.36
Rest of Asia-Pacific
The
              Hongkong and Shanghai
Banking
    Corporation
46,652
2,659
5.70
36,775
1,781
4.84
HSBC Bank Malaysia
5,380
325
6.04
4,937
278
5.63
HSBC Bank Middle East
10,038
635
6.33
7,425
418
5.63
North America
HSBC Bank USA
86,800
5,594
6.44
61,659
2,936
4.76
HSBC Finance
118,215
13,307
11.26
114,393
13,146
11.49
HSBC Bank Canada
28,491
1,439
5.05
22,603
1,099
4.86
HSBC Mexico
9,983
1,210
12.12
8,095
878
10.85
South America
Brazilian operations
1
7,447
2,647
35.54
4,726
1,527
32.31
HSBC Bank Argentina
914
122
13.35
903
101
11.18
Other operations
27,203
1,352
4.97
35,713
1,113
3.12
679,278
47,904
7.05
597,428
38,148
6.39
Financial investments
Europe
HSBC Bank
35,787
1,297
3.62
22,488
824
3.66
HSBC
    Private Banking
Holdings (Suisse)
8,725
299
3.43
10,828
303
2.80
HSBC France
4,482
143
3.19
6,957
240
3.45
Hong Kong
Hang Seng Bank
23,445
815
3.48
20,924
507
2.42
The
              Hongkong and Shanghai
Banking
    Corporation
29,508
924
3.13
33,798
779
2.30
Rest of Asia-Pacific
The
    Hongkong and Shanghai
Banking Corporation
15,100
592
3.92
15,902
537
3.38
HSBC Bank Malaysia
1,182
41
3.47
1,156
40
3.46
HSBC Bank Middle East
1,311
44
3.36
1,104
27
2.45
North America
HSBC Bank USA
19,262
864
4.49
18,213
884
4.85
HSBC Finance
3,945
221
5.60
4,153
166
4.00
HSBC Bank Canada
3,951
116
2.94
2,814
65
2.31
HSBC Mexico
4,995
583
11.67
3,822
395
10.33
South America
Brazilian operations
1
2,328
324
13.92
843
128
15.18
HSBC Bank Argentina
218
23
10.55
169
12
7.10
Other operations
17,769
881
4.96
17,485
564
3.23
172,008
7,167
4.17
160,656
5,471
3.41
For footnotes, see page 113.
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        S B C   H O L D I N G S   P L C
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Review
(continued)
Assets
(continued)
Year ended 31 December
2005
2004
Average
Interest
Average
Interest
Balance
income
Yield
balance
income
Yield
US$m
US$m
%
US$m
US$m
%
Other interest-earning assets
Europe
HSBC Bank
14,748
543
3.68
8,629
361
4.18
HSBC
                Private Banking
Holdings
    (Suisse)
11,831
416
3.52
7,611
146
1.92
HSBC France
9,811
442
4.51
7,533
62
0.82
Hong Kong
Hang Seng Bank
81
3
3.70
813
17
2.09
The
    Hongkong and Shanghai
Banking Corporation
18,310
443
2.42
16,926
316
1.87
Rest of Asia-Pacific
The
                Hongkong and Shanghai
Banking Corporation
4,836
200
4.14
4,757
179
3.76
HSBC Bank Malaysia
283
8
2.83
153
3
1.96
HSBC Bank Middle East
371
18
4.85
164
10
6.10
North America
HSBC Bank USA
1,444
43
2.98
784
26
3.32
HSBC Finance
2,063
67
3.25
651
64
9.83
HSBC Bank Canada
641
18
2.81
233
8
3.43
HSBC Mexico
1,186
16
1.35
336
5
1.49
South America
Brazilian operations
1
558
162
29.03
284
36
12.68
HSBC Bank Argentina
43
2
4.65
30
–
–
Other operations
(49,322
)
(2,001
)
(46,751
)
(1,040
)
16,884
380
2.25
2,153
193
8.96
Total interest-earning assets
Europe
HSBC Bank
275,977
14,837
5.38
255,412
12,522
4.90
HSBC
                Private Banking
Holdings (Suisse)
29,957
1,082
3.61
25,783
653
2.53
HSBC France
73,099
2,682
3.67
96,310
3,520
3.65
HSBC Finance
10,553
1,081
10.24
9,342
1,074
11.50
Hong Kong
Hang Seng Bank
64,958
2,447
3.77
61,669
1,614
2.62
The
                Hongkong and Shanghai
Banking Corporation
128,693
4,485
3.49
132,007
3,337
2.53
Rest of Asia-Pacific
The
    Hongkong and Shanghai
Banking Corporation
78,255
3,802
4.86
69,102
2,796
4.05
HSBC Bank Malaysia
8,612
423
4.91
7,739
361
4.66
HSBC Bank Middle East
14,982
808
5.39
10,348
485
4.69
North America
HSBC Bank USA
111,085
6,652
5.99
88,426
4,017
4.54
HSBC Finance
124,223
13,595
10.94
119,197
13,376
11.22
HSBC Bank Canada
35,198
1,635
4.65
28,990
1,242
4.28
HSBC Mexico
19,159
2,038
10.64
18,982
1,678
8.84
South America
Brazilian operations
1
13,637
3,697
27.11
9,186
2,231
24.29
HSBC Bank Argentina
1,440
154
10.69
1,371
117
8.53
Other operations
9,593
676
7.05
42,523
1,449
3.41
999,421
60,094
6.01
976,387
50,472
5.17
Summary
Total interest-margin assets
999,421
60,094
6.01
976,387
50,472
5.17
Trading assets
2
292,404
7,232
2.47
Financial assets designated at fair value
3
15,247
405
2.66
Impairment provisions
(12,469
)
(12,958
)
Non-interest-earning assets
207,337
285,912
Total assets and interest income
1,501,940
67,731
4.51
1,249,341
50,472
4.04
106
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Assets
(continued)
Year ended 31 December
2005
2004
%
%
Distribution of average total assets
Europe
HSBC Bank
30.1
28.3
HSBC
    Private Banking Holdings (Suisse)
2.2
2.2
HSBC France
9.9
9.8
HSBC Finance
0.7
0.9
Hong Kong
Hang Seng Bank
4.8
5.2
The
    Hongkong and Shanghai Banking Corporation
12.7
14.2
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
6.5
6.6
HSBC Bank Malaysia
0.6
0.7
HSBC Bank Middle East
1.1
0.9
North America
HSBC Bank USA
10.7
8.8
HSBC Finance
9.3
10.8
HSBC Bank Canada
2.6
2.4
HSBC Mexico
1.6
1.8
South America
Brazilian operations
1
1.4
0.9
HSBC Bank Argentina
0.1
0.1
Other operations (including consolidation adjustments)
5.7
6.4
100.0
100.0
For footnotes, see page 113.
107
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H
        S B C   H O L D I N G S   P L C
Financial
Review
(continued)
Total equity and
liabilities
Year ended 31 December
2005
2004
Average
Interest
Average
Interest
balance
expense
Cost
balance
expense
Cost
US$m
US$m
%
US$m
US$m
%
Deposits by banks
4
Europe
HSBC Bank
32,673
1,037
3.17
26,950
412
1.53
HSBC
              Private Banking
Holdings
              (Suisse)
886
20
2.26
1,446
27
1.87
HSBC France
17,935
582
3.25
22,162
526
2.37
Hong Kong
Hang Seng Bank
1,876
61
3.25
685
14
2.04
The
              Hongkong and Shanghai
Banking
    Corporation
3,430
116
3.38
3,139
39
1.24
Rest of Asia-Pacific
The
                Hongkong and Shanghai
Banking Corporation
4,973
168
3.38
3,505
95
2.71
HSBC Bank Malaysia
238
5
2.10
98
2
2.04
HSBC Bank Middle East
888
27
3.04
1,104
23
2.08
North America
HSBC Bank USA
4,251
202
4.75
3,833
74
1.93
HSBC Bank Canada
926
34
3.67
392
8
2.04
HSBC Mexico
1,051
70
6.66
914
48
5.25
South America
Brazilian operations
1
1,355
125
9.23
914
57
6.24
HSBC Bank Argentina
111
8
7.21
140
8
5.71
Other operations
3,962
211
5.33
11,182
206
1.84
74,555
2,666
3.58
76,464
1,539
2.01
Customer accounts
5
Europe
HSBC Bank
186,996
5,359
2.87
169,501
3,986
2.35
HSBC
              Private Banking
Holdings
              (Suisse)
19,908
622
3.12
17,339
377
2.17
HSBC France
24,538
611
2.49
22,072
575
2.61
Hong Kong
Hang Seng Bank
51,460
874
1.70
50,944
290
0.57
The
    Hongkong and Shanghai
Banking Corporation
95,496
1,322
1.38
92,579
392
0.42
Rest of Asia-Pacific
The
                Hongkong and Shanghai
Banking Corporation
48,997
1,293
2.64
42,625
891
2.09
HSBC Bank Malaysia
6,123
157
2.56
5,744
151
2.63
HSBC Bank Middle East
8,696
207
2.38
5,978
60
1.00
North America
HSBC Bank USA
60,795
1,385
2.28
52,813
680
1.29
HSBC Bank Canada
21,635
475
2.20
18,191
351
1.93
HSBC Mexico
8,272
188
2.27
11,157
377
3.38
South America
Brazilian operations
1
10,790
1,859
17.23
5,787
842
14.55
HSBC Bank Argentina
903
28
3.10
898
27
3.01
Other operations
44,816
1,273
2.84
56,494
918
1.62
589,425
15,653
2.66
552,122
9,917
1.80
For footnotes, see page 113.
108
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Total equity and
liabilities
(continued)
Year ended 31 December
2005
2004
Average
Interest
Average
Interest
balance
expense
Cost
balance
expense
Cost
US$m
US$m
%
US$m
US$m
%
Financial liabilities designated at fair value –
own debt issued
6
Europe
HSBC Holdings
13,928
496
3.56
HSBC Bank
5,919
327
5.52
North America
HSBC Bank USA
1,469
96
6.54
HSBC Finance
28,146
1,098
3.90
Other operations
288
20
6.94
49,750
2,037
4.09
Debt securities in issue
Europe
HSBC Bank
28,620
1,817
6.35
26,320
1,103
4.19
HSBC France
14,271
314
2.20
16,250
434
2.67
HSBC Finance
3,330
77
2.31
3,524
163
4.63
Hong Kong
Hang Seng Bank
1,523
53
3.48
1,266
30
2.37
The
    Hongkong and Shanghai
Banking Corporation
–
–
–
11,192
437
3.90
Rest of Asia-Pacific
The
                Hongkong and Shanghai
Banking Corporation
6,523
315
4.83
5,313
229
4.31
HSBC Bank Malaysia
572
16
2.80
261
8
3.07
North America
HSBC Bank USA
25,537
1,073
4.20
11,125
376
3.38
HSBC Finance
75,913
3,399
4.48
101,269
2,751
2.72
HSBC Bank Canada
7,963
268
3.37
5,994
165
2.75
HSBC Mexico
4,585
285
6.22
3,566
134
3.76
South America
Brazilian operations
1
401
67
16.71
360
65
18.06
HSBC Bank Argentina
7
1
14.29
95
7
7.37
Other operations
6,834
90
1.32
18,136
234
1.29
176,079
7,775
4.42
204,671
6,136
3.00
Other interest-bearing liabilities
Europe
HSBC Bank
23,924
547
2.29
30,504
870
2.85
HSBC
              Private Banking
Holdings
              (Suisse)
4,247
130
3.06
2,505
38
1.52
HSBC France
14,154
220
1.55
20,117
601
2.99
HSBC Finance
5,299
361
6.81
4,298
258
6.00
Hong Kong
Hang Seng Bank
1,228
36
2.93
1,161
22
1.89
The
              Hongkong and Shanghai
Banking
    Corporation
6,981
221
3.17
10,495
171
1.63
Rest of Asia-Pacific
The
    Hongkong and Shanghai
Banking Corporation
13,725
460
3.35
12,972
228
1.76
HSBC Bank Malaysia
137
4
2.92
195
3
1.54
HSBC Bank Middle East
767
23
3.00
407
20
4.91
North America
HSBC Bank USA
13,287
1,332
10.02
12,618
324
2.57
HSBC Bank Canada
856
12
1.40
938
20
2.13
HSBC Markets Inc
4,718
121
2.56
12,652
460
3.64
HSBC Mexico
1,258
30
2.38
195
15
7.69
South America
Brazilian operations
1
2,264
86
3.80
565
47
8.32
HSBC Bank Argentina
35
4
11.43
319
3
0.94
Other operations
(62,593
)
(2,958
)
(64,040
)
(1,301
)
30,287
629
2.08
45,901
1,779
3.88
For footnotes, see on page 113.
109
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H
        S B C   H O L D I N G S   P L C
Financial
Review
(continued)
Total equity and
liabilities
(continued)
Year ended 31 December
2005
2004
Average
Interest
Average
Interest
balance
expense
Cost
balance
expense
Cost
US$m
US$m
%
US$m
US$m
%
Total interest-bearing liabilities
Europe
HSBC Bank
278,131
9,087
3.27
253,275
6,371
2.52
HSBC
              Private Banking Holdings (Suisse)
25,041
772
3.08
21,290
442
2.08
HSBC France
71,115
1,732
2.44
80,601
2,136
2.65
HSBC Finance
8,667
470
5.42
8,152
421
5.16
Hong Kong
Hang Seng Bank
56,087
1,024
1.83
54,056
357
0.66
The
                Hongkong and Shanghai
Banking Corporation
105,907
1,659
1.57
117,404
1,038
0.88
Rest of Asia-Pacific
The
    Hongkong and Shanghai
Banking Corporation
74,218
2,236
3.01
64,415
1,443
2.24
HSBC Bank Malaysia
7,070
182
2.57
6,298
163
2.59
HSBC Bank Middle East
10,351
289
2.79
7,489
103
1.38
North America
HSBC Bank USA
105,339
4,088
3.88
80,389
1,454
1.81
HSBC Finance
116,164
4,933
4.25
112,973
2,964
2.62
HSBC Bank Canada
31,380
789
2.51
25,516
544
2.13
HSBC Markets Inc
4,718
121
2.56
28,563
701
2.45
HSBC Mexico
15,165
573
3.78
15,832
574
3.63
South America
Brazilian operations
1
14,810
2,137
14.43
7,626
1,010
13.24
HSBC Bank Argentina
1,056
41
3.88
1,453
46
3.17
Other operations
(17,224
)
(1,373
)
(6,174
)
(396
)
907,995
28,760
3.17
879,158
19,371
2.20
Summary
Total interest-margin liabilities
907,995
28,760
3.17
879,158
19,371
2.20
Trading liabilities
211,059
5,024
2.38
Financial liabilities
designated at fair value (excluding own debt issued)
9,787
Non-interest-bearing current accounts
65,509
56,043
Total equity and other non-interest-bearing liabilities
307,590
314,140
Total equity and liabilities
1,501,940
33,784
2.25
1,249,341
19,371
1.55
Net interest margin
Year ended 31 December
2005
2004
%
%
Europe
HSBC Bank
2.08
2.41
HSBC
    Private Banking Holdings (Suisse)
1.03
0.82
HSBC France
1.30
1.44
HSBC Finance
5.79
6.99
Hong Kong
Hang Seng Bank
2.19
2.08
The
    Hongkong and Shanghai Banking Corporation
2.20
1.74
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
2.00
1.96
HSBC Bank Malaysia
2.80
2.56
HSBC Bank Middle East
3.46
3.69
North America
HSBC Bank USA
2.31
2.90
HSBC Finance
6.97
8.74
HSBC Bank Canada
2.40
2.41
HSBC Mexico
7.65
5.82
South America
Brazilian operations
1
11.44
13.29
HSBC Bank Argentina
7.87
5.18
Other operations
7
0.20
0.03
3.14
3.19
For footnotes, see page 113.
110
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Analysis
    of changes in net interest income
The following
    table allocates changes in net interest income between volume and rate for
2005 compared with 2004. Changes due to a combination of volume
and rate, and
    the effect of reclassifying items on the adoption of IAS 32 and IAS 39 at
1 January 2005, are allocated to rate.
Interest
    income
2005
    compared with 2004
Increase/(decrease)
2005
Volume
Rate
2004
US$m
US$m
US$m
US$m
Short-term funds and loans and advances to banks
Europe
HSBC Bank
774
(64
)
169
669
HSBC Private Banking Holdings (Suisse)
156
32
35
89
HSBC France
387
(339
)
(234
)
960
Hong Kong
Hang Seng Bank
288
(7
)
74
221
The
    Hongkong and Shanghai Banking
Corporation
1,058
167
353
538
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking
Corporation
351
54
99
198
HSBC Bank Malaysia
49
11
2
36
HSBC Bank Middle East
111
29
53
29
North America
HSBC Bank USA
151
30
65
56
HSBC Bank Canada
62
(1
)
18
45
HSBC Mexico
228
(47
)
48
227
South America
Brazilian operations
1
565
164
164
237
HSBC Bank Argentina
7
–
4
3
Other operations
456
(76
)
203
329
4,643
(5
)
1,011
3,637
Trading assets
3,023
Loans and advances to customers
Europe
HSBC Bank
12,223
1,817
885
9,521
HSBC Private Banking Holdings (Suisse)
211
27
69
115
HSBC France
1,710
(8
)
(174
)
1,892
HSBC Finance
1,086
77
(46
)
1,055
Hong Kong
Hang Seng Bank
1,323
47
394
882
The
    Hongkong and Shanghai Banking Corporation
2,061
70
585
1,406
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
2,659
478
400
1,781
HSBC Bank Malaysia
325
25
22
278
HSBC Bank Middle East
635
147
70
418
North America
HSBC Bank USA
5,594
1,197
1,461
2,936
HSBC Finance
13,307
439
(278
)
13,146
HSBC Bank Canada
1,439
286
54
1,099
HSBC Mexico
1,210
205
127
878
South America
Brazilian operations
1
2,647
879
241
1,527
HSBC Bank Argentina
122
1
20
101
Other operations
1,352
(266
)
505
1,113
47,904
5,230
4,526
38,148
For
    footnotes, see page 113.
111
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H S B C   H O L D I N G S   P L C
Financial
Review
(continued)
Interest income
(continued)
2005
    compared with 2004
Increase/(decrease)
2005
Volume
Rate
2004
US$m
US$m
US$m
US$m
Financial investments
Europe
HSBC Bank
1,297
487
(14
)
824
HSBC Private Banking Holdings (Suisse)
299
(59
)
55
303
HSBC France
143
(85
)
(12
)
240
Hong Kong
Hang Seng Bank
815
61
247
507
The
    Hongkong and Shanghai Banking Corporation
924
(99
)
244
779
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
592
(27
)
82
537
HSBC Bank Malaysia
41
1
–
40
HSBC Bank Middle East
44
5
12
27
North America
HSBC Bank USA
864
51
(71
)
884
HSBC Finance
221
(8
)
63
166
HSBC Bank Canada
116
26
25
65
HSBC Mexico
583
121
67
395
South America
Brazilian operations
1
324
225
(29
)
128
HSBC Bank Argentina
23
3
8
12
Other operations
881
9
308
564
7,167
387
1,309
5,471
Deposits by banks
Europe
HSBC Bank
1,037
87
538
412
HSBC Private Banking Holdings (Suisse)
20
(10
)
3
27
HSBC France
582
(100
)
156
526
Hong Kong
Hang Seng Bank
61
24
23
14
The
    Hongkong and Shanghai Banking Corporation
116
4
73
39
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
168
40
33
95
HSBC Bank Malaysia
5
3
–
2
HSBC Bank Middle East
27
(5
)
9
23
North America
HSBC Bank USA
202
8
120
74
HSBC Bank Canada
34
11
15
8
HSBC Mexico
70
7
15
48
South America
Brazilian operations
1
125
28
40
57
HSBC Bank Argentina
8
(2
)
2
8
Other operations
211
(133
)
138
206
2,666
(38
)
1,165
1,539
For footnotes, see page 113.
112
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Interest expense
2005
    compared with 2004
Increase/(decrease)
2005
Volume
Rate
2004
US$m
US$m
US$m
US$m
Customer accounts
Europe
HSBC Bank
5,359
411
962
3,986
HSBC Private Banking Holdings (Suisse)
622
56
189
377
HSBC France
611
64
(28
)
575
Hong Kong
Hang Seng Bank
874
3
581
290
The
    Hongkong and Shanghai Banking Corporation
1,322
12
918
392
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
1,293
133
269
891
HSBC Bank Malaysia
157
10
(4
)
151
HSBC Bank Middle East
207
27
120
60
North America
HSBC Bank USA
1,385
103
602
680
HSBC Bank Canada
475
66
58
351
HSBC Mexico
188
(97
)
(92
)
377
South America
Brazilian operations
1
1,859
728
289
842
HSBC Bank Argentina
28
–
1
27
Other operations
1,273
(190
)
545
918
15,653
670
5,066
9,917
Financial liabilities designated at fair value – own debt issued
2,037
Debt securities in issue
Europe
HSBC Bank
1,817
96
618
1,103
HSBC France
314
(53
)
(67
)
434
HSBC Finance
77
(9
)
(77
)
163
Hong Kong
Hang Seng Bank
53
6
17
30
The
    Hongkong and Shanghai Banking Corporation
–
(437
)
–
437
Rest of Asia-Pacific
The
    Hongkong and Shanghai Banking Corporation
315
52
34
229
HSBC Bank Malaysia
16
10
(2
)
8
North America
HSBC Bank USA
1,073
487
210
376
HSBC Finance
3,399
(689
)
1,337
2,751
HSBC Bank Canada
268
54
49
165
HSBC Mexico
285
38
113
134
South America
Brazilian operations
1
67
7
(5
)
65
HSBC Bank Argentina
1
(6
)
–
7
Other operations
90
(146
)
2
234
7,775
(857
)
2,496
6,136
Footnotes to 'Average balance sheet and net interest income'
1
Brazilian operations comprise HSBC Bank Brasil S.A.-Banco Múltiplo and subsidiaries, plus Banco Lloyds TSB S.A. and Losango Promotora de Vendas Limitada.
2
Interest income on trading assets is reported as 'Net trading income' in the consolidated income statement in 2005.
3
Interest income on financial assets designated at fair value is reported as 'Net income from financial instruments designated at fair value' in the consolidated income
statement.
4
Further analysis is given on page 179.
5
Further analysis is given on page 180.
6
Interest expense on financial liabilities designated at fair value is reported as 'Net income on financial liabilities designated at fair value' in the consolidated
income statement other than interest on own debt.
7
Excludes eliminations (see note (iii)).
113
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H S B C   H O L D I N G S   P L C
Financial
Review
(continued)
Notes
(i)
Average balances are based on daily averages for the principal areas of HSBC's banking activities with monthly or less frequent averages used elsewhere.
(ii)
In 2004 'Loans accounted for on a non-accrual basis' and 'Loans on which interest has been accrued but suspended' were included in 'Loans and advances
to banks' and 'Loans and advances to customers'. Interest income on such loans was included in the consolidated income statement to the extent to which it had been received.
(iii)
Balances and transactions with fellow subsidiaries are reported gross in the principal commercial banking and consumer finance entities within 'Other interest-earning
assets' and 'Other interest-bearing liabilities' as appropriate and the elimination entries are included within 'Other operations' in those two categories.
(iv)
Other than as noted in (iii) above, 'Other operations' comprise the operations of the principal commercial banking and consumer finance entities outside their domestic
markets and all other banking operations.
(v)
In 2004 non-equity minority interests were included within shareholders' equity and other non interest-bearing liabilities and the related coupon payments were included
within 'Profit attributable to minority interests'.
114
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Risk management
(Audited IFRS 7 information)
All HSBC's
    activities involve analysis, evaluation,
acceptance
    and management of some degree of risk
or
    combination of risks. The most important types of risk are credit risk (which
    includes country and cross-border risk), liquidity risk, market risk, residual
    value risk, reputational risk, operational risk and insurance risk. Market
  risk includes foreign exchange, interest rate and equity price risk.
HSBC's
    risk management policies are designed
to
    identify and analyse these risks, to set appropriate risk limits and controls,
    and to monitor the risks and adherence to limits by means of reliable and
    up-to-date administrative and information systems. HSBC regularly reviews
    its risk management policies and emerging best practice. Individual responsibility
    and accountability, instilled through training, are designed to deliver a
    disciplined, conservative and constructive culture of risk management and
  control.
The
    Group Management Board, under authority delegated by the Board of Directors,
    formulates high level Group risk management policy. A separately constituted
    Risk Management Meeting monitors risk and receives reports which allow it
    to
review the effectiveness of HSBC's risk management policies.
The
    management of all risks that are significant
to
    HSBC is discussed below. The insurance businesses manage their own credit,
    liquidity and market risk along with insurance risk, so these risks are discussed
  separately from those relating to the operations' section.
Credit
      risk management
(Audited
      IFRS 7 information)
Credit risk
    is the risk of financial loss if a customer or counterparty fails to meet
    an obligation under a contract. It arises principally from lending, trade
    finance, treasury and leasing business. HSBC hasfinance, treasury and leasing
    business. HSBC has standards, policies and procedures dedicated to controlling
    and monitoring
risk from all such activities.
Within
    Group Head Office, a separate function, Group Credit and Risk, is mandated
    to provide high-level centralised management of credit risk for HSBC worldwide.
    Group Credit and Risk is headed by a Group General Manager who reports to
  the Group Chief Executive. Its responsibilities include the following:
•
Formulating
        credit policies. These are embodied
in
        the HSBC standards with which all HSBC's
operating
        companies are required to comply in
formulating
        and recording in dedicated manuals
their own more detailed credit
        policies and
procedures.
        All such credit policies and
procedures are monitored by Group Credit
and
    Risk.
•
Establishing
        and maintaining HSBC's large
credit
        exposure policy. This policy delineates
HSBC's maximum exposures
        to individual
customers,
        customer groups and other risk
concentrations in an approach which is designed
to
        be more conservative than internationally
accepted regulatory standards. All HSBC's
operating
    companies are required to comply
with the policy.
•
Issuing
        lending
guidelines to HSBC's operating
companies
on the Group's attitude towards, and
appetite for, lending
to,
inter
alia
,
specified
market
sectors and industries. Each HSBC
operating
company and major business unit is
required to base its
own lending guidelines on
HSBC's
standards, regularly update them and
disseminate them to all credit
and lending
executives.
•
Undertaking
        an independent review and
objective
        assessment of risk. Group Credit and
Risk assesses all commercial
        non-bank credit
facilities
        originated by HSBC's operating
companies in excess of designated
        limits, prior
to
        the facilities being committed to customers.
Operating
        companies may not confirm credit
approval
        without this concurrence. Renewals
and reviews of commercial non-bank
        facilities
over
    designated levels are subject to the same
process.
•
Controlling
        exposures to banks and other
financial
        institutions. HSBC's credit and
settlement risk limits to counterparties
        in the
finance
        and government sectors are approved
centrally to optimise the use
        of credit
availability
        and avoid excessive risk
concentration. A dedicated unit within Group
Credit
        and Risk controls and manages these
exposures globally using centralised systems
and
    automated processes.
•
Managing
        exposures to debt securities by
establishing
        controls in respect of the liquidity
of securities held for trading
        and setting issuer
limits
        for securities held-to-maturity. Separate
portfolio limits are established
        for asset-backed
securities
    and similar instruments.
•
Controlling
        cross-border exposures. A dedicated
unit
    within Group Credit and Risk uses
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H S B C   H O L
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Financial Review
(continued)
centralised
        systems to manage country and
cross-border
        risk through the imposition of
country limits with sub-limits
        by maturity and
type
        of business. Country limits are determined
by taking into account economic
        and political
factors,
        and applying local business knowledge.
Transactions with countries
        deemed to be high
risk
    are considered on a case-by-case basis.
•
Controlling
        exposures to selected industries.
Group
        Credit and Risk controls HSBC's
exposures to the shipping, aviation
        and
automobile
        sectors, and closely monitors
exposures to other industries such as insurance
and
        real estate. When necessary, restrictions are
imposed on new business, or exposures in
HSBC's
    operating companies are capped.
•
Maintaining
        and developing HSBC's risk
ratings
        in order to categorise exposures
meaningfully and facilitate
        focused management
of
        the attendant risks. Historically, HSBC's risk
rating framework has consisted
        of a minimum of
seven
        grades, taking into account the risk of
default and the availability
        of security or other
credit
        risk mitigation. A more sophisticated risk-
rating framework for banks and
        other customers,
based
        on default probability and loss estimates
and comprising up to 22 categories,
        is being
progressively
    implemented across the HSBC Group and
        is already operative in most major
business
        units. This new approach will
increasingly allow a more granular
        analysis of
risk
        and trends. Rating methodology is based
upon a wide range of financial
        analytics together
with
        market data-based tools which are core
inputs to the assessment of
        counterparty risk.
Although
        automated risk-rating processes are
increasingly in use, for the
        larger facilities
ultimate
        responsibility for setting risk grades
rests in each case with the
        final approving
executive.
        Risk grades are reviewed frequently
and amendments, where necessary,
        are
implemented
      promptly.
•
Reviewing
        the performance and effectiveness of
operating
    companies' credit approval processes. Regular
        reports are provided to Group Credit
and
        Risk on the credit quality of local portfolios
and corrective action is taken
      where necessary.
•
Reporting
        to certain senior executives on
aspects
        of the HSBC loan portfolio. These
executives, as well as the Group
        Management
Board,
        the Risk Management Meeting, the
Group Audit Committee and the Board of
Directors
        of HSBC Holdings, receive a variety
of
    regular reports covering:
–
risk concentrations
    and exposure to industry sectors;
–
large customer
    group exposures;
–
emerging
    market debt and impairment allowances;
–
large impaired
    accounts and impairment allowances;
–
specific
        segments of the portfolio: real estate, automobiles, insurance, aviation
    and shipping, as well as ad hoc reviews;
–
country
    limits, cross-border exposures and impairment allowances; and
–
causes
        of unexpected
loss and lessons learned.
•
Managing
        and directing credit-related systems initiatives. HSBC has a centralised
        database of large corporate, sovereign and bank facilities and is constructing
        a database comprising all Group credit assets. A systems-based credit
        application process for bank lending is operational in all jurisdictions
        and an electronic corporate credit application system is deployed in
    all of the Group's major businesses.
•
Providing
        advice and guidance to HSBC's operating companies in order to promote
    best practice throughout the Group on credit-related matters such as:
–
regulatory
    developments;
–
implementing
    environmental and social responsibility policies;
–
risk modelling
    and portfolio collective impairment allowances;
–
new products;
–
training
    courses; and
–
credit-related
    reporting.
•
Acting
        on behalf of HSBC Holdings as the primary interface for credit-related
        issues with external parties including the Bank of England, the FSA,
        rating agencies, corporate analysts, trade associations and counterparts
    in the world's major banks and non-bank financial institutions.
Each
        operating company is required to implement credit policies, procedures
        and lending guidelines which conform to HSBC Group standards, with credit
        approval authorities delegated from the Board of Directors of HSBC Holdings
        to the
relevant Chief Executive Officer. In each major
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subsidiary,
    management includes a Chief Credit and Risk Officer who reports to the local
    Chief Executive Officer on credit-related issues. All Chief Credit and Risk
    Officers have a functional reporting line to the Group General Manager, Group
    Credit and Risk. Each operating company is responsible for the quality and
    performance of its credit portfolios and for monitoring and controlling all
    credit risks in its portfolios, including those subject to central approval
    by Group Credit and Risk. This includes managing its own risk concentrations
    by market sector, geography and product. Local systems are in place throughout
    the Group to enable operating companies to control and monitor exposures
  by customer and counterparty.
Special attention is paid to problem loans. When appropriate, specialist units are established by HSBC's operating companies to provide customers with
support in order to help them avoid default wherever possible, thereby maximising recoveries for HSBC.
Regular audits of operating companies' credit processes are undertaken by HSBC's Internal Audit function. Audits include a consideration of the
completeness and adequacy of credit manuals and lending guidelines; an in-depth analysis of a representative sample of accounts; an overview of homogeneous portfolios of similar assets to assess the quality of the loan book and other exposures; and
a check that Group standards and policies are adhered to in the extension and management of credit facilities. Individual accounts are reviewed to ensure that risk grades are appropriate, that credit and collection procedures have been properly
followed and that, when an account or portfolio evidences deterioration, impairment allowances are raised in accordance with the Group's established processes. Internal Audit discuss with management risk ratings they consider to be
inappropriate, and their subsequent recommendations for revised grades must then be assigned to the facilities concerned.
Collateral and other credit enhancements
Loans and advances
(Audited
IFRS 7 information)
When appropriate, operating companies are required to implement guidelines on the acceptability of specific classes of collateral or credit risk mitigation, and determine valuation
parameters. Such parameters are expected to be conservative, reviewed regularly and supported by empirical evidence. Security structures and legal covenants are subject to regular review to ensure that they continue to fulfil their intended purpose
and remain in line with local market practice. While collateral is an
important mitigant to credit risk, it is HSBC's policy to establish that loans are within the customer's capacity to repay rather than to rely excessively on security. In
certain cases, depending on the customer's standing and the type of product, facilities may be unsecured. The principal collateral types are as follows:
•
in the
        personal sector, mortgages over
residential
      properties;
•
in the
        commercial and industrial sector, charges
over
      business assets such as premises, stock and
debtors;
•
in the
        commercial real estate sector, charges
over
      the properties being financed; and
•
in the
        financial sector, charges over financial
instruments
      such as debt securities and equities
in support of trading facilities.
Other securities
(Audited IFRS 7 information)
Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt securities, treasury and other eligible bills are
generally unsecured with the exception of asset backed securities and similar instruments, which are secured by pools of financial assets.
The ISDA Master Agreement is HSBC's preferred agreement for documenting derivatives activity. It provides the contractual framework within which dealing
activity across a full range of over-the-counter ('OTC'), products is conducted and contractually binds both parties to apply close-out netting across all outstanding transactions covered by an agreement, if either party defaults or
following other pre-agreed termination events. It is common for the parties to execute a Credit Support Annex ('CSA') in conjunction with the ISDA Master Agreement, a practice HSBC encourages. Under a CSA, collateral is passed between the
parties to mitigate the market contingent counterparty risk inherent in the outstanding positions.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding receipt in cash,
securities or equities. Daily Settlement Limits are established for each counterparty, to cover the aggregate of all settlement risk arising from HSBC's investment banking and markets transactions on any single day. Settlement risk on many
transactions, particularly those involving securities and equities, is substantially mitigated when effected via Assured Payment Systems, or on a delivery versus payment basis.
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(continued)
Maximum
    exposure to credit risk
Maximum
      exposure
to credit risk before collateral held or other credit enhancements
Maximum exposure
(Audited IFRS 7 information)
US$m
Items in course of collection from other banks
11,300
Trading assets
212,705
Treasury
    and other eligible bills
12,746
Debt
    securities
117,659
Loans
      and advances
82,300
Financial assets designated at fair value
6,513
Treasury
      and other eligible bills
53
Debt
    securities
5,705
Loans
      and advances
755
Derivatives
73,928
Loans and advances to banks
125,965
Loans and advances to customers
740,002
Financial investments
174,822
Treasury
    and other eligible bills
25,041
Debt
      securities
149,781
Other assets
Endorsements
    and acceptances
7,973
Other
10,981
Financial guarantees and other credit related contingent liabilities
66,805
Loan commitments and other credit related commitments
12,216
At 31 December 2005
1,443,210
Concentration
  of exposure
Loans and advances
Loans and advances
  are well spread across both industry sectors and jurisdictions.
At
    constant exchange rates, and excluding the US$44 billion grossing adjustment
    to meet IFRSs requirements, gross loans and advances to customers (excluding
    the finance sector and settlement accounts) grew by US$71 billion, or
    12 per cent, during 2005. On the same basis, personal lending comprised 63
    per cent of HSBC's loan portfolio and 63 per cent of the growth in loans
    in
2005.
Including
    the financial sector and settlement accounts, personal lending represented
    US$420 billion, or 56 per cent, of total loans and advances to customers
    at 31 December 2005. Within this total, secured residential mortgages were
    US$234 billion and, at 31 per cent, of total advances to customers, the
  Group's largest single concentration.
Commercial
    and financial lending, including settlement accounts, comprised 44 per cent
    of gross lending to customers at 31 December 2005. The largest single industry
    concentrations were in non-bank financial institutions and commercial real
    estate lending, each of which amounted to 7 per cent of total gross lending
  to customers, broadly in line with 2004.
Commercial, industrial and international trade lending grew strongly in 2005, particularly in the retail and services industries. This, together with the
IFRS grossing change mentioned above, increased commercial and financial lending by just over 2 percentage points to 17 per cent of total gross loans and advances. Within this category of lending, no individual industry exceeded 4 per cent of total
gross lending.
Advances to banks are widely distributed, principally to major institutions, and with no single exposure more than 5 per cent of total advances to
banks.
Financial investments
Total financial investments were broadly in line with 2004. Investments of US$96 billion in corporate debt and other securities were the largest single concentration of these, rising
to 53 per cent of overall investments from 45 per cent at 31 December 2004. Nearly three quarters of these holdings, which were spread across a wide range of issuers, as well as geographically, were in debt securities issued by banks and other
financial institutions.
Investments in governments and government agencies of US$76 billion were 42 per cent of overall financial investments, broadly in line with 2004. One
third of these investments were held in treasury and other eligible bills.
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The insurance businesses have a diversified portfolio of debt securities designated at fair value (US$5 billion) and debt securities classified as
financial investments (US$9 billion).
Securities held for trading
Total securities within trading assets were US$150 billion. The largest single class of these assets is governments and government agency assets,
which amounted to US$72 billion, or 48 per cent of overall trading securities. This included US$13 billion of treasury and other eligible bills.
Corporate debt and other securities were US$55 billion or 37 per cent of overall trading securities. In percentage terms this was broadly in line with
2004. Included within this were US$17 billion of debts securities issued by banks and other financial institutions.
Gross loans and advances by industry sector
At
Constant
At
31 December
currency
Grossing/
Underlying
31 December
2004
effect
offsetting
2
change
2005
US$m
US$m
US$m
US$m
US$m
Loans and advances to customers
Personal:
Residential
    mortgages
222,464
(7,701
)
–
19,103
233,866
Hong
    Kong Government Home
Ownership Scheme
5,383
14
–
(717
)
4,680
Other
    personal
160,005
(4,267
)
–
26,192
181,930
Total
    personal
387,852
(11,954
)
–
44,578
420,476
Corporate and commercial:
Commercial, industrial
and
international
trade
101,876
(6,171
)
21,626
13,471
130,802
Commercial
    real estate
43,469
(2,222
)
199
10,369
51,815
Other
    property-related
20,749
(761
)
1,353
855
22,196
Government
10,527
(388
)
622
(2,543
)
8,218
Other commercial
1
55,151
(3,993
)
10,606
3,914
65,678
Total
    corporate and commercial
231,772
(13,535
)
34,406
26,066
278,709
Financial:
Non-bank
    financial institutions
52,329
(3,679
)
9,840
(8,458
)
50,032
Settlement
    accounts
13,819
(497
)
–
(11,180
)
2,142
Total
    financial
66,148
(4,176
)
9,840
(19,638
)
52,174
Total loans and advances to customers
685,772
(29,665
)
44,246
51,006
751,359
Loans and advances to banks
143,466
(5,694
)
–
(11,798
)
125,974
Total gross loans and advances
829,238
(35,359
)
44,246
39,208
877,333
1
Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.
2
Under IAS32 there are restrictions on the ability to offset, for presentational purposes, loans and advances in respect of customers who maintain both deposit and borrowing
relationships with HSBC. This represents the amounts 'grossed up' at 31 December 2005 to isolate underlying charges on the net basis on which HSBC continues to treat such loans and advances for the purpose of credit risk
management.
The commentary below analyses the underlying changes in lending noted in the table above, measured against the position at 31 December 2004. On this basis, total loans and advances to
customers grew by 8 per cent, and total gross loans and advances increased by 5 per cent.
Residential mortgages increased by 9 per cent to US$234 billion and comprised 31 per cent of total gross loans to customers (including the finance sector
and settlement accounts) at 31 December 2005. Growth was particularly strong in the UK, where residential mortgages increased by 17 per cent to US$68 billion, and in North America, where
mortgages increased by US$5 billion to US$118 billion.
In North America, mortgage growth was concentrated in HSBC Finance in the US, where a continued focus on expanding the secured lending portfolio through the
correspondent and branch based businesses generated an 18 per cent increase in mortgage lending. There was also a continued focus on junior lien loans through portfolio acquisitions and purchasing newly originated loans through flow correspondents.
This was partly offset by a reduction in the US bank, as newly originated prime mortgages were sold into the secondary market. In Canada,
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(continued)
branch expansions
    in the consumer finance business delivered a 17 per cent increase in mortgage
  lending.
Residential
    mortgage balances in Hong Kong were broadly flat, in what remained a highly
    competitive market. There was a net repayment in mortgages under the Hong
    Kong GHOS, under which new advances remained suspended. In the rest of Asia-Pacific,
    an increase of 22 per cent in mortgage lending was driven by operations in
    the Middle East, India, Taiwan, South Korea, mainland China and Singapore,
  in each of which growth was over 30 per cent.
Other
    personal lending increased by 17 per cent to US$182 billion, and represented
    24 per cent of total gross loans to customers at 31 December 2005. The acquisition
    of Metris in December 2005 increased personal loans by US$5 billion,
    or 3 percentage points of the growth in 2005. Including and in part due to
    this, some 75 per cent of growth was in North America. Organic growth within
    the US in HSBC branded prime, Union Privilege and non-prime portfolios, partly
    offset by the continued decline in certain older acquired portfolios, also
    contributed to the increase. The US vehicle finance business reported strong
    organic growth, principally in the near-prime portfolios. This came from
    newly originated loans acquired through the dealer network, growth in the
    consumer direct loan programme and expanded distribution through alliance
    channels. Growth in personal non-credit card lending
reflected HSBC's increasing the availability of this product in the second
half of 2004, as a result of an improving US economy, as well as the success
of several large direct mail campaigns launched in 2005.
In
    Europe, the charge-off of substantially provided personal loans against provisions
    masked the underlying growth in lending: Other personal lending net of impairment
    reserves grew by 13 per cent. In the UK, growth in credit card and other
    unsecured lending was driven by pricing and marketing initiatives, against
    the backdrop of subdued consumer spending. In Turkey, credit card lending
    rose markedly,
also helped by marketing campaigns.
In the Rest of Asia-Pacific, continuing expansion of the credit card base and higher utilisation of cards by existing customers, together with successful
marketing, contributed to a 25 per cent increase in lending. In South America, marketing and new product launches, combined with improved consumer sentiment, contributed to underlying growth of 26 per cent in Brazil.
Loans and advances to the corporate and commercial sectors grew by 12 per cent during 2005, predominantly in the Commercial Banking customer group.
In Europe, corporate and commercial advances increased by 10 per cent, reflecting customer demand for credit, as well as new customer acquisition,
particularly in the property, distribution and services sectors. In Hong Kong, an 11 per cent increase was mainly in the property and manufacturing sectors, in part reflecting the benefit of economic expansion in mainland China. This was also
reflected in the Rest of Asia-Pacific, where strong regional economies, and significant government-backed infrastructure and property projects, also contributed to the 16 per cent increase overall. In North America, a 15 per cent increase was driven
by lending to finance real estate projects and construction, as well as increases in most other sectors and industries.
The following tables analyse loans by industry sector and by the location of the principal operations of the lending subsidiary or, in the case of the
operations of The Hongkong and Shanghai Banking Corporation, HSBC Bank, HSBC Bank Middle East and HSBC Bank USA, by the location of the lending branch.
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Loans
and advances to customers by industry sector and by geographical region
At 31 December 2005
(Audited IFRS 7 information)
Gross loans
Gross
by industry
Rest of
loans and
sector as a
Hong
Asia-
North
South
advances to
% of total
Europe
Kong
Pacific
America
America
customers
gross loans
US$m
US$m
US$m
US$m
US$m
US$m
%
Personal
Residential
    mortgages
73,923
23,812
17,641
118,298
192
233,866
31.1
Hong
            Kong Government
Home
    Ownership Scheme
–
4,680
–
–
–
4,680
0.6
Other
    personal
55,672
9,978
11,178
100,116
4,986
181,930
24.2
129,595
38,470
28,819
218,414
5,178
420,476
55.9
Corporate and commercial
Commercial,
    industrial and
international trade
76,687
16,736
21,286
13,199
2,894
130,802
17.4
Commercial
    real estate
22,071
12,557
5,081
11,911
195
51,815
6.9
Other
    property-related
7,603
6,147
3,426
4,937
83
22,196
3.0
Government
1,821
303
2,147
3,502
445
8,218
1.1
Other commercial
1
41,944
6,922
7,716
7,960
1,136
65,678
8.7
150,126
42,665
39,656
41,509
4,753
278,709
37.1
Financial
Non-bank
    financial
institutions
35,305
1,966
2,202
10,431
128
50,032
6.7
Settlement
    accounts
1,002
505
175
416
44
2,142
0.3
36,307
2,471
2,377
10,847
172
52,174
7.0
Total gross loans and advances
to customers
2
316,028
83,606
70,852
270,770
10,103
751,359
100.0
Percentage of Group loans and
advances
    by geographical
region
42.2%
11.1%
9.4%
36.0%
1.3%
100.0%
Impaired loans
5,068
506
936
4,045
891
11,446
Impaired loans as a percentage of
gross
    loans and advances to
customers
1.6%
0.6%
1.3%
1.5%
8.8%
1.5%
Impairment allowances
outstanding
    against loans
and
    advances
3,491
398
836
5,836
796
11,357
Impairment allowances
outstanding
    as a percentage
of
    impaired loans
68.9%
78.9%
89.3%
144.3%
89.2%
99.2%
1
Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.
2
Included within this total is credit card lending of US$66,020 million.
Included in personal lending in North America are the following balances relating to the US:
2005
2004
US$m
US$m
Residential mortgages – HSBC Bank USA
36,170
43,683
Residential mortgages – HSBC Finance
67,359
55,612
Motor vehicle finance
12,792
11,284
MasterCard/Visa credit cards
26,795
20,300
Private label cards
15,488
13,684
Other unsecured personal lending
35,545
28,448
194,149
173,011
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H S B C   H
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Financial
        Review
(
continued
)
Loans and advances to customers by industry sector and by geographical region
(continued)
At
    31 December 2004
Gross loans
Gross
by industry
Rest of
loans and
sector as a
Hong
Asia-
North
South
advances to
% of total
Europe
Kong
Pacific
America
America
customers
gross loans
US$m
US$m
US$m
US$m
US$m
US$m
%
Personal
Residential
    mortgages
70,546
23,990
14,860
112,861
207
222,464
32.5
Hong
              Kong Government
Home
Ownership
    Scheme.
–
5,383
–
–
–
5,383
0.8
Other
    personal
57,920
9,105
9,079
80,463
3,438
160,005
23.3
128,466
38,478
23,939
193,324
3,645
387,852
56.6
Corporate and commercial
Commercial,
    industrial and
international trade
55,018
14,132
19,177
11,599
1,950
101,876
14.9
Commercial
    real estate
18,917
10,388
4,232
9,798
134
43,469
6.3
Other
    property-related
6,850
5,959
3,350
4,518
72
20,749
3.0
Government
3,663
615
1,432
3,868
949
10,527
1.5
Other commercial
1
34,185
7,294
7,015
5,718
939
55,151
8.1
118,633
38,388
35,206
35,501
4,044
231,772
33.8
Financial
Non-bank
    financial
institutions
30,901
1,932
2,297
17,090
109
52,329
7.6
Settlement
    accounts
4,476
596
305
8,431
11
13,819
2.0
35,377
2,528
2,602
25,521
120
66,148
9.6
Total gross loans and
advances
            to customers
2
282,476
79,394
61,747
254,346
7,809
685,772
100.0
Percentage of Group loans and
advances
    by geographical
region
41.2%
11.6%
9.0%
37.1%
1.1%
100.0%
Impaired loans
3,4
6,039
696
1,160
3,875
657
12,427
Impaired loans as a percentage of
gross loans and advances
3
2.1%
0.9%
1.9%
1.5%
8.4%
1.8%
Specific provisions outstanding
against loans and advances
4
4,036
320
785
4,364
512
10,017
Specific provisions outstanding
as
    a percentage of impaired
loans
3,4
66.8%
46.0%
67.7%
112.6%
77.9%
80.6%
1
Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.
2
Included within this total is credit card lending of US$56,222 million.
3
Net of suspended interest.
4
Included in North America are impaired loans of US$3,782 million and specific provisions of US$3,443 million in HSBC Finance; excluding HSBC Finance, specific provisions
outstanding as a percentage of impaired loans was 54.6 per cent
.
122
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At
    31 December 2003
1
Gross loans
Gross
by industry
Rest of
loans and
sector as a
Hong
Asia-
North
South
advances to
% of total
Europe
Kong
Pacific
America
America
customers
gross loans
US$m
US$m
US$m
US$m
US$m
US$m
%
Personal
Residential
    mortgages
51,721
23,664
12,101
77,754
224
165,464
30.4
Hong
    Kong Government Home
Ownership Scheme
–
6,290
–
–
–
6,290
1.2
Other
    personal
42,041
7,420
7,135
75,173
2,376
134,145
24.7
93,762
37,374
19,236
152,927
2,600
305,899
56.3
Corporate and commercial
Commercial,
    industrial and
international trade
49,468
10,966
14,892
8,907
1,435
85,668
15.7
Commercial
    real estate
15,517
8,548
3,149
7,785
89
35,088
6.5
Other
    property-related
5,416
5,075
2,597
3,994
58
17,140
3.2
Government
2,462
927
1,450
4,104
647
9,590
1.8
Other commercial
1
24,239
6,754
5,735
6,619
683
44,030
8.1
97,102
32,270
27,823
31,409
2,912
191,516
35.3
Financial
Non-bank
    financial
institutions
21,226
4,921
2,027
8,839
78
37,091
6.8
Settlement
    accounts
3,068
556
188
4,767
15
8,594
1.6
24,294
5,477
2,215
13,606
93
45,685
8.4
Total gross loans and advances
to customers
3
215,158
75,121
49,274
197,942
5,605
543,100
100.0
Percentage of Group loans and
advances
    by geographical
region
39.7%
13.8%
9.1%
36.4%
1.0%
100.0%
Non-performing loans
5
5,701
1,671
1,538
5,444
696
15,050
Non-performing loans as a
percentage
    of gross loans and
advances to customers
4
2.6%
2.2%
3.1%
2.8%
12.4%
2.8%
Specific provisions outstanding
against loans and advances
5
3,554
629
981
5,184
530
10,878
Specific provisions outstanding
as
    a percentage of non-
performing
            loans
5
62.3%
37.6%
63.8%
95.2%
76.1%
%
72.3%
1
Figures presented in this table were prepared in accordance with UK GAAP.
2
Other commercial loans and advances include advances in respect of agriculture, transport, energy and utilities.
3
Included within this total is credit card lending of US$48,634 million.
4
Net of suspended interest.
5
Included in North America are non-performing loans of US$4,380 million and specific provisions of US$4,448 million in HSBC Finance; excluding HSBC Finance, specific
provisions outstanding as a percentage of non-performing loans was 69.2 per cent.
123
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H S B C   H
    O L D I N G S   P L C
Financial
        Review
(
continued
)
Loans and advances to customers by industry sector and by geographical region
(continued)
At
    31 December 2002
1
Gross loans
Gross
by industry
Rest of
loans and
sector as a
Hong
Asia-
North
South
advances to
% of total
Europe
Kong
Pacific
America
America
customers
gross loans
US$m
US$m
US$m
US$m
US$m
US$m
%
Personal
Residential
    mortgages
38,719
23,839
7,507
26,666
253
96,984
26.9
Hong
    Kong Government Home
Ownership Scheme
–
7,255
–
–
–
7,255
2.0
Other
    personal
26,748
7,066
5,900
7,836
1,012
48,562
13.4
65,467
38,160
13,407
34,502
1,265
152,801
42.3
Corporate and commercial
Commercial,
    industrial and
international trade
44,424
10,173
12,582
10,773
1,063
79,015
21.8
Commercial
    real estate
11,887
8,336
2,701
6,297
46
29,267
8.1
Other
    property-related
3,970
4,805
2,031
4,515
26
15,347
4.2
Government
2,164
719
933
4,575
562
8,953
2.5
Other commercial
2
22,712
6,612
5,950
4,835
565
40,674
11.2
85,157
30,645
24,197
30,995
2,262
173,256
47.8
Financial
Non-bank
    financial institutions
15,221
2,055
931
9,231
49
27,487
7.6
Settlement
    accounts
2,622
347
192
5,224
–
8,385
2.3
17,843
2,402
1,123
14,455
49
35,872
9.9
Total gross loans and advances
to customers
3
168,467
71,207
38,727
79,952
3,576
361,929
100.0
Percentage of Group loans and
advances
    by geographical
region
46.5%
19.7%
10.7%
22.1%
1.0%
100.0%
Non-performing loans
4
4,495
1,724
2,055
1,773
476
10,523
Non-performing loans as a
percentage
    of gross loans and
advances to customers
4
2.7%
2.4%
5.3%
2.2%
13.3%
2.9%
Specific provisions outstanding
against
    loans and advances
2,774
688
1,321
1,482
341
6,606
Specific provisions outstanding
as
    a percentage of non-
performing loans
4
61.7%
39.9%
64.3%
83.6%
71.6%
62.8%
1
Figures presented in this table were prepared in accordance with UK GAAP.
2
Other commercial loans include advances in respect of agriculture, transport, energy and utilities.
3
Included within this total is credit card lending of US$9,950 million.
4
Net of suspended interest.
124
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At 31 December 2001
1
Gross loans
Gross
by industry
Rest of
loans and
sector as a
Hong
Asia-
North
South
advances to
% of total
Europe
Kong
Pacific
America
America
customers
gross loans
US$m
US$m
US$m
US$m
US$m
US$m
%
Personal
Residential
    mortgages
27,282
23,125
5,134
22,126
548
78,215
24.6
Hong
    Kong Government Home
Ownership Scheme
–
8,123
–
–
–
8,123
2.6
Other
    personal
21,065
6,227
4,616
6,273
1,280
39,461
12.4
48,347
37,475
9,750
28,399
1,828
125,799
39.6
Corporate and commercial
Commercial,
    industrial and
international trade
38,476
9,662
11,226
9,018
1,720
70,102
22.1
Commercial
    real estate
9,475
8,474
2,395
5,877
77
26,298
8.3
Other
    property-related
3,630
4,710
2,169
4,011
69
14,589
4.6
Government
2,393
543
900
728
775
5,339
1.7
Other commercial
1
20,510
6,349
5,457
4,230
617
37,163
11.7
74,484
29,738
22,147
23,864
3,258
153,491
48.4
Financial
Non-bank
    financial
institutions
11,329
1,546
752
12,572
118
26,317
8.3
Settlement
    accounts
2,361
223
189
8,984
4
11,761
3.7
13,690
1,769
941
21,556
122
38,078
12.0
Total gross loans and advances
to customers
3
136,521
68,982
32,838
73,819
5,208
317,368
100.0
Percentage of Group loans and
advances by geographical
region
43.0%
21.7
%
10.3
%
23.3
%
1.7
%
100.0
%
Non-performing loans
4
3,682
2,028
2,723
672
544
9,649
Non-performing loans as a
percentage of gross loans and
advances to customers
4
2.7
%
2.9
%
8.3
%
0.9
%
10.4
%
3.0
%
Specific provisions outstanding
against loans and advances
2,204
856
1,786
289
365
5,500
Specific provisions outstanding
as a percentage of non-
performing loans
4
59.8
%
42.2
%
65.6
%
43.0
%
67.1
%
57.0
%
1
Figures presented in this table were prepared in accordance with UK GAAP.
2
Other commercial loans include advances in respect of agriculture, transport,
    energy and utilities.
3
Included within this total is credit card lending of US$8,289 million.
4
Net of suspended interest.
125
H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Loans and advances to customers by principal area within Rest of Asia-Pacific
and South America
Loans and advances (gross)
Commercial,
international
Residential
Other
Property-
trade and
mortgages
personal
related
other
Total
US$m
US$m
US$m
US$m
US$m
At 31 December 2005
(audited)
Australia and New Zealand
5,912
694
2,588
3,698
12,892
India
1,139
545
104
1,819
3,607
Indonesia
13
338
8
921
1,280
Japan
14
139
696
2,352
3,201
Mainland China
358
11
1,210
3,426
5,005
Malaysia
2,223
871
496
2,925
6,515
Middle East
258
2,320
1,448
9,403
13,429
Singapore
2,811
3,395
1,441
2,249
9,896
South Korea
2,585
460
31
2,219
5,295
Taiwan
2,094
1,057
14
727
3,892
Thailand
23
220
75
958
1,276
Other
211
1,128
396
2,829
4,564
Total of Rest of Asia-Pacific
17,641
11,178
8,507
33,526
70,852
Argentina
4
147
31
1,000
1,182
Brazil
187
4,838
206
3,432
8,663
Other
1
1
41
215
258
Total of South America
192
4,986
278
4,647
10,103
At 31 December 2004
Australia and New Zealand
5,935
635
2,580
3,761
12,911
India
778
371
56
1,440
2,645
Indonesia
12
166
9
769
956
Japan
12
106
689
3,532
4,339
Mainland China
256
10
794
3,329
4,389
Malaysia
2,029
670
407
2,611
5,717
Middle East
129
1,982
1,414
6,327
9,852
Singapore
2,137
3,027
1,262
2,258
8,684
South Korea
1,834
189
6
1,559
3,588
Taiwan
1,509
762
–
805
3,076
Thailand
28
178
75
1,134
1,415
Other
201
983
290
2,701
4,175
Total of Rest of Asia-Pacific
14,860
9,079
7,582
30,226
61,747
Argentina
37
69
21
1,372
1,499
Brazil
170
3,369
158
2,411
6,108
Other
–
–
27
175
202
Total of South America
207
3,438
206
3,958
7,809
Loans and advances to banks by geographical region
Impairment
allowances
(2001-2004:
Gross
provisions
Rest of
loans and
for bad and
Hong
Asia-
North
South
advances
doubtful
Europe
Kong
Pacific
America
America
to banks
debts)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
At 31 December 2005
(audited)
44,369
42,751
19,559
14,013
5,282
125,974
(9
)
At 31 December 2004
56,063
45,710
14,890
24,179
2,624
143,466
(17
)
At 31 December 2003
51,806
38,639
12,948
11,885
1,922
117,200
(24
)
At 31 December 2002
39,398
33,359
10,708
10,391
1,665
95,521
(23
)
At 31 December 2001
40,665
42,516
11,253
7,979
2,252
104,665
(22
)
126
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Credit quality
Loans and advances
Distribution of loans and advances by credit quality
(Audited IFRS 7 information)
At
    31 December 2005
Loans and
Loans and
advances to
advances to
customers
banks
US$m
US$m
Loans and advances:
– neither
    past due nor impaired
731,116
125,930
– past
    due but not impaired
8,797
22
– impaired
11,446
22
751,359
125,974
Distribution of loans and advances neither past due nor impaired
(Audited IFRS 7
information)
The credit quality of the portfolio of loans and advances that were neither past
due nor impaired at
31 December 2005 can be assessed by reference to the Group's standard credit
grading system. The following information is based on that system:
Loans and
Loans and
advances to
advances to
customers
banks
US$m
US$m
Grades:
1 – 3:
    satisfactory risk
705,036
125,324
4 – watch
    list and special mention
19,950
555
5 – sub-standard
    but not impaired
6,130
51
731,116
125,930
Grades 1 and 2 include corporate facilities demonstrating financial condition, risk factors and capacity to repay that are good to excellent, residential
mortgages with low to moderate loan to values ratios, and other retail accounts which are not impaired and are maintained within product guidelines.
Grade 3 represents satisfactory risk and includes corporate facilities that require closer monitoring, mortgages with higher loan to value ratios than grades
1 and 2, all non-impaired credit card exposures, and other retail exposures which operate outside product guidelines without being impaired.
Grades 4 and 5 include corporate facilities that require various degrees of special attention and all retail exposures that are progressively between 30 and
90 days past due.
Loans and advances which were past due but not impaired
(Audited IFRS 7
information)
Loans and advances which were past due at 31 December 2005 but not impaired were
as follows:
Loans and
Loans and
advances to
advances to
customers
banks
US$m
US$m
Past due up to 29 days
4,837
22
Past due 30 – 59 days
1,743
–
Past due 60 – 89 days
583
–
7,163
22
Past due 90 – 179 days
1,368
–
Past due over 180 days but less than 1 year
266
–
8,797
22
This ageing analysis includes loans and advances less than 90 days past due
that have collective impairment allowances set aside to cover credit losses on
loans which are in the
early stages of arrears.
127
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
There are a variety of
reasons why certain loans designated as 'past due' are not regarded
as impaired. Unless other information is available to indicate to the contrary,
all loans less than 90 days past due are not considered impaired. It is also
not unusual for short-term trade finance facilities to extend beyond 90 days
past due for reasons that do not reflect any concern on the creditworthiness
of the counterparty, such as delays in documentation. In addition, past due loans
secured in full by cash collateral are not considered impaired and, where appropriate,
neither are residential mortgages in arrears by more than 90 days where the value
of collateral is sufficient to repay both the debt and all potential interest
for
at least one year.
Impaired loans and advances
(Audited IFRS 7 information)
For individually assessed accounts, loans are treated as impaired as soon as there is objective evidence that an impairment loss has been incurred. The criteria used by HSBC to determine
that there is objective evidence of an impairment loss include,
inter alia
:
–
known cash
        flow
difficulties experienced by the borrower;
–
overdue
    contractual payments of either principal or interest;
–
breach
    of loan covenants or conditions;
–
the probability
        that the borrower will enter bankruptcy or other financial reorganisation;
    and
–
a downgrading
    in credit rating by an external credit rating agency.
Accounts
    in portfolios of homogeneous loans are treated as impaired once facilities
    are 90 days or more overdue. Further information on impaired loans is provided
below in 'Impairment assessment'.
The
      total gross amount of impaired loans and advances to customers as at 31
      December 2005 was US$11,446 million, of which US$4,960 million
      related to
individually impaired loans and advances and
US$6,486
million related to portfolios of homogeneous loans and advances. The following
table presents an analysis of individually impaired loans by industry sector
and by
geographical region:
At 31 December 2005
Gross
impaired
Gross
loans by
impaired
industry
Rest of
loans and
sector as a
Hong
Asia-
North
South
advances to
% of total
Europe
Kong
Pacific
America
America
customers
gross loan
US$m
US$m
US$m
US$m
US$m
US$m
%
Personal
655
256
119
5
–
1,035
20.9
Commercial and corporate
2,562
198
629
338
198
3,925
79.1
Total impaired loans and
advances to customers
3,217
454
748
343
198
4,960
100.0
The types of collateral
or other security held are described above in 'Collateral and other credit
enhancements'.
128
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Loans and advances
  measured at amortised cost – net total credit risk
(Audited IFRS 7 information)
Loans and advances against which HSBC had legally enforceable rights to offset with financial liabilities at 31 December 2005 were as follows:
Amount for
which HSBC
had a legally
Carrying
enforceable
Net total
amount
right to offset
1
credit risk
2
US$m
US$m
US$m
Loans and advances to customers
751,359
(48,495
)
702,864
Loans and advances to banks
125,974
(51
)
125,923
877,333
(48,546
)
828,787
1
Against financial liabilities with the same counterparty.
2
Excluding the value of any collateral or security held.
Debt securities
Debt securities and other bills by rating agency designation
(Audited IFRS 7 information)
The following table
  presents an analysis of debt and similar securities, other than loans, by rating
  agency designation at 31 December 2005, based on Standard and Poor's ratings
or their equivalent:
Treasury
Other
Debt
bills
eligible bills
securities
Total
US$m
US$m
US$m
US$m
AAA
16,798
381
113,429
130,608
AA – to AA +
3,089
264
62,684
66,037
A – to A +
11,147
110
46,538
57,795
Lower than A –
3,287
202
23,359
26,848
Unrated
2,563
–
27,135
29,698
36,884
957
273,145
310,986
Of which issued by:
–
governments
19,634
–
91,279
110,913
–
local authorities
16,646
–
10,516
27,162
–
corporates
7
84
63,384
63,475
–
other
597
873
107,966
109,436
Of which classified as:
–
trading assets
12,649
97
117,659
130,405
–
financial instruments
designated at fair value
53
–
5,705
5,758
–
available-for-sale securities
23,974
860
141,699
166,533
–
held-to-maturity investments
208
–
8,082
8,290
Debt securities with short-term ratings are reported against the long-term rating of the issuer of the short-term debt securities. If major rating agencies
have different ratings for the same debt securities, the securities are reported against the lower rating.
129
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Financial assets
other than loans and advances measured at amortised cost – net total credit
risk
(Audited IFRS 7 information)
Financial assets against which HSBC had legally enforceable rights to offset
with financial liabilities at 31 December 2005 were as follows:
Amount for
which HSBC
had a legally
Carrying
enforceable
Net total
amount
right to offset
1
credit risk
2
US$m
US$m
US$m
Trading assets
Treasury and other eligible bills
12,746
–
12,746
Debt securities
117,659
–
117,659
Loans and advances to banks
29,806
(19
)
29,787
Loans and advances to customers
52,495
(7,411
)
45,084
212,706
(7,430
)
205,276
Financial assets designated at fair value
Treasury and other eligible bills
53
–
53
Debt securities
5,705
(464
)
5,241
Loans and advances to banks
124
–
124
Loans and advances to customers
631
–
631
6,513
(464
)
6,049
Derivatives
73,928
(46,060
)
27,868
Financial investments
Treasury and other similar bills
25,042
–
25,042
Debt securities
149,781
–
149,781
174,823
–
174,823
Other assets
Endorsements and acceptances
7,973
(9
)
7,964
475,943
(53,963
)
421,980
1
Against financial liabilities with the same counterparty.
2
Excluding the value of any collateral or security held.
Impairment
      assessment
Loans and advances
(Audited IFRS 7 information)
It is HSBC's policy that each operating company makes allowance for impaired
loans promptly when required and on a consistent basis in accordance with Group
guidelines.
HSBC's
      rating process for credit facilities extended by its operating entities
      is designed to highlight exposures which require closer management attention
      because of their greater probability of default and potential loss. Amendments
      to risk grades, when necessary, are implemented promptly, with management
      particularly focusing on facilities to borrowers and portfolio segments
      classified
below satisfactory grades. Management also regularly evaluates the adequacy of
      the established allowances for impaired loans by conducting a detailed
      review of the loan portfolio, comparing performance and delinquency statistics
      with historical trends and assessing the impact of current economic conditions.
The criteria that HSBC uses to determine that there is objective
evidence that an impairment loss has occurred include:
•
contractual
        payments of principal or interest
which
      become 90 days overdue;
•
breach
    of loan covenants, conditions or other
terms;
•
known cash
        flow difficulties experienced by the
borrower;
      and
•
a significant
        downgrading in credit rating set by
an
      external credit rating agency.
Two types of impairment allowance are in place: individually assessed and collectively assessed. These are discussed below.
Individually assessed allowances
(Audited IFRS 7 information)
Impairment allowances on individually assessed accounts are determined by an
evaluation of the exposure to loss on a case-by-case basis. This procedure is
applied to all individually significant accounts and all other accounts that
do not qualify for, or are not subject to, the portfolio-based
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approach outlined below. In determining allowances on individually assessed accounts,
the following factors are considered:
•
HSBC's
      aggregate exposure to the customer;
•
the viability
        of the customer's business model
and
        the capacity to trade successfully out of
financial difficulties and generate
        sufficient cash
flow
    to service debt obligations;
•
the amount
    and timing of expected receipts and
recoveries;
•
the likely
    dividend available on liquidation or
bankruptcy;
•
the extent
        of other creditors' commitments
ranking
        ahead of, or pari passu with, HSBC and
the likelihood of other creditors
        continuing to
support
    the company;
•
the complexity
        of determining the aggregate
amount
        and ranking of all creditor claims and
the extent to which legal and
        insurance
uncertainties
    are evident;
•
the realisable
        value of security (or other credit
mitigants)
    and likelihood of successful
repossession;
•
the likely
        deduction of any costs involved in
recovering
      amounts outstanding;
•
the ability
        of the borrower to obtain and make
payments
        in the relevant foreign currency if
loans are not in local currency;
    and
•
when available,
        the secondary market price for
the
      debt.
Group
      policy requires the level of impairment allowances on individual facilities
      that are above materiality thresholds to be reviewed at least half-yearly,
      and more regularly when individual circumstances require. The review normally
      encompasses collateral held (including re-confirmation of its enforceability)
      and an assessment of actual and anticipated receipts. For significant commercial
      and
corporate debts, specialised loan 'work-out' teams with experience
in insolvency and specific market sectors are used to assess likely losses on
significant individual exposures.
Individually calculated impairment allowances are only reversed when the Group
has reasonable and objective evidence of a reduction in the established loss
estimate.
Collectively assessed allowances
(Audited IFRS 7 information)
Collectively assessed allowances are made in respect of (i) losses incurred in
portfolios of homogeneous
assets and (ii) losses which have been incurred but have not yet been identified
on loans subject to individual assessment for impairment.
Homogeneous groups of loans
(Audited IFRS 7 information)
Two approaches are available to calculating impairment allowances when homogeneous
groups of assets such as credit card loans, other unsecured consumer lending,
motor vehicle financing and residential mortgage loans are reviewed collectively
on a portfolio basis:
•
When appropriate
        empirical information is
available,
        the Group uses roll rate methodology
(a statistical analysis of historical
        trends of the
probability
        of default and amount of
consequential loss, assessed
        at each time period
for
        which payments are overdue), other
historical data and an evaluation
        of current
economic
        conditions to calculate an appropriate
level of impairment allowance
        based on
inherent
        loss. In certain highly developed
markets, sophisticated models also take into
account
        behavioural and account management
trends such as those indicated by bankruptcy
and
      restructuring statistics. Roll rates are
regularly benchmarked to ensure they remain
appropriate.
•
When portfolios
        are less than US$20 million in
size,
        or when information is insufficient or not
sufficiently reliable
        for roll rate methodology to
be
        adopted, the Group uses a simpler method
based on similar principles
        which assesses
impairment
      based on historical experience and
current economic conditions.
The portfolio
      approach is applied to accounts in the following portfolios:
•
low value,
        homogeneous small business
accounts
      in certain jurisdictions;
•
residential
        mortgages that have not been
individually
    assessed or are less than 90 days
overdue (except in HSBC Finance);
•
credit
        cards and other unsecured consumer
lending
      products; and
•
motor
      vehicle financing.
These
    portfolio allowances are generally
assessed monthly and charges for new allowances, or releases of existing allowances,
  are calculated for each separately identified portfolio.
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Incurred but not yet identified impairment
(Audited IFRS 7 information)
Impairment allowances for incurred but not yet identified losses relate to loans
that are impaired at the balance sheet date but which will not be individually
identified as such until some time in the future. HSBC requires each operating
company to estimate such impairment losses by taking into account:
•
historical
        loss experience in portfolios of similar
risk
      characteristics, for example, by industry
sector, loan grade or product;
•
the estimated
        period between a loss being
incurred
        and that loss being evidenced by the
establishment of an individually
        assessed
impairment
      allowance against that loss; and
•
management's
        experienced judgement as to
whether
        the current economic and credit
conditions are such that the
        actual level of
inherent
        losses is likely to be greater or less than
that suggested by historical
      experience.
The estimated period between a loss occurring and its identification (as evidenced by the establishment of an individual impairment allowance for that loss)
is determined by local management for each identified portfolio. In general, the periods used vary between four and twelve months although, in exceptional cases, longer periods are warranted.
In normal circumstances, historical experience is the most objective and accurate framework used to assess inherent loss within each portfolio. Historical
loss experience is generally benchmarked against the average annual rate of losses over at least five years. In certain circumstances, economic conditions are such that historical loss experience provides little or no guide to the inherent loss in a
given portfolio. In such circumstances, management uses its experienced judgement to determine an appropriate impairment allowance.
The basis on which impairment allowances for incurred but not yet identified losses is established in each reporting entity is documented and reviewed by
senior Group credit management to ensure conformity with Group policy.
Cross-border exposures
(Audited
IFRS 7 information)
Management assesses the vulnerability of countries to foreign currency payment
restrictions when considering impairment allowances on cross-border exposures.
This assessment includes an
analysis of the economic and political factors
existing at the time. Economic factors include the level of external indebtedness, the debt
service burden and access to
external sources
    of funds to meet the debtor country's financing requirements. Political
    factors taken into account include the stability of the country and its government,
  threats to security, and the quality and independence of the legal system.
Impairment allowances are applied to all qualifying exposures within these countries unless these exposures are:
•
performing,
        trade-related and of less than one
year's
      maturity;
•
mitigated
        by acceptable security cover which is,
other
      than in exceptional cases, held outside the
country concerned;
•
represented
        by securities held for trading
purposes
        for which a liquid and active market
exists, and which are measured
      at fair value
daily;
•
performing
        facilities with principal (excluding
security)
      of US$1 million or below; or
•
performing
        facilities with maturity dates shorter
than
      3 months.
Loan write-offs
(Audited IFRS 7 information)
Loans (and the related impairment allowances) are normally written off, either
partially or in full, when there is no realistic prospect of recovering these
amounts and when the proceeds from realising security have been received. Unsecured
consumer facilities are normally written off between 150 and 210 days overdue.
In HSBC Finance, this period is generally extended to 300 days overdue (270 days
for real estate secured
products).
In almost no cases does the write-off period exceed 360 days overdue. The only exception arises when certain consumer finance accounts are deemed collectible
beyond this point. In the event of bankruptcy, write-off can occur earlier.
US
      banks typically write off problem lending more quickly than is the practice
      in the UK. This means that HSBC's reported levels of credit risk elements
      and associated allowances are likely to be higher than those of comparable
US banks.
Impairment allowances
(Audited IFRS 7
information)
When impairment losses occur, HSBC reduces the carrying amount of loans and advances and held-to-maturity financial investments through the use of an allowance account. When impairment of
available-for-sale financial assets occurs, the carrying amount of the asset is reduced directly.
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Movement in allowance accounts for total loans and advances
(Audited IFRS 7 information)
2005
Individually
Collectively
assessed
assessed
Total
US$m
US$m
US$m
At 1 January
12,881
IFRSs transition at 1 January
(247
)
At 1 January
3,728
8,906
12,634
Amounts written off
(1,102
)
(7,941
)
(9,043
)
Recoveries of loans and advances written off in previous years
199
295
494
Charge to income statement
518
7,342
7,860
Exchange and other movements
(664
)
85
(579
)
At 31 December
2,679
8,687
11,366
Impairment
    allowances against loans and advances to customers
2005
2004
%
%
Total impairment allowances to gross lending
1
Individually assessed impairment allowances
0.36
–
Collectively assessed impairment allowances
1.18
–
Total provisions to gross lending
1
Specific provisions
–
1.56
General provisions
–
0.39
1.54
1.95
1
Net of reverse repo transactions and settlement accounts
.
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Movement in impairment allowances by industry segment and by geographical region
The following tables
  show details of the movements in HSBC's impairment allowances by location
of lending office for each of the past five years.
A discussion of the material movements in the loan impairment charges by region follows these tables.
2005
(Audited IFR
S 7 information)
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Impairment allowances at 1 January
4,851
504
960
5,733
586
12,634
Amounts written off
Commercial, industrial and international trade
(345
)
(157
)
(79
)
(83
)
(9
)
(673
)
Real estate
(67
)
(23
)
(11
)
(15
)
(1
)
(117
)
Non-bank financial institutions
(3
)
–
–
(10
)
–
(13
)
Other commercial
(108
)
–
(6
)
(62
)
(18
)
(194
)
Residential mortgages
(14
)
(2
)
(6
)
(486
)
–
(508
)
Other personal
(2,267
)
(112
)
(227
)
(4,447
)
(485
)
(7,538
)
(2,804
)
(294
)
(329
)
(5,103
)
(513
)
(9,043
)
Recoveries of amounts
    written off in previous
years
Commercial, industrial and international trade
10
4
17
37
8
76
Real estate
5
–
1
2
1
9
Other commercial
6
1
2
47
33
89
Residential mortgages
1
9
1
7
–
18
Other personal
62
31
61
99
49
302
84
45
82
192
91
494
Net charge/(release) to income statement
1
Banks
(5
)
–
(2
)
–
–
(7
)
Commercial, industrial and international trade
354
199
(72
)
31
76
588
Real estate
59
–
1
(6
)
2
56
Non-bank financial institutions
(14
)
(1
)
–
9
–
(6
)
Governments
4
–
–
2
–
6
Other commercial
(21
)
(32
)
(1
)
27
1
(26
)
Residential mortgages
5
(25
)
7
614
4
605
Other personal
1,602
5
203
4,363
471
6,644
1,984
146
136
5,040
554
7,860
Foreign exchange and other movements
(616
)
(3
)
(12
)
(26
)
78
(579
)
Impairment allowances at 31 December
3,499
398
837
5,836
796
11,366
Impairment allowances against banks:
– individually
    assessed
8
–
1
–
–
9
Impairment allowances against customers:
– individually
    assessed
1,575
173
500
309
126
2,683
– collectively
              assessed
2
1,916
225
336
5,527
670
8,674
Impairment allowances at 31 December
3,499
398
837
5,836
796
11,366
%
%
%
%
%
%
Impairment allowances against customers
as a percentage of loans and advances to
customers:
– individually
    assessed
0.50
0.21
0.71
0.11
1.25
0.36
– collectively
    assessed
0.61
0.27
0.47
2.04
6.63
1.16
At 31 December
1.11
0.48
1.18
2.15
7.88
1.52
1
See table below 'Net impairment charge to income statement by geographical
    region'.
2
Collectively assessed impairment allowances are allocated to geographical
    segments based on the location of the office booking the allowance. Consequently,
    the collectively assessed impairment allowances booked in Hong Kong may cover
    assets booked in branches located outside Hong Kong, principally in the Rest
    of Asia-Pacific, as well as those booked in Hong Kong.
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Movement in provisions
by industry segment and by geographical region
2004
Rest
        of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Provisions
        at 1 January
4,435
1,055
1,181
6,461
583
13,715
IFRSs
        transition adjustment at 1 January
(2
)
(34
)
(21
)
–
(1
)
(58
)
Amounts
        written off
Commercial,
        industrial and international trade
(298
)
(35
)
(164
)
(73
)
(53
)
(623
)
Real
        estate
(30
)
(55
)
(17
)
(3
)
(1
)
(106
)
Non-bank
        financial institutions
(14
)
(2
)
(1
)
(3
)
–
(20
)
Other
        commercial
(209
)
(33
)
(42
)
(204
)
(10
)
(498
)
Residential
        mortgages
(10
)
(52
)
(8
)
(488
)
(3
)
(561
)
Other
        personal
(770
)
(125
)
(171
)
(5,639
)
(331
)
(7,036
)
(1,331
)
(302
)
(403
)
(6,410
)
(398
)
(8,844
)
Recoveries
        of amounts written off in previous
years
Commercial,
        industrial and international trade
27
10
4
73
4
118
Real
        estate
3
–
10
4
–
17
Non-bank
        financial institutions
3
–
–
–
–
3
Other
        commercial
5
3
14
34
29
85
Residential
        mortgages
1
12
1
17
–
31
Other
        personal
97
22
41
453
46
659
136
47
70
581
79
913
Net
        charge to profit and loss account
1
Banks
(7
)
–
(1
)
–
(2
)
(10
)
Commercial,
        industrial and international trade
180
(56
)
52
(44
)
47
179
Real
        estate
21
(15
)
(28
)
(1
)
1
(22
)
Non-bank
        financial institutions
18
(3
)
(1
)
1
–
15
Governments
–
–
–
1
–
1
Other
        commercial
(65
)
(29
)
(18
)
(37
)
(19
)
(168
)
Residential
        mortgages
3
(14
)
4
485
4
482
Other
        personal
1,035
120
142
4,680
239
6,216
General
        provisions
(162
)
(223
)
(48
)
(63
)
(2
)
(498
)
1,023
(220
)
102
5,022
268
6,195
Foreign
        exchange and other movements
551
(24
)
14
60
37
638
Provisions
        at 31 December
4,812
522
943
5,714
568
12,559
Provisions
        against banks:
– specific
        provisions
14
–
3
–
–
17
Provisions
        against customers
– specific
        provisions
4,036
320
785
4,364
512
10,017
– general
        provisions
2
762
202
155
1,350
56
2,525
Provisions
        at 31 December
4,812
522
943
5,714
568
12,559
Provisions
        against customers as a percentage
of
        loans and advances to customers
%
%
%
%
%
%
– specific
        provisions
1.43
0.40
1.27
1.72
6.56
1.46
– general
        provisions
0.27
0.25
0.25
0.53
0.72
0.37
At
        31 December
1.70
0.65
1.52
2.25
7.28
1.83
1
See table below 'Net charge to the profit and loss account for bad and doubtful debts by geographical region'.
2
General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Movement in provisions by industry segment and by geographical region
(continued)
2003
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Provisions at 1 January
3,668
1,143
1,496
2,356
477
9,140
Amounts written off
Commercial, industrial and international trade
(338
)
(71
)
(201
)
(337
)
(69
)
(1,016
)
Real estate
(31
)
(12
)
(18
)
(113
)
(5
)
(179
)
Non-bank financial institutions
(3
)
(13
)
(21
)
(30
)
–
(67
)
Other commercial
(54
)
(65
)
(42
)
(104
)
(30
)
(295
)
Residential mortgages
(4
)
(121
)
(16
)
(529
)
(5
)
(675
)
Other personal
(472
)
(302
)
(147
)
(4,225
)
(78
)
(5,224
)
(902
)
(584
)
(445
)
(5,338
)
(187
)
(7,456
)
Recoveries of amounts written off in previous
years
Commercial, industrial and international trade
25
16
18
20
3
82
Real estate
3
–
4
2
–
9
Non-bank financial institutions
2
–
5
4
–
11
Other commercial
49
4
11
10
7
81
Residential mortgages
1
6
1
4
1
13
Other personal
62
16
35
295
6
414
142
42
74
335
17
610
Net charge to profit and loss account
1
Banks
(6
)
–
3
–
–
(3
)
Commercial, industrial and international trade
286
(3
)
(45
)
78
60
376
Real estate
15
(18
)
(8
)
(1
)
1
(11
)
Non-bank financial institutions
(1
)
1
(17
)
(5
)
(1
)
(23
)
Governments
–
–
1
–
–
1
Other commercial
216
78
(4
)
55
(6
)
339
Residential mortgages
–
102
23
421
6
552
Other personal
482
271
116
3,992
122
4,983
General Provisions
(118
)
(31
)
16
136
(124
)
(121
)
874
400
85
4,676
58
6,093
Foreign exchange and other movements
2
653
54
(29
)
4,432
218
5,328
Provisions at 31 December
4,435
1,055
1,181
6,461
583
13,715
Provisions against banks:
– specific
    provisions
20
–
4
–
–
24
Provisions against customers
– specific
    provisions
3,554
629
981
5,184
530
10,878
– general
              provisions
3
861
426
196
1,277
53
2,813
Provisions at 31 December
4,435
1,055
1,181
6,461
583
13,715
Provisions
    against customers as a percentage
of
    loans and advances to customers
%
%
%
%
%
%
– specific
    provisions
1.65
0.84
1.99
2.62
9.46
2.00
– general
    provisions
0.40
0.57
0.40
0.65
0.95
0.52
At 31 December
2.05
1.41
2.39
3.27
10.41
2.52
1
See table below 'Net charge to the profit and loss account for bad and doubtful debts by geographical region'.
2
Other movements
include amounts of US$129 million in Europe and US$4,524 million in North
America transferred in on the acquisition of HSBC Finance Corporation, and of

US$116 million in South America transferred in on the acquisition of Lloyds
TSB
Group's
Brazilian businesses and assets.
3
General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.
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2002
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Provisions at 1 January
3,067
1,408
1,952
723
1,033
8,183
Amounts written off
Banks
–
–
–
–
(1
)
(1
)
Commercial, industrial and international trade
(161
)
(59
)
(255
)
(92
)
(28
)
(595
)
Real estate
(31
)
(18
)
(88
)
(9
)
(4
)
(150
)
Non-bank financial institutions
(4
)
(11
)
(2
)
(12
)
(2
)
(31
)
Governments
(1
)
–
–
–
–
(1
)
Other commercial
(54
)
(11
)
(116
)
(149
)
(22
)
(352
)
Residential mortgages
(2
)
(109
)
(7
)
(2
)
(10
)
(130
)
Other personal
(199
)
(328
)
(132
)
(96
)
(96
)
(851
)
(452
)
(536
)
(600
)
(360
)
(163
)
(2,111
)
Recoveries of amounts written off in previous
years
Commercial, industrial and international trade
15
1
4
6
2
28
Real estate
6
–
2
6
–
14
Non-bank financial institutions
–
–
1
–
–
1
Other commercial
7
3
14
9
–
33
Residential mortgages
1
7
–
–
–
8
Other personal
29
14
31
14
8
96
58
25
52
35
10
180
Net charge to profit and loss account
1
Banks
(2
)
–
–
–
–
(2
)
Commercial, industrial and international trade
345
(22
)
38
89
30
480
Real estate
(4
)
9
(11
)
5
2
1
Non-bank financial institutions
3
(14
)
(29
)
18
11
(11
)
Governments
(1
)
–
–
(5
)
4
(2
)
Other commercial
50
(22
)
(22
)
116
177
299
Residential mortgages
–
70
11
(4
)
10
87
Other personal
243
322
93
66
96
820
General Provisions
(65
)
(97
)
9
15
(213
)
(351
)
569
246
89
300
117
1,321
Foreign exchange and other movements
2
426
–
3
1,658
(520
)
1,567
Provisions at 31 December
3,668
1,143
1,496
2,356
477
9,140
Provisions against banks:
– specific
    provisions
23
–
–
–
–
23
Provisions against customers
– specific
    provisions
2,774
688
1,321
1,482
341
6,606
– general
              provisions
3
871
455
175
874
136
2,511
Provisions at 31 December
3,668
1,143
1,496
2,356
477
9,140
Provisions
            against customers as a percentage
of
    loans and advances to customers
%
%
%
%
%
%
– specific
    provisions
1.65
0.97
3.42
1.85
9.73
1.83
– general
    provisions
0.52
0.64
0.45
1.09
3.88
0.69
At 31 December
2.17
1.61
3.87
2.94
13.61
2.52
1
See table below 'Net charge to the profit and loss account for bad and doubtful debts by geographical region'.
2
Other movements include amounts transferred in on the acquisition of HSBC Mexico of US$1,704 million.
3
General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.
137
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Movement in provisions by industry segment and by geographical region
(continued)
2001
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Provisions at 1 January
3,025
1,802
2,091
739
540
8,197
Amounts written off
Banks
(5
)
–
–
–
–
(5
)
Commercial, industrial and international trade
(123
)
(238
)
(256
)
(107
)
(29
)
(753
)
Real estate
(27
)
(29
)
(18
)
(10
)
(4
)
(88
)
Non-bank financial institutions
(5
)
(53
)
(5
)
(3
)
(1
)
(67
)
Other commercial
(54
)
(34
)
(48
)
(107
)
(215
)
(458
)
Residential mortgages
(4
)
(121
)
(7
)
(2
)
(13
)
(147
)
Other personal
(224
)
(155
)
(93
)
(93
)
(95
)
(660
)
(442
)
(630
)
(427
)
(322
)
(357
)
(2,178
)
Recoveries of amounts
written off in previous
years
Commercial, industrial and international trade
12
1
11
18
3
45
Real estate
1
2
1
–
–
4
Non-bank financial institutions
–
3
1
–
–
4
Other commercial
17
12
99
11
1
140
Residential mortgages
1
5
–
–
–
6
Other personal
34
8
26
14
4
86
65
31
138
43
8
285
Net charge to profit and loss account
1
Banks
(1
)
–
–
–
–
(1
)
Commercial, industrial and international trade
164
15
157
93
55
484
Real estate
(35
)
16
(6
)
2
7
(16
)
Non-bank financial institutions
(2
)
(20
)
(14
)
2
–
(34
)
Government
(2
)
–
–
(3
)
–
(5
)
Other commercial
143
(84
)
(58
)
151
90
242
Residential mortgages
(47
)
111
10
1
17
92
Other personal
257
168
82
70
125
702
General provisions
(36
)
(9
)
1
(16
)
633
573
441
197
172
300
927
2,037
Foreign exchange and other movements
(22
)
8
(22
)
(37
)
(85
)
(158
)
Provisions at 31 December
3,067
1,408
1,952
723
1,033
8,183
Provisions against banks:
– specific
    provisions
22
–
–
–
–
22
Provisions against customers
– specific
    provisions
2,204
856
1,786
289
365
5,500
– general
              provisions
2
841
552
166
434
668
2,661
Provisions at 31 December
3,067
1,408
1,952
723
1,033
8,183
Provisions
            against customers as a percentage
of
    loans and advances to customers
%
%
%
%
%
%
– specific
    provisions
1.61
1.24
5.44
0.39
7.03
1.73
– general
    provisions
0.62
0.80
0.51
0.59
12.87
3
0.84
At 31 December
2.23
2.04
5.95
0.98
19.90
2.57
1
See table below 'Net charge to the profit and loss account for bad and doubtful debts by geographical region'.
2
General provisions are allocated to geographical segments based on the location of the office booking the provision. Consequently, the general provision booked in Hong Kong may
cover assets booked in branches located outside Hong Kong, principally in the Rest of Asia-Pacific, as well as those booked in Hong Kong.
3
Includes US$600 million of additional provisions held against Argentine loans.
138
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Net impairment
charge to income statement by geographical region
Year
              ended 31 December 2005
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Individually assessed impairment allowances
New allowances
1,029
200
131
348
7
1,715
Release of allowances no longer required
(648
)
(123
)
(166
)
(43
)
(18
)
(998
)
Recoveries of amounts previously written off
(21
)
(18
)
(34
)
(110
)
(16
)
(199
)
360
59
(69
)
195
(27
)
518
Collectively assessed impairment allowances
New allowances
2,013
159
339
5,198
716
8,425
Release of allowances no longer required
(326
)
(45
)
(86
)
(271
)
(60
)
(788
)
Recoveries of amounts previously written off
(63
)
(27
)
(48
)
(82
)
(75
)
(295
)
1,624
87
205
4,845
581
7,342
Total charge for impairment losses
1,984
146
136
5,040
554
7,860
Bank
(5
)
–
(2
)
–
–
(7
)
Customer
1,989
146
138
5,040
554
7,867
%
%
%
%
%
%
Customer charge for impairment losses
as a percentage of closing gross loans
and advances
0.55
0.12
0.15
1.77
3.60
0.90
US$m
US$m
US$m
US$m
US$m
US$m
31 December 2005
Impaired loans
5,068
506
936
4,045
891
11,446
Impairment allowances
3,491
398
836
5,836
796
11,357
Net charge to
the income statement for bad and doubtful debts by geographical region
Year
            ended 31 December 2004
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Specific provisions
New provisions
2,047
237
419
5,771
398
8,872
Release of provisions no longer required
(726
)
(187
)
(199
)
(105
)
(49
)
(1,266
)
Recoveries of amounts previously written off
(136
)
(47
)
(70
)
(581
)
(79
)
(913
)
1,185
3
150
5,085
270
6,693
General provisions
(162
)
(223
)
(48
)
(63
)
(2
)
(498
)
Total bad and doubtful debt charge
1,023
(220
)
102
5,022
268
6,195
Bank
(7
)
–
(1
)
–
(2
)
(10
)
Customer
1,031
(220
)
103
5,022
270
6,205
%
%
%
%
%
%
Customer bad and doubtful debt charge
as a percentage of closing gross loans
and advances
0.36
(0.28
)
0.17
1.97
3.44
0.91
US$m
US$m
US$m
US$m
US$m
US$m
31 December 2004
Non-performing loans
6,039
696
1,160
3,875
657
12,427
Provisions
4,798
522
940
5,714
568
12,542
139
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H S B C   H O L
D I N G S   P L C
Financial
        Review
(
continued
)
Net charge to the income statement for bad and doubtful debts by geographical region
(continued)
Year
            ended 31 December 2003
Rest of
North
South
Europe
Hong Kong
Asia-Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Specific provisions
New provisions
1,485
655
412
4,962
263
7,777
Release of provisions no longer required
(351
)
(182
)
(269
)
(87
)
(64
)
(953
)
Recoveries of amounts previously written off
(142
)
(42
)
(74
)
(335
)
(17
)
(610
)
992
431
69
4,540
182
6,214
General provisions
(118
)
(31
)
16
136
(124
)
(121
)
Total bad and doubtful debt charge
874
400
85
4,676
58
6,093
Bank
(6
)
–
3
–
–
(3
)
Customer
880
400
82
4,676
58
6,096
%
%
%
%
%
%
Customer bad and doubtful debt charge
as a percentage of closing gross loans
and advances
0.41
0.53
0.17
2.36
1.03
1.12
US$m
US$m
US$m
US$m
US$m
US$m
31 December 2003
Non-performing loans
5,701
1,671
1,538
5,444
696
15,050
Provisions
4,415
1,055
1,177
6,461
583
13,691
Year ended 31 December 2002
Rest of
North
South
Europe
Hong Kong
Asia-Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Specific provisions
New provisions
963
528
400
399
388
2,678
Release of provisions no longer required
(271
)
(160
)
(268
)
(79
)
(48
)
(826
)
Recoveries of amounts previously written off
(58
)
(25
)
(52
)
(35
)
(10
)
(180
)
634
343
80
285
330
1,672
General provisions
Argentine additional provision
–
–
–
–
(196
)
(196
)
Other
(65
)
(97
)
9
15
(17
)
(155
)
(65
)
(97
)
9
15
(213
)
(351
)
Total bad and doubtful debt charge
569
246
89
300
117
1,321
Customer
569
246
89
300
117
1,321
%
%
%
%
%
%
Customer bad and doubtful debt charge
as a percentage of closing gross loans
and advances
0.34
0.35
0.23
0.38
3.27
0.36
US$m
US$m
US$m
US$m
US$m
US$m
31 December 2002
Non-performing loans
4,495
1,724
2,055
1,773
476
10,523
Provisions
3,645
1,143
1,496
2,356
477
9,117
140
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Year ended 31 December 2001
Rest of
North
South
Europe
Hong Kong
Asia-Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Specific provisions
New provisions
802
449
577
392
346
2,566
Release of provisions no longer required
(260
)
(212
)
(268
)
(42
)
(35
)
(817
)
Recoveries of amounts previously written off
(65
)
(31
)
(138
)
(43
)
(8
)
(285
)
477
206
171
307
303
1,464
General provisions
Argentine additional provision
–
–
–
–
600
600
Other
(36
)
(9
)
1
(7
)
24
(27
)
(36
)
(9
)
1
(7
)
624
573
Total bad and doubtful debt charge
441
197
172
300
927
2,037
Customer
441
197
172
300
927
2,037
%
%
%
%
%
%
Customer
              bad and doubtful debt charge
as
              a percentage of closing gross loans
and
    advances
0.32
0.29
0.52
0.41
17.80
0.64
US$m
US$m
US$m
US$m
US$m
US$m
31 December 2001
Non-performing loans
3,682
2,028
2,723
672
544
9,649
Provisions
3,045
1,408
1,952
723
1,033
8,161
Year ended 31 December 2005 compared with year ended 31 December 2004
Loan impairment charges were US$7,860 million, an increase of 27 per cent compared with 2004. Acquisitions accounted for US$107 million of the rise and US$498 million
reflected the non-recurrence of the general provision release in 2004. The total charge remained dominated by the personal sector, with losses in these portfolios representing 92 per cent of the Group's net loan impairment charge. On a constant
currency basis, the trends were as follows:
New allowances
    for loan impairment charges were US$10,140 million, an increase of 13 per cent compared with 2004. Releases and recoveries of allowances increased by 4 per cent to US$2,280 million.
  Including a general provision release of US$498 million in 2004, releases and recoveries decreased by 15 per cent.
In
Europe
, growth in UK personal lending and a weakening in credit quality were the principal causes of a 50 per cent increase in new loan impairment charges to US$3,042 million in 2005. Slower economic growth and weaker employment
conditions were compounded by a change in legislation in 2004 that relaxed conditions for personal bankruptcies, which rose to record highs by the final quarter of 2005. In response to these trends in the personal portfolio, HSBC tightened
underwriting controls, focusing more on existing relationships and changing the product mix towards lower risk customers. These actions, together with further centralisation of underwriting approvals and
revised reward programmes, assisted in mitigating the rate of growth in new impairment charges towards the end of 2005. In the commercial sector, there were a number of individually
significant new charges raised in the fourth quarter, as well as a higher rate of new allowances. Although credit charges remained low by historic standards, the trend is progressively moving back to more normal levels. Elsewhere in Europe, France
and Italy saw declines in new allowances, due to the sale of a consumer finance subsidiary during the year and the non-recurrence of corporate charges, respectively. In Turkey, new allowances have increased in line with the growth in the personal
loan portfolio.
Releases and recoveries in Europe were US$1,058 million, an increase of 23 per cent. Including a general provision release of US$162 million in 2004,
releases and recoveries were broadly in line. Increased releases in Turkey, largely reflecting higher volumes offset the non-recurrence of the general provision release in Switzerland.
New impairment allowances in
Hong Kong
were US$359 million, a rise of 51 per cent. This was partially attributable to a small number of individual allowances for corporate and commercial customers. However, overall credit quality
improved, evidenced by a decline in non-performing loans as a proportion of gross advances, reflecting a strong economy with low unemployment.
Releases and recoveries in Hong Kong declined 53 per cent, including the non-recurrence of a
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H
        S B C   H O L D I N G S   P L C
Financial
    Review
(continued)
general provision release of US$223 million in 2004. Excluding this, releases and recoveries fell by 9 per cent to US$213 million, as the significant number of large corporate
releases in 2004 was not repeated. The general provision release last year reflected a review of historical loss experience and the improved market environment.
The effect of strong growth in advances in the
Rest of
Asia-Pacific
, produced an 11 per cent rise in new impairment allowances to US$470 million. In particular, increased allowances in Taiwan were driven by a combination of
loan growth and an increase in credit card delinquency. There were further increases in Indonesia and the Philippines due to growth in advances, with credit quality stable in both countries. These were partially offset by declines in mainland China
and Singapore. In general, across the region, advances to customers rose and credit quality improved. Non-performing assets, as a percentage of advances, fell across most major countries.
In the Rest of Asia-Pacific, releases and recoveries rose by 6 per cent to US$334 million, including the US$48 million general provision release in
2004. Excluding this, releases and recoveries were 24 per cent higher than 2004. There were higher releases and recoveries across most countries in the region reflecting the strong economic environment, although in Malaysia and Singapore there were
declines, due to the non-recurrence of the general provision releases in 2004.
New loan impairment allowances in
North America
declined 4 per cent. This was despite loan growth, and the additional credit allowances raised in relation to Hurricane Katrina, and accelerated bankruptcy filings in the second half of the year
ahead of new legislation in the US. A portion of the increase in bankruptcies was an acceleration of write-offs that would have otherwise been experienced in future periods. In an effort to assist customers affected by Hurricane Katrina, HSBC
initiated various programmes, including extended payment arrangements. The reduction in the charge also reflected the non-recurrence of a US$47 million charge in 2004, following the adoption of FFIEC write-off policies relating to retail and
credit card balances. Excluding these factors, credit quality improved year on year, reflecting an improving economic environment. This contributed to the fall in new impairment allowances, which was only partially offset by increased requirements
due to loan growth. HSBC has benefited from the shift in the balance of the consumer lending business towards higher credit quality customers. HSBC Finance monitors the two-month-and-over contractual
delinquency ratio
closely, as management views it as an important indicator of future write-offs.
The ratio declined from 4.0 per cent at 31 December 2004 to 3.6
per cent at 30
June 2005, rising to 3.7 per cent at 31 December
2005.
Lending in the US is primarily
in the personal sector. Credit quality in the commercial portfolio was stable in 2005. The favourable trends in the US were partially offset by rises in new allowances in Mexico and
Canada. In both cases, this was largely driven by personal balance growth in the loan portfolio in recent years. Underlying credit quality was stable in Mexico and improved in Canada.
Releases and recoveries in North America were US$506 million, a decrease of 27 per cent. Including the 2004 general provision release of US$63
million, releases and recoveries declined by 33 per cent. In the US, a rise in releases reflected an improved credit environment and a strong economy. Under IFRSs, from 1 January 2005 certain recoverable amounts were incorporated into the loan
impairment charge directly resulting in lower reported recoveries. There were further decreases in Mexico, due to a particularly large number of recoveries last year, and in Bank of Bermuda, following the non-recurrence of the general provision
release in 2004. These declines were offset by a more than five-fold increase in releases in Canada, where better credit quality was driven by improved economic conditions, particularly in the resource driven economy of western Canada.
In
South America
, new impairment allowances in Brazil were the principal cause of a 51 per cent rise in new charges to US$723 million in 2005. Significant growth of 24 per cent in gross advances, coupled with deteriorating credit quality in
the consumer finance business, were the main contributing factors to this increase. Lending growth combined with a move into the low-income segment, where finances have been stretched by higher interest rates, drove higher delinquency. Changes were
made to underwriting procedures during the year, to improve the credit quality of new business. This resulted in a falling impairment charge to asset ratio towards the end of the year. New allowances in Argentina were in line with 2004.
Releases and recoveries in South America increased by 16 per cent to US$169 million. Recoveries in Brazil rose as a result of improved collections,
compounded by higher releases as a result of greater volumes of advances. Argentine releases fell as impaired loans reduced, partially offsetting the rise in Brazil.
142
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Charge for impairment losses as a percentage of average gross loans and advances to customers
Rest of
North
South
Europe
Hong
    Kong
Asia-Pacific
America
America
Total
%
%
%
%
%
%
Year ended 31 December 2005
New allowances
1.12
0.44
0.70
2.25
7.68
1.50
Releases and recoveries
(0.39
)
(0.26
)
(0.50
)
(0.21
)
(1.80
)
(0.34
)
Impairment allowances
0.73
0.18
0.20
2.04
5.88
1.16
Total charge for impairment losses
0.73
0.18
0.20
2.04
5.89
1.16
Amount written off net of recoveries
1.00
0.31
0.37
1.99
4.49
1.26
Year ended 31 December 2004
New provisions
0.78
0.31
0.77
2.54
6.58
1.41
Releases and recoveries
(0.33
)
(0.30
)
(0.49
)
(0.30
)
(2.13
)
(0.35
)
Net charge for specific provisions
0.45
0.01
0.28
2.24
4.45
1.06
Total provisions charged
0.39
(0.29
)
0.19
2.21
4.45
0.99
Amount written off net of recoveries
0.46
0.33
0.61
2.56
5.27
1.26
Year ended 31 December 2003
New provisions
0.76
0.89
0.96
2.91
6.09
1.60
Releases and recoveries
(0.25
)
(0.30
)
(0.80
)
(0.25
)
(1.88
)
(0.32
)
Net charge for specific provisions
0.51
0.59
0.16
2.66
4.21
1.28
Total provisions charged
0.45
0.54
0.20
2.74
1.34
1.25
Amount written off net of recoveries
0.39
0.73
0.86
2.93
3.94
1.40
Collateral and other credit enhancements obtained
During 2005, HSBC obtained assets by taking possession of collateral held as security, or calling other credit enhancements, as follows:
Carrying
amount
obtainable
in 2005
1
US$m
Nature of assets
Residential property
1,171
Commercial and industrial property
26
1,197
1
Audited
    IFRS 7 information.
Repossessed properties are made available for sale in an orderly fashion, with the proceeds used to reduce or repay the outstanding indebtedness. Where
  excess funds are available after the debt has been repaid, they are available either for other secured lenders with lower priority or are returned to the customer. HSBC does not generally occupy repossessed properties for its business use. The
  majority of repossessed properties in 2005 arose in HSBC Finance Corporation in the US.
Renegotiated loans
(Audited IFRS 7 information)
Restructuring activity
is designed to manage customer relationships, maximise collection opportunities
and, if possible, avoid foreclosure or repossession. These include extended payment

arrangements, approved external debt management
plans,
deferring foreclosure, modification, loan
rewrites and/or
      deferral of payments pending a change in circumstances. Following restructuring,
      an overdue consumer account is normally reset from delinquent to current
      status. Restructuring policies and practices are based on indicators or criteria
      which, in the judgement of local management, indicate that repayment will
      probably continue. These policies are kept under continuous
    review and their application varies according to the nature of the market,
      the product, and the availability of empirically based data. When empirical
      evidence indicates an increased propensity to default on restructured accounts,
      the use of roll-rate methodology ensures this factor is taken into account
  when calculating impairment allowances.
Renegotiated loans that would otherwise be past due or impaired totalled US$18.1 billion at 31 December 2005. Restructuring is most commonly applied to
consumer finance portfolios. The largest concentration is in HSBC Finance, and amounts to US$14.8 billion or 82 per cent of the total renegotiated loans. The majority of restructured amounts arise from secured lending.
HSBC Holdings
(Audited IFRS 7 information)
HSBC Holdings manages its credit risk by limiting its exposure to transactions with its subsidiary undertakings. No outstanding balances were considered past due or impaired as at 31
December 2005.
HSBC
    Holdings' maximum exposure to credit risk at 31 December 2005, excluding
    collateral or
other
  credit enhancements, was as follows:
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H
        S B C   H O L D I N G S   P L C
Financial
          Review
(continued)
2005
Carrying
Off-balance
Maximum
value
sheet exposure
exposure
US$m
US$m
US$m
Derivatives
968
–
968
Loans and advances to HSBC undertakings
14,092
3,663
17,755
Financial investments – debt securities of HSBC undertakings
3,256
–
3,256
Guarantees
–
36,877
36,877
18,316
40,540
58,856
No collateral or other credit enhancements were held by HSBC Holdings in respect of its transactions with subsidiary undertakings, other than cash deposited
in respect of interest rate contract margins.
HSBC Holdings' financial assets are held with subsidiaries of HSBC, primarily those domiciled in Europe and North America.
Areas of special interest
Group advances to personal customers
The loan impairment charge in 2005 remained dominated by the charge relating to the personal sector, which represented 92 per cent of the Group total after taking account of losses from
HSBC's other credit related activities. Within this total, losses on residential mortgages remained modest.
At 31 December 2005, HSBC's lending to the personal sector amounted to US$420 billion, or 56 per cent of total gross loans and advances, compared
with US$388 billion (57 per cent) at 31 December 2004. Acquisitions in 2005 accounted for 1 per cent of the overall increase on the previous year. The main characteristics of this portfolio and the economic influences affecting it are outlined
below.
Secured residential mortgages, including the Hong Kong GHOS, accounted for US$239 billion, or 57 per cent of total lending to the personal sector,
compared with US$228 billion, or 59 per cent, at 31 December 2004. The US and the UK were the main areas of growth in 2005, though increased lending to European customers was masked by the effect of the strengthening US dollar on currency
translation. In percentage terms, growth in the Rest of Asia-Pacific was also strong, and mortgage lending increased by over 30 per cent in each of the Middle East, India, Taiwan, South Korea, mainland China and Singapore.
Growth
in the unsecured element of the portfolio, consisting of credit and charge card
advances, personal loans, vehicle finance facilities
and
other varieties of instalment finance, was more subdued than in the prior year.
Following a review of
the UK personal
    unsecured lending book, US$1 billion of gross lending to
  personal customers was written off, and related collectively assessed loss allowances extinguished. This reflected those amounts for which it was deemed there was no realistic possibility of recovery, and was the main cause of more subdued growth.
  At 31 December 2005, the combined portfolios totalled US$182 billion, or 43 per cent, of total lending to the personal sector, compared with US$160 billion, or 41 per cent, at 31 December 2004. The acquisition of the credit card portfolios
  of Metris added US$5 billion to unsecured lending in 2005.
Growth in these portfolios reflected resilient consumer spending in most of the main economies in which HSBC operates. In the UK, demand for additional
consumer credit moderated, and marketing and competitive pricing initiatives were the main drivers of growth. Again, growth in Europe was masked by the strengthening US dollar.
Geographically, total lending to personal customers was dominated by the diverse and mature portfolios in North America (US$218 billion), the UK
(US$107 billion) and Hong Kong (US$38 billion). Collectively, these books accounted for 87 per cent of total lending to the personal sector (31 December 2004: 87 per cent).
Account management within HSBC's personal lending portfolios is generally supported by sophisticated statistical techniques, which are enhanced by the
availability of credit reference data in key local markets. The utilisation of an increasingly analytical approach to the management of these portfolios remains an ongoing objective of the Group.
In
    the US, excluding the acquisition of Metris, growth was largely in the mortgage
    services and branch-based consumer lending businesses. Promotions in the dealer
    network, and strong growth in the consumer direct loan programme, also contributed
    to increased vehicle finance lending. With the exception of the areas immediately
    affected by Hurricane Katrina, the US housing market remained strong, supported
    by low interest rates and
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transaction
    costs, and increased availability of credit. Within the US, HSBC's portfolios
    remained geographically diverse, and were largely secured by first lien positions.
Although increased mortgage borrowing has contributed to the record level of consumer debt burden in the US, levels have largely stabilised and are expected
to decline gradually, as incomes rise sufficiently to repay debt, notwithstanding higher interest rates. Bankruptcy filings increased sharply in the second half of 2005 as a result of a change in legislation, but receded to more modest levels by the
end of the year. This has continued into 2006. Notwithstanding the effect of additional impairment allowances required for the Hurricane Katrina and increased bankruptcy filings, delinquency rates continued to fall across the majority of portfolios
during 2005, and trends in lending quality improved.
In Mexico, HSBC utilised well-developed distribution capabilities and enhanced marketing initiatives to grow consumer lending, card and mortgages. Net
interest margin was partially offset by a lower interest rate environment during the year.
In the UK, growth in personal lending was mainly in the mortgage market, where HSBC focused on retaining existing customers, and increasing market share
through competitive pricing and marketing strategies. Fixed rate mortgages were the main driver of growth, against the background of a more subdued market. Overall, the secured mortgage portfolio represented 64 per cent of total lending to personal
customers in the UK, and although delinquency increased modestly during 2005, losses remained negligible.
The unsecured portfolio in the UK also continued to expand, driven by credit and charge cards, and to a lesser extent unsecured personal lending, though
growth in gross lending was largely offset by the US$1 billion write-off mentioned above. In response to prevailing market conditions, which saw a progressive rise in personal indebtedness, bankruptcies and delinquencies over the course of 2005,
HSBC revised credit scorecards, adopted positive credit reference data, further centralised underwriting, and expanded its origination and collection analytics and efforts. As a result, there were indicators in the second half of the year that the
credit quality of more recent unsecured lending vintages had improved.
Personal lending
in Hong Kong remained subdued
in 2005. The mortgage market remained intensely competitive, with competitors
offering very low rates, along with up-front cash incentives to attract new mortgage
business.  Overall mortgage
balances, excluding
    the reduction in balances under the GHOS, which remained suspended, were
    broadly flat compared with December
  2004. Credit quality continued to improve, with consumers benefiting from employment
  levels and rising
  property prices, with a notable reduction in the level of negative equity on
  mortgage balances.
In contrast with Hong Kong, personal lending in the Rest of Asia-Pacific grew strongly in most countries in 2005, boosted by a series of mortgage and credit
card campaigns during the year and growth in the card base, which added 1.6 million cards, to reach 6.3 million cards in issue at the end of 2005.
Growth was also notable in Brazil, where marketing and new product launches contributed to growth of 44 per cent in personal unsecured lending, as consumer
sentiment improved with economic growth. Credit quality deteriorated, notably in the consumer finance business, however, actions taken to mitigate this, notably through tightening underwriting, delivered an improvement in the fourth
quarter.
Elsewhere, credit quality remained relatively stable, although HSBC continued to monitor carefully those portfolios that possess the greatest potential for
future economic stress. Delinquency and loss trends differed across jurisdictions, reflecting these varied conditions.
Non-traditional lending
In response to customer demand, HSBC offers interest only residential mortgage loans in more developed markets. These loans allow customers to pay only accruing interest for a period of
time, and provide customers with the repayment flexibility inherent in the structures of such products. An increasing number of customers prefer to make one-off, or irregular capital reduction payments through the lifetime of such loans, reflecting
their individual income patterns.
HSBC underwrites and prices these loans in a manner appropriate to compensate for their risk by ensuring, for example, that loan-to-value ratios are more
conservative than for traditional mortgage lending. HSBC does not offer loans which are designed to expose customers to the risk of negative amortisation.
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H S B C   H O
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Review
(
continued
)
Risk elements in the loan portfolio
The disclosure of credit risk elements under the following headings reflects US accounting practice and classifications:
•
loans
    accounted for on a non-accrual basis;
•
accruing
        loans
contractually past due 90 days or
more
as to interest or principal; and
•
troubled
    debt restructurings not included in the
above.
In accordance with IFRSs, interest income continues to be recognised on assets that have been written down as a result of an impairment loss. In the
following tables, HSBC presents information on its impaired loans and advances which are designated in accordance with the policy described above.
Impaired loans are consistent with the 'non-accrual basis' classification used in US GAAP and in prior years.
Impaired loans and advances
At 31 December
2005
2004
US$m
US$m
Banks
22
26
Customers
11,446
12,427
Total impaired loans and advances
11,468
12,453
Total allowances cover as a percentage of impaired loans and advances
99.1%
100.9%
Impaired customer
loans and impairment allowances by geographical region
2005
2004
Impaired
Impairment
Impaired
Impairment
loans
allowances
loans
allowances
US$m
US$m
US$m
US$m
Europe
5,068
3,491
6,039
4,799
Hong Kong
506
398
696
522
Rest of Asia-Pacific
936
836
1,160
940
North America
4,045
5,836
3,875
5,714
South America
891
796
657
567
11,446
11,357
12,427
12,542
Total impaired loans to customers declined by US$981 million to US$11,446 million at the end of 2005. At 31 December 2005, impaired loans represented 1.5 per cent of gross
customer loans and advances after grossing, compared with 1.8 per cent at 31 December 2004. Following a review of the personal unsecured lending portfolio in the UK, US$1 billion of impaired loans, for which there was no realistic possibility of
recovery, were written-off.
The commentary that follows is based on constant exchange rates.
Impaired loans in Europe fell by 5 per cent to US$5,068 million in 2005. In the UK, impaired loans decreased by 4 per cent. This was primarily due to the
write-offs mentioned above. Excluding this, impaired loans rose, in part due to the strong growth in unsecured personal lending and credit cards. The UK has experienced weakening personal credit quality in recent years, driven by record levels of
consumer debt, slower economic growth and higher unemployment. These factors, coupled with a change in legislation, have resulted in a significant
increase in personal bankruptcies. There were further declines in France, due to corporate restructuring and acquisition activity, and a 21 per cent decline in Malta. This reflected the
write-off of fully provided loans that were no longer deemed to have a realistic prospect of recovery.
In Hong Kong, impaired loans declined by 28 per cent to US$506 million in 2005. Improvement was seen in both the personal and corporate portfolios,
driven by the strong economy, lower unemployment and stable property prices following a recovery in 2004. Some weakness in the real estate market was evident in the fourth quarter, following successive interest rate rises, but loan quality remains
strong.
Impaired loans, both in absolute terms and as a proportion of gross advances, declined across most major countries in the Rest of Asia-Pacific. In total,
impaired balances declined by 19 per cent to US$936 million. In particular, there were significant falls in Malaysia, due to a significant number of restructurings and to strong economic growth. There
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were also improvements in mainland China and Singapore, due to strong economic growth.
In North America, impaired loans increased by 4 per cent to US$4,045 million. This rise reflected portfolio growth and accelerated bankruptcies ahead of
new US legislation, particularly in secured and personal unsecured lending. The trend in US impaired loans as a percentage of gross receivables was stable year-on-year. In Mexico, impaired loans increased in line with portfolio growth. Improving
credit conditions in Canada, on the back of a strong economy, drove a decrease in impaired loans, offsetting the rises in the US and Mexico.
A rise of 26 per cent to US$891 million in South America's impaired loans was mainly due to the 34 per cent increase in Brazil. This was partly
driven by strong balance sheet growth, but there was also some weakening in credit quality in the consumer finance business, particularly in the low income segment. Action taken during the year to amend lending parameters has assisted in stabilising
delinquency. Argentina's economy continued its steady recovery and as a result impaired loans declined by 9 per cent, partly offsetting the rise in Brazil.
Troubled debt restructurings
US GAAP requires separate disclosure of any loans whose terms have been modified because of problems with the borrower to grant concessions other than are warranted by market conditions.
These are classified as 'troubled debt restructurings' and are distinct from the normal restructuring activities described above. Disclosure of troubled debt restructurings may be discontinued after the first year if the debt performs in
accordance with the new terms.
The fall in troubled debt restructurings was driven by the decline in Hong Kong, a product of the continuing improvement in the quality of the loan
book.
Unimpaired loans past due 90 days or more
The rise in Europe was due to the UK, where improved processes led to better credit data collection. In North America, HSBC Finance's business benefited from improvement in
delinquency and default trends year on year. In common with other card issuers, including other parts of HSBC, HSBC Finance continues to accrue interest on credit cards past 90 days until charged off. Appropriate provisions are raised against the
proportion judged to be irrecoverable.
Potential problem loans
Credit risk elements also cover potential problem loans. These are loans where information about borrowers' possible credit problems causes management serious doubts about the
borrowers' ability to comply with the loan repayment terms. There are no potential problem loans other than those identified in the table of risk elements set out below.
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    D I N G S   P L C
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Review
(
continued
)
Risk elements
The following table provides an analysis of risk elements in the loan portfolios at 31 December for the past five years:
At
    31 December
At
    31 December
2005
2004
2003
2002
2001
US$m
US$m
US$m
US$m
US$m
Impaired loans
5,081
6,053
Europe
5,680
4,479
3,605
506
696
Hong Kong
1,670
1,707
2,008
945
1,172
Rest of Asia-Pacific
1,519
2,008
2,692
4,045
3,875
North America
4,651
1,672
660
891
657
South America
696
476
544
11,468
12,453
14,216
10,342
9,509
Troubled debt restructurings
35
34
Europe
159
41
–
198
436
Hong Kong
571
396
381
121
56
Rest of Asia-Pacific
68
89
131
160
144
North America
210
4
3
732
693
South America
837
669
144
1,246
1,363
1,845
1,199
659
Unimpaired loans contractually past due
90 days or more as to principal or
interest
592
68
Europe
34
16
15
74
67
Hong Kong
205
193
98
40
56
Rest of Asia-Pacific
45
33
38
928
1,171
North America
1,252
42
52
–
–
South America
2
7
47
1,634
1,362
1,538
291
250
Risk elements on loans
5,708
6,155
Europe
5,873
4,536
3,620
778
1,199
Hong Kong
2,446
2,296
2,487
1,106
1,284
Rest of Asia-Pacific
1,632
2,130
2,861
5,133
5,190
North America
6,113
1,718
715
1,623
1,350
South America
1,535
1,152
735
14,348
15,178
17,599
11,832
10,418
Assets held for resale
205
27
Europe
32
26
84
49
75
Hong Kong
2
17
19
31
21
Rest of Asia-Pacific
30
54
32
634
708
North America
794
101
14
40
–
South America
–
–
–
959
831
858
198
149
Total risk elements
5,913
6,182
Europe
5,905
4,562
3,704
827
1,274
Hong Kong
2,448
2,313
2,506
1,137
1,305
Rest of Asia-Pacific
1,662
2,184
2,893
5,767
5,898
North America
6,907
1,819
729
1,663
1,350
South America
1,535
1,152
735
15,307
16,009
18,457
12,030
10,567
%
%
%
%
%
Loan impairment allowances as a
79.2
82.7
percentage
    of risk elements on loans
77.9
77.2
78.5
Interest foregone on impaired loans
Interest income that would have been recognised under the original terms of the impaired interest and restructured loans amounted to approximately
US$275 million in 2005, compared with US$280 million in 2004. Interest income of approximately US$120 million from such loans was recorded in 2005, compared with US$182
    million in 2004.
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Country distribution of outstandings and cross-border exposures
HSBC controls the risk associated with cross-border lending, essentially that foreign currency will not be made available to local residents to make payments, through a centralised
structure of internal country limits which are determined by taking into account relevant economic and political factors. Exposures to individual countries and cross-border exposure in aggregate are kept under continuous review.
The following table summarises the aggregate of in-country foreign currency and cross-border outstandings by type of borrower to countries which individually
represent in excess of 1 per cent of HSBC's total assets. The classification is based on
the country of residence of the borrower but also recognises the transfer of country risk in respect of third party guarantees, eligible collateral held and residence of the head office
when the borrower is a branch. In accordance with the Bank of England Country Exposure Report (Form CE) guidelines, outstandings comprise loans and advances (excluding settlement accounts), amounts receivable under finance leases, acceptances,
commercial bills, certificates of deposit, and debt and equity securities (net of short positions), and exclude accrued interest and intra-HSBC exposures. Comparative figures for 2003 were calculated in accordance with the requirements of the Bank
of England's Form C1, which was replaced by Form CE with effect from 31 December 2004 reporting.
Government
and official
Banks
institutions
Other
Total
US$bn
US$bn
US$bn
US$bn
At 31 December 2005
United Kingdom
19.6
3.7
16.2
39.5
United States
10.2
11.1
17.1
38.4
Germany
21.6
12.7
3.3
37.6
France
11.5
4.7
5.4
21.6
The Netherlands
11.9
2.6
4.4
18.9
Italy
4.4
10.6
3.5
18.5
At 31 December 2004
United Kingdom
19.7
3.8
24.5
48.0
United States
9.2
13.3
14.0
36.5
Germany
17.8
10.4
4.0
32.2
France
11.1
3.7
4.6
19.4
Italy
5.7
9.7
2.1
17.5
The Netherlands
9.1
2.2
4.2
15.5
Hong Kong
1.6
1.1
10.3
13.0
At 31 December 2003
United Kingdom
14.2
3.1
20.4
37.7
Germany
16.0
8.0
3.7
27.7
United States
5.5
8.4
12.3
26.2
France
9.5
2.3
5.5
17.3
The Netherlands
9.0
0.6
4.6
14.2
Hong Kong
1.1
0.7
10.0
11.8
Canada
6.0
3.2
1.8
11.0
Italy
4.4
5.2
0.8
10.4
At 31 December 2005, HSBC had in-country foreign currency and cross-border outstandings to counterparties in Hong Kong, Australia and Canada of between 0.75
per cent and 1 per cent of total assets. The aggregate in-country foreign currency and cross-border outstandings were: Hong Kong: US$14.6 billion; Australia: US$12.5 billion; Canada: US$11.7 billion.
At 31 December 2004, HSBC had in-country foreign currency and cross-border outstandings to counterparties in Australia and Canada of between 0.75 per cent
and 1 per cent of total assets. The aggregate in-country foreign currency and cross-
border outstandings were: Australia: US$12.7 billion; Canada: US$11.8 billion.
At 31 December 2003, HSBC had in-country foreign currency and cross-border outstandings to counterparties in Australia and Japan of between 0.75 per cent and
1 per cent of total assets. The aggregate in-country foreign currency and cross-border outstandings were: Australia: US$9.1 billion; Canada: US$7.9 billion.
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Review
(continued)
Liquidity
          and funding management
(Audited
      IFRS 7 information)
The objective of HSBC's liquidity and funding management is to ensure that
all foreseeable funding commitments and deposit withdrawals can be met when due,
and that wholesale market access is co-ordinated and disciplined. To this end,
HSBC maintains a diversified and stable funding base comprising core retail and
corporate customer deposits and institutional balances. This is augmented by
wholesale funding and portfolios of highly liquid assets which are diversified
by currency and maturity, in order to enable HSBC to respond quickly and smoothly
to unforeseen liquidity requirements.
The management of liquidity and funding is primarily carried out locally in the operating companies of HSBC in accordance with practice and limits set by the
Group Management Board. These limits vary by local financial unit to take account of the depth and liquidity of the market in which the entity operates. It is HSBC's general policy that each banking entity should be self-sufficient with regard
to funding its own operations. Exceptions are permitted to facilitate the efficient funding of certain short-term treasury requirements and start-up operations or branches which do not have access to local deposit markets, all of which are funded
under strict internal and regulatory guidelines and limits from HSBC's largest banking operations. These internal and regulatory limits and guidelines serve to place formal limitations on the transfer of resources between HSBC entities and are
necessary to reflect the broad range of currencies, markets and time zones within which HSBC operates.
HSBC requires operating entities to maintain a strong liquidity position and to manage the liquidity profile of their assets, liabilities and commitments so
that cash flows are appropriately balanced and all funding obligations are met when due.
The
Group's liquidity and funding management process includes:
•
projecting
          cash flows by major currency and considering
      the level of liquid assets necessary in relation thereto;
•
monitoring
          balance sheet liquidity ratios against internal
      and regulatory requirements;
•
maintaining
          a diverse range of funding sources with
      adequate back-up facilities;
•
managing
      the concentration and profile of debt maturities;
•
maintaining
      debt financing plans;
•
monitoring
            depositor concentration in order to avoid
            undue reliance on large individual depositors and ensure a satisfactory
            overall funding
      mix; and
•
maintaining
            liquidity and funding contingency plans.
            These plans identify early indicators of stress conditions and describe
            actions to be taken
            in the event of difficulties arising from systemic or other crises, while
            minimising adverse
      long-term implications for the business.
Primary sources of funding
(Audited IFRS 7 information)
Current accounts and savings deposits payable on demand or at short notice form
a significant part of HSBC's funding. HSBC places considerable importance
on the stability of these deposits. Stability depends upon maintaining depositor
confidence in HSBC's capital strength and liquidity, and on competitive
and transparent deposit-pricing strategies. HSBC seeks to support this confidence
by consistently reinforcing
HSBC's brand values of trust and solidity across the Group's geographically
diverse retail banking network.
HSBC
      accesses professional markets in order to provide funding for non-banking
      subsidiaries that do not accept deposits, to maintain a presence in local
      money markets and to optimise the funding of asset maturities not naturally
      matched by core deposit funding. In aggregate, HSBC's banking entities
      are liquidity providers to the inter-bank market, placing significantly
      more funds with other
banks than they borrow.
The
      main operating subsidiary that does not accept deposits is HSBC Finance
      Corporation, which funds itself principally through taking term funding
      in the professional markets and through the securitisation of assets. At
      31 December 2005, US$132 billion of HSBC Finance Corporation's
      liabilities were drawn from professional markets, utilising a range of
      products, maturities and currencies to avoid undue reliance on any particular
funding source.
Of
      total liabilities of US$1,502 billion at 31 December 2005, funding from customers amounted to US$810 billion, of which US$773
      billion was contractually repayable within one year. However, although
      the contractual repayments of many customer accounts are on demand or at
      short notice, in practice short-term deposit balances remain stable as
inflows and outflows broadly match.
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The
    following is an analysis of cash flows payable by HSBC under financial liabilities
  by remaining contractual maturities at the balance sheet date:
Due
Due
Due
between
between
Due
On
within 3
3 and 12
1 and 5
after 5
demand
months
months
years
years
US$m
US$m
US$m
US$m
US$m
Deposits by banks
21,672
29,937
11,026
7,619
4,259
Customer accounts
424,880
254,354
40,813
29,619
6,531
Financial liabilities designated at fair value
6,258
1,365
4,603
34,244
73,534
Debt securities in issue
1,487
64,824
51,538
118,109
24,823
Subordinated liabilities
–
714
2,453
14,583
30,555
Other financial liabilities
12,922
14,871
971
109
689
Total at 31 December 2005
467,219
366,065
111,404
204,283
140,391
For information on the contractual maturity of gross loan commitments, see Note 40 on the Financial Statements.
Liabilities in trading portfolios have not been analysed by contractual maturity because trading assets and liabilities are typically held for short periods
of time.
Assets
    available to meet these liabilities, and to cover outstanding commitments
    to lend (US$642 billion), included cash, central bank balances, items in
  the course of collection and treasury and other bills (US$75 billion); loans to banks (US$156 billion, including US$121 billion repayable within one year); and loans to customers (US$793 billion, including US$313 billion
  repayable within one year). In the normal course of business, a proportion of customer loans contractually repayable within one year will be extended. In addition, HSBC held debt securities marketable at a value of US$273 billion. Of these
  assets, some US$98 billion of debt securities and treasury and other bills
have been pledged to secure liabilities.
HSBC
    would meet unexpected net cash outflows by selling securities and accessing
  additional funding sources such as interbank or asset-backed markets.
A
    key measure used by the Group for managing liquidity risk is the ratio of
    net liquid assets to customer liabilities. Generally, liquid assets comprise
    cash balances, short-term interbank deposits and highly-rated debt securities
    available for immediate sale and for which a deep and liquid market exists.
    Net liquid assets are liquid assets less all wholesale market funds, and
    all funds provided by
  customers deemed to be professional, maturing in the next 30 days. The definition
    of a professional customer takes account of the size of the customer's
total deposits.
Minimum
    liquidity ratio limits are set for each bank operating entity. Limits reflect
    the local market place, the diversity of funding sources available, and the
    concentration risk from large depositors. Compliance with entity level limits
    is monitored within the Group Finance Function and reported regularly to
  the Risk Management Meeting.
Although
    consolidated data is not utilised in the management of HSBC's liquidity, the consolidated liquidity ratio figures of net liquid assets to
  customer liabilities shown in the following table provide a useful insight into the overall liquidity position of the Group's banking entities. The Group's
liquidity risk has not changed materially during the year.
Ratio of net liquid assets to customer liabilities
At 31 December
Average
during
Maximum
Minimum
2005
2004
2005
in 2005
in 2005
17.1
%
15.9
%
16.3
%
17.5
%
14.4
%
HSBC Holdings
(Audited
IFRS 7 information)
HSBC Holdings' primary sources of cash are interest and capital receipts from its subsidiaries, which it deploys in short-term bank deposits or liquidity funds. HSBC Holdings' primary
  uses of cash are investments in subsidiaries, interest payments to debt holders
  and dividend payments to shareholders. On an ongoing basis, HSBC Holdings replenishes
  its liquid resources through the receipt of interest on, and repayment of,
  intra-group loans, from dividends paid by subsidiaries, and from interest earned
  on its own liquid funds. The ability of its subsidiaries to pay dividends or
  advance monies to HSBC Holdings depends, among other things, on their respective
  regulatory
capital requirements, statutory reserves, and financial and operating performance.
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(continued)
HSBC actively
    manages the cash flows from its subsidiaries
    to optimise the amount of cash held at the holding company level, and expects
    to continue
    doing so in the future. The wide range of HSBC's activities means that
    HSBC Holdings is not dependent on a single source of profits to fund its
    dividends. Together with its accumulated liquid assets, HSBC Holdings believes
    that planned
  dividends and interest from subsidiaries will enable
it to meet anticipated cash obligations. Also, in normal circumstances, HSBC Holdings has full access to capital markets on normal terms.
The following is an analysis of cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities at the balance sheet
date:
Due
Due
Due
between
between
Due
On
within 3
3 and 12
1 and 5
after 5
demand
months
months
years
years
US$m
US$m
US$m
US$m
US$m
Amounts owed to HSBC undertakings
664
176
1,060
1,654
521
Financial liabilities designated at fair value
–
140
420
3,442
20,382
Other liabilities
–
1,196
–
–
7
Accruals and deferred income
13
82
–
–
–
Subordinated liabilities
–
107
321
2,771
15,638
Total at 31 December 2005
677
1,701
1,801
7,867
36,548
At
      31 December 2005, the short-term liabilities of HSBC Holdings totalled
    US$3,191 million including US$1,193 million in respect of the proposed
    third interim dividend for 2005. Short-term assets of US$5,599 million consisted mainly of cash at bank of US$756 million and loans and advances to HSBC undertakings of US$4,661
  million.
Market risk management
(Audited
          IFRS 7 information)
The objective
    of HSBC's market risk management is to manage and control market risk exposures in order to optimise return on risk while maintaining a market profile consistent with
the Group's status as a premier provider of financial products and services.
Market
    risk is the risk that movements in market risk factors, including foreign
    exchange rates and commodity prices, interest rates, credit spreads and equity
    prices will reduce HSBC's income or the value of its portfolios. Credit
risk is discussed separately in the Credit risk management section.
HSBC separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those positions arising from market-making,
  proprietary position-taking and other marked-to-market positions so designated. The marked-to-market positions so designated but not held with trading intent have historically not been material to the Trading Value at Risk figure. However, this is
  no longer the case following the transition to accounting under IFRSs, which has increased the proportion of financial instruments measured at fair value. The contribution of these positions to the Trading Value at Risk is disclosed separately.
Non-trading
      portfolios primarily arise from the effective interest rate management
    of HSBC's retail and commercial banking assets and liabilities.
The
    management of market risk is principally undertaken in Global Markets using
    risk limits approved by the Group Management Board. Limits are set for each
    portfolio, product and risk type, with market liquidity being a principal
    factor in determining the level of limits set. Traded Markets Development
    and Risk, an independent unit within Corporate, Investment Banking and Markets,
    develops the
  Group's market risk management policies and measurement techniques. Each
  major operating entity has an independent market risk control function which
  is responsible for measuring market risk exposures in accordance with the policies
  defined by Traded Markets Development and Risk, and monitoring and reporting
these exposures against the prescribed limits on a daily basis.
Each
    operating entity is required to assess the market risks which arise on each
    product in its business and to transfer these risks to either its local Global
    Markets unit for management, or to separate books managed under the supervision
    of the local Asset and Liability Management Committee ('ALCO').
    The aim is to ensure that all market risks are consolidated within operations
    which have the necessary skills, tools, management and governance to manage
such risks professionally.
Value at risk ('VAR')
(Audited IFRS 7 information
)
One of the principal tools used by HSBC to monitor and limit market risk exposure
is VAR. VAR is a technique that estimates the potential losses that
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could occur on risk positions as a result of movements in market rates and
  prices over a specified time horizon and to a given level of confidence (for
  HSBC, 99 per cent). HSBC calculates VAR daily. The VAR model used by HSBC is
  predominantly based on historical simulation. The historical simulation model
  derives plausible future scenarios from historical market rate time series,
  taking account of inter-relationships between different markets and rates,
  for example, between interest rates and foreign exchange rates. Potential movements
  in market prices are calculated with reference to market data from the last
  two years. The model incorporates the impact of option features in the underlying
  exposures. HSBC has changed the assumed holding period from a 10-day period
  to a 1-day period as this reflects the way the risk positions are managed.
  Comparative VAR numbers have been restated to reflect this change.
Although
    a valuable guide to risk, VAR should always be viewed in the context of its
  limitations. For example:
•
the
          use of historical data as a proxy for estimating
          future events may not encompass all potential events, particularly
          those which are extreme
      in nature;
•
the
            use of a 1-day holding period assumes that all
            positions can be liquidated or hedged in one day. This may not fully reflect
            the market risk arising
            at times of severe illiquidity, when a 1-day holding period may be
            insufficient to liquidate
        or hedge all positions fully;
•
the
            use of a 99 per cent confidence level, by definition,
            does not take into account losses that might occur beyond this level
        of confidence; and
•
VAR
            is calculated on the basis of exposures outstanding
            at the close of business and therefore does not necessarily
        reflect intra-day exposures.
HSBC
      recognises these limitations by augmenting its VAR limits with other position
      and sensitivity limit structures. Additionally, HSBC applies a wide range
      of stress testing, both on individual portfolios and on the Group's consolidated positions. HSBC's
      stress-testing regime provides senior management with an assessment of
      the financial impact of identified extreme events on the market risk exposures
of HSBC.
The VAR, both trading and non-trading, for Global Markets was as follows:
Value at risk
US$m
Total
At 31 December 2005
128.5
At 31 December 2004
254.7
Average
Minimum
Maximum
US$m
US$m
US$m
2005
174.1
108.2
248.8
2004
172.5
101.2
304.2
Total VAR
    at 31 December 2005 reduced compared with 31 December 2004. As interest rates
    rose during 2005 in the major markets, the risk arising in Global Markets' positions
  was managed down to limit exposure to further interest rate rises.
(Unaudited information)
The
    histogram below illustrates the frequency of daily revenue arising from all
    Global Markets' business and other trading activities. In 2005, HSBC
    implemented a change in the transfer pricing of funds between the Personal
    Financial Services and the Corporate, Investment Banking and Markets segments
    in North America, following a transfer of the management of all of the interest
    rate risk of the held prime residential mortgage portfolio. The numbers for
    2004 have been restated
to reflect the impact of transfer pricing had it been in place on a similar
  basis and to include the Futures and Equities revenues which comprise part
  of the Global Markets' business. As a result of these restatements, the
  average daily revenue in 2004 increased from US$18.3 million to US$20.5
  million.
The average
    daily revenue earned from Global Markets' business
    and other trading activities in 2005 was US$18.7 million, compared with
    US$20.5 million in 2004. The standard deviation of these daily revenues
    was US$10.4 million compared with US$8.1 million for 2004. The standard
    deviation measures the variation of daily revenues about the mean value of
    those revenues.
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(continued)
An
        analysis of the frequency distribution of daily revenue shows that there
        were three days with
negative
      revenue during 2005 compared with two days in 2004. The most frequent result
      was a daily revenue of between US$20 million and US$24 million,
  with 43 occurrences.
Daily distribution
  of Global Markets' and other trading revenues in 2005
Number of days
Revenues (US $m)
Profit
  and loss frequency
Daily
          distribution of Global Markets' and other trading revenues in
          2004
Number of days
Revenues (US $m)
Profit
      and loss frequency
Fair value and price verification
    control
(Audited
  IFRS 7 information)
Where certain financial instruments are carried on the Group's balance
    sheet at fair values, the valuation and the related price verification processes
    are subject to independent validation across the Group. Financial instruments
    which are accounted for on a fair value basis include assets held in the
    trading portfolio, financial instruments designated at fair value, obligations
    related to securities sold short all derivative financial instruments and
  available-for-sale securities.
The
    determination of fair values is therefore a significant element in the reporting
  of the Group's Global Markets activities.
Responsibility
    for determining accounting policies and procedures governing valuation and
  validation ultimately rests with independent finance
functions
    which report functionally to the Group Finance Director. All significant
    valuation policies, and any changes thereto, must be approved by senior finance
    management. HSBC's governance of financial reporting requires that Financial
    Control departments across the Group are independent of the risk-taking businesses,
    with the Finance functions having ultimate responsibility for the determination
    of fair values included in the financial statements, and for ensuring that
    the Group's policies comply with all relevant accounting standards.
    Both senior executive management and the Group Audit Committee assess the
    resourcing and expertise of Finance functions within the Group on a regular
    basis to ensure that the Group's financial control and price verification
  processes are properly staffed to support the required control infrastructure.
Trading
(Audited IFRS 7 information
)
HSBC's control of market risk is based on restricting individual operations
  to trading within a list of permissible instruments authorised for each site
  by Traded Markets Development and Risk, and enforcing rigorous new product
  approval procedures. In particular, trading in the more complex derivative
  products is concentrated in offices with appropriate levels of product expertise
  and robust control
systems.
In addition, at both portfolio and position levels, market risk in trading portfolios is monitored and controlled using a complementary set of techniques
such as VAR and present value of a basis point, together with stress and sensitivity testing and concentration limits. These techniques quantify the impact on capital of defined market movements.
Total
    trading VAR for Global Markets at 31 December 2005 was US$32.7 million. The contribution from positions taken without trading intent was US$6.9
  million, the principal components of which are hedges that fail to meet the strict documentation and testing requirements of IAS 39 and are designated as 'non-qualifying' hedges, and other positions transacted as economic hedges but which
  again do not qualify for hedge accounting. HSBC's policy on hedging is
  to manage economic risk in the most appropriate way without regard as to whether
  hedge accounting is available, within limits regarding the potential volatility
  of reported earnings. Trading VAR is further analysed below by risk type, by
  positions taken with trading intent and by positions taken without trading
intent:
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Total trading VAR by
risk type
(Audited IFRS 7 information)
Foreign
exchange and
commodity
Interest
prices
rate trading
Equity
Total
US$m
US$m
US$m
US$m
At
    31 December 2005
4.6
33.8
4.7
32.7
At
    31 December 2004
12.4
30.9
4.8
37.7
Average
2005
6.9
37.3
5.5
37.3
2004
16.1
29.6
5.2
39.2
Minimum
2005
2.9
24.3
2.3
23.5
2004
7.4
19.1
3.5
30.1
Maximum
2005
12.4
76.9
10.9
73.2
2004
21.4
42.9
8.9
53.1
Positions taken with trading
intent – VAR by risk type
(Audited IFRS 7 information)
Foreign
exchange and
commodity
Interest
prices
rate trading
Equity
Total
US$m
US$m
US$m
US$m
At
    31 December 2005
4.6
28.4
4.7
30.1
At
    31 December 2004
12.4
30.9
4.8
37.7
Average
2005
6.9
33.3
5.5
33.5
2004
16.1
29.6
5.2
39.2
Minimum
2005
2.9
25.5
2.3
25.7
2004
7.4
19.1
3.5
30.1
Maximum
2005
12.4
49.0
10.9
46.7
2004
21.4
42.9
8.9
53.1
Positions taken without trading
intent – VAR by risk type
(Audited IFRS 7 information)
Foreign
exchange and
commodity
Interest
prices
rate trading
Equity
Total
US$m
US$m
US$m
US$m
At
    31 December 2005
–
6.9
–
6.9
At
    31 December 2004
–
–
–
–
Average
2005
–
8.6
–
8.6
2004
–
–
–
–
Minimum
2005
–
1.4
–
1.4
2004
–
–
–
–
Maximum
2005
–
24.5
–
24.5
2004
–
–
–
–
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H S B C   H O L
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Review
(continued)
Non-trading
(Audited IFRS 7 information)
The principal
    objective of market risk management of non-trading portfolios is to optimise
  net interest income.
Market
    risk in non-trading portfolios arises principally from mismatches between
    the future yield on assets and their funding cost, as a result of interest
    rate changes. Analysis of this risk is complicated by having to make assumptions
    on optionality in certain product areas, for example, mortgage prepayments,
    and from behavioural assumptions regarding the economic duration of liabilities
    which are contractually repayable on demand, for example, current accounts.
    The prospective change in future net interest income from non-trading portfolios
    will be reflected in the current realisable value of these positions, should
    they be sold or closed prior to maturity. In order to manage this risk optimally,
    market risk in non-trading portfolios is transferred to Global Markets or
  to separate books managed under the supervision of the local ALCO.
The
    transfer of market risk to books managed byGlobal Markets or supervised by
    ALCO is usually achieved by a series of internal deals between the business
    units and these books. When the behavioural characteristics of a product
    differ from its contractual characteristics, the behavioural characteristics
    are assessed to determine the true underlying interest rate risk. Local ALCOs
    regularly monitor all such behavioural assumptions and interest rate risk
    positions, to ensure they comply with interest rate risk limits established
  by the GroupManagement Board.
As
    noted above, in certain cases, the non-linear characteristics of products
    cannot be adequately captured by the risk transfer process. For example,
    both the flow from customer deposit accounts to alternative investment products
    and the precise prepayment speeds of mortgages will vary at different interest
    rate levels. In such circumstances, simulation modelling is used to identify
  the impact of varying scenarios on valuations and net interest income.
Once
    market risk has been consolidated in Global Markets or ALCO-managed books,
    the net exposure is typically managed through the use of interest rate swaps
  within agreed limits.
The
    principal non-trading risks which are not included in VAR for Global Markets
    (see 'Value at risk' above) are
detailed below.
Market
    risk within HSBC Finance primarily arises from mismatches between future
    behaviouralised asset yields and their funding costs. This mismatch mainly
    comes from the fact that asset yields are predominantly fixed and relatively
    insensitive to market movements in interest rates, whereas the related wholesale
    funding and its associated derivatives are more sensitive to such movements.
    This non-trading risk is principally managed by controlling the sensitivity
    of projected net interest income under varying interest rate scenarios: see 'Net
  interest income' below.
VAR
    limits are set to control the total market risk exposure of HSBC Finance.
    The VAR as at 31 December 2005 was US$13.5 million (2005 average: US$13.4
    million; 2005 minimum: US$6.2 million; 2005 maximum: US$41.6 million),
    compared with US$9.1 million at 31 December 2004(2004 average: US$16.1
    million; 2004 minimum: US$4.1 million; 2004 maximum: US$31.9
million).
Market
    risk arising in the prime residential mortgage business of HSBC Bank USA
    is primarily managed by a specialist function within the business,under guidelines
    established by HSBC Bank USA's ALCO. A range of risk management tools
    is applied to hedge the sensitivity arising from movements in interest rates.
    The key element of market risk within the US prime mortgage business relates
    to the prepayment options embedded in US mortgages, which affect the sensitivity
    of the value of mortgage servicing rights ('MSRs') to interest
    rate movements and the net interest margin on mortgage assets. MSRs represent
    the economic value of the right to receive fees for performing specified
    residential mortgage servicing activities. They are sensitive to interest
    rate movements because lower rates accelerate the prepayment speed of the
    underlying mortgages and therefore reduce the value of the MSRs. The reverse
    is true for rising rates. HSBC uses a combination of interest rate-sensitive
    derivatives and debt securities to help protect the economic value of MSRs.
    An accounting asymmetry can arise in this area because the derivatives used
    to hedge the economic exposure arising from MSRs arealways measured at fair
    value, but the MSRs themselves are measured for accounting purposes at the
    lower of amortised cost and valuation. It is, therefore, possible for an
    economically hedged position not to be shown as such in the accounts, when
    the hedge shows a loss but the MSR cannot be revalued above cost to reflect
    the related profit. HSBC's policy again
is to hedge the economic risk.
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VAR
    limits are set to control the exposure to MSRs and MSR hedges. The VAR on
    MSRs and MSR hedges at 31 December 2005 was US$3.9 million (2005 average:
     US$3.2 million; 2005 minimum: US$2.4 million; 2005 maximum: US$4.0
     million), compared with US$3.7 million at 31 December 2004 (2004 average:
     US$3.9 million; 2004 minimum: US$2.8 million; 2004 maximum: US$4.6
  million).
Non-trading
    exposure also arises on non-cumulative perpetual preferred securities issued.
    These fixed-rate securities are eligible as tier 1 capital
       and are managed as capital instruments. Prior to the adoption of IFRSs
    these securities were classified as a non-equity element of minority interests
       but they are now classified as debt securities issued and therefore included
       in non-trading market risk analysis. The combination of a fixed interest
       rate and perpetual term generated a VAR of
    US$65.0 million at 31 December 2005 (2005 average: US$70.3 million;
    2005 minimum: US$62.3 million; 2005 maximum: US$78.2 million), compared
    with US$72.5 million at 31 December 2004 (2004 average: US$75.6 million;
  2004  minimum: US$66.6 million; 2004 maximum: US$86.3 million).
Market
      risk arises in HSBC's insurance businesses within their portfolios of
      investments and policyholders' liabilities.
      The principal market risks are interest-rate risk and equity risk, which
      primarily arise when guaranteed investment return policies have been issued.
      The insurance
      businesses have a dedicated head office market risk function which oversees
    management of this risk.
A
    similar market risk also arises within HSBC's defined benefit pension
    schemes to the extent that the obligations of the schemes are not fully matched
    by assets with determinable cash flows. This risk principally derives from
    the pension schemes holding equities against their future pension obligations.
    The risk is that market movements in equity prices could result in assets
    which are
  insufficient over time to cover the level of projected liabilities. Management,
    together with the trustees who act on behalf of the pension scheme beneficiaries,
    assess the level of this risk using reports prepared by independent external
actuaries.
The
    present value of HSBC's defined benefit pension plans' liabilities was US$27.7 billion at 31 December 2005, compared with US$26.5
billion at 31 December 2004. Assets of the defined benefit
schemes at 31 December 2005 comprised: equity investments 46 per cent (54 per cent at 31 December 2004); debt securities 33 per cent (29 per cent at 31 December 2004) and other (including
property) 21 per cent (17 per cent at 31 December 2004). (See Note 7 on the Financial Statements).
Net interest income
A principal part of
  HSBC's management of market risk in non-trading portfolios is to monitor
  the sensitivity of projected net interest income under varying interest rate
  scenarios (simulation modelling). HSBC aims, through its management of market
  risk in non-trading portfolios, to mitigate the impact of prospective interest
  rate movements which could reduce future net interest income, whilst balancing
  the cost of such
hedging activities on the current net revenue stream.
For
    simulation modelling, businesses use a combination of scenarios relevant
    to local businesses and local markets as well as standard scenarios required
    to be used across HSBC. The standard scenarios are consolidated to illustrate
    the combined pro forma impact on HSBC consolidated portfolio valuations and
  net interest income.
The
    table below sets out the impact on future net interest income of a 25 basis
    points parallel fall or rise in all yield curves worldwide at the beginning
    of each quarter during the 12 month period from 1 January 2006. These scenarios
    differ from those disclosed in the
Annual Report and Accounts 2004
which assumed an immediate 100 basis points parallel rise or fall in all yield curves on the first day of the 12 month period. The revised scenarios, although still simplified, are considered more
relevant.
Assuming
    no management actions, such a series of incremental parallel rises in all
    yield curves would decrease planned net interest income for the year to 31
    December 2006 by US$525 million, while such a series of incremental parallel falls in all yield curves would increase planned net interest income by US$474
    million. These figures incorporate the impact of any option features in the
underlying exposures.
Instead
    of assuming that all interest rates move together, HSBC groups its interest
    rate exposures into currency blocs whose interest rates are considered likely
    to move together. The sensitivity of projected net interest income, on this
  basis, is described as follows:
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(continued)
Rest of
Hong Kong
Rest of
US dollar
Americas
dollar
Asia
Sterling
Euro
bloc
bloc
bloc
bloc
bloc
bloc
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Change in 2006 projected net
interest income
+25 basis points shift in yield curves
at the beginning of each quarter .
(448
)
74
(18
)
28
(47
)
(114
)
(525
)
-25 basis points shift in yield curves
at the beginning of each quarter .
402
(72
)
20
(39
)
51
112
474
Change in 2005 projected net
interest income
+25 basis points shift in yield curves
at the beginning of each quarter .
(500
)
81
2
18
62
(160
)
(497
)
-25 basis points shift in yield curves
at the beginning of each quarter .
637
(83
)
(104
)
(13
)
(70
)
157
524
The
    interest rate sensitivities set out in the table above are illustrative only
    and are based on simplified scenarios. The figures represent the effect of
    the pro forma movements in net interest income based on the projected yield
    curve scenarios and the Group's current interest rate risk profile.
    This effect, however, does not incorporate actions that would be taken by
    Global Markets or in the business units to mitigate the impact of this interest
    rate risk. In reality, Global Markets seeks proactively to change the interest
    rate risk profile to minimise losses and optimise net revenues. The projections
    above also assume that interest
  rates of all maturities move by the same amount and, therefore, do not reflect
    the potential impact on net interest income of some rates changing while
    others remain unchanged. The projections also make other simplifying assumptions,
including that all positions run to maturity.
The
    Group's core exposure to changes in its net interest income arising
    from movements in interest rates falls into three areas: core deposit franchises,
HSBC Finance and Global Markets.
•
Core
          deposit franchises: these are exposed to changes
          in the value of the deposits raised and spreads against wholesale funds;
          in a low interest
          rate environment, the value of core deposits increases as interest
          rates rise and decreases
          as interest rates fall. This risk is, however, asymmetrical in a very
          low interest rate
          environment as there is limited room to lower deposit pricing in the
    event of interest rate reductions.
•
HSBC
          Finance provides an offset to the sensitivity
          effect of interest rate reductions on the core deposit franchises.
          This arises from having
          a substantially fixed rate, real estate secured, lending portfolio funded
          to an extent with
    interest rate sensitive short-term liabilities.
•
Global
          Markets: the residual interest rate risk is managed
          within Global Markets. This reflects the Group's policy of transferring
          all interest rate
          risk, other than structural risk, to Global Markets to be managed within
          defined limits and
    with flexibility as to the instruments used.
The
          major drivers of the changes shown in the projected effect of interest
    rate moves in the above table are set out below.
•
In
          the US dollar bloc, the rise in interest rates in 2005,
          coupled with an overall flattening of the yield
          curve, led the Group to reduce its sensitivity
          to falling rates, particularly with respect to some retail products
    with embedded optionality.
•
In
          Hong Kong, the rise in interest rates during the
          year improved the sensitivity to falling interest rates as there was
          more room to lower deposit
    pricing in the event of falling interest rates.
•
Global
          Markets decreased its exposure to US dollar,
          Hong Kong dollar, and euro assets, contributing to the decreased
          sensitivity in these currencies
    to both rising and falling rates.
It can be seen from
the above that projecting the movement in net interest income from prospective changes in interest rates is
a complex interaction of structural and managed exposures. In a rising rate environment,
the most critical
exposures are those managed within Global Markets.
Additionally, the Group considers a principal risk to future net interest income to be a general flattening of yield curves at a low level of interest rates,
as this reduces the value of the deposit franchise and limits the opportunities within Global Markets.
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Following the adoption of IFRSs, HSBC monitors the sensitivity of reported reserves to interest rate movements on a monthly basis by assessing the expected
reduction in valuation of available-for-sale portfolios and cash flow hedges
due to parallel movements of plus or minus 100 basis points in all yield curves. The table below describes the sensitivity to these movements at 31 December 2005 and the maximum and
minimum month figures during the year then ended:
At
31 December
Maximum
Minimum
2005
impact
impact
US$m
US$m
US$m
+ 100 basis point parallel move all in yield curves
(1,918
)
(2,655
)
(1,918
)
As a percentage of shareholders' funds at 31 December 2005
(2.0%
)
(2.8%
)
(2.0%
)
- 100 basis point parallel move all in yield curves
1,877
2,543
1,877
As a percentage of shareholders' funds at 31 December 2005
2.0%
2.7%
2.0%
The sensitivities included in the table are illustrative only and are based on simplified scenarios. Moreover, the table shows only those interest rate risk
exposures arising in available-for-sale portfolios and from cash flow hedges. These particular exposures form only a part of the Group's overall interest rate exposures. The accounting treatment under IFRSs of the Group's remaining
interest rate exposures, while economically largely offsetting the exposures shown in the above table, does not require revaluation movements to go to reserves.
Structural foreign exchange exposures
Structural foreign exchange exposures represent net investments in subsidiaries, branches or associated undertakings, the functional currencies of which are currencies other than the US
dollar.
Exchange differences on structural exposures are recorded in the consolidated statement of recognised income and expense. The main operating (or functional)
currencies in which HSBC's business is transacted are the US dollar, the Hong Kong dollar, sterling, the euro, the Mexican peso, the Brazilian real and the Chinese renminbi. As the US dollar and currencies linked to it form the dominant
currency bloc in which HSBC's operations transact business, HSBC Holdings prepares its consolidated financial statements in US dollars. HSBC's consolidated balance sheet is, therefore, affected by exchange differences between the US dollar
and all the non-US dollar functional currencies of underlying subsidiaries.
HSBC hedges structural foreign exchange exposures only in limited circumstances. HSBC's
structural foreign exchange exposures are managed with the primary objective of ensuring, where practical, that HSBC's consolidated capital ratios, and the capital ratios of
individual banking subsidiaries, are protected from the effect of changes in exchange rates. This is usually achieved by ensuring that, for each subsidiary bank, the ratio of structural exposures in a given currency to risk-weighted assets
denominated in that currency is broadly equal to the capital ratio of the subsidiary in question.
Selective hedges were in place during 2005. Hedging is undertaken using forward foreign exchange contracts which are accounted for under IFRSs as hedges of a
net investment in a foreign operation, or by financing with borrowings in the same currencies as the functional currencies involved. There was no ineffectiveness arising from these hedges in the year ended 31 December 2005.
There was no material effect from exchange differences on HSBC's capital ratios during the period.
HSBC Holdings
(Audited IFRS 7 information)
As a financial services holding company, HSBC Holdings has limited market risk activity. Its activities predominantly involve maintaining sufficient capital resources to support the
Group's diverse activities; allocating these capital resources across the Group's businesses; earning dividend and interest income on its investments in the Group's businesses; providing dividend payments to HSBC Holdings' equity
shareholders and interest payments to providers of debt capital; and maintaining a supply of short-term cash resources. It does not take proprietary trading positions.
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H S B C   H O L
    D I N G S   P L C
Financial
Review
(continued)
The objectives of HSBC Holdings' market risk management are to minimise income statement volatility arising from short-term cash balances and funding
positions; to minimise the market risk arising from long-term investments and long-term liabilities; and to protect distributable reserves from the adverse impact of market risk variables.
Market risk for HSBC Holdings is monitored by its ALCO.
The main market risks to which HSBC Holdings is exposed are interest rate risk and foreign currency risk.
HSBC Holdings is exposed to interest rate risk on debt capital investments in, and loans to, subsidiary undertakings; on debt capital issues; and on
short-term cash resources.
Following the adoption of IFRSs, certain loans to subsidiary undertakings of a capital nature that are not denominated in the functional currency of either
the provider or the recipient are accounted for as financial assets. Changes in the carrying amount of these assets due to exchange differences are taken directly to the income statement. Prior to the adoption of IFRSs, such exchange differences
were taken directly to reserves. These loans, and the associated foreign exchange exposures, are eliminated on a Group consolidated basis.
Revaluations due to foreign exchange rate movements of loans to subsidiary undertakings of a capital nature, and which are denominated in the functional
currency of either the borrower or the recipient, are taken directly to reserves. Equity investments in subsidiary undertakings are accounted for on a cost basis and are not revalued following movements in exchange rates.
Total VAR arising within HSBC Holdings at 31 December 2005 was as follows:
Foreign
Interest
exchange
rates
Total
US$m
US$m
US$m
At 31 December
2005
26.1
36.1
51.4
At 31 December
2004
24.1
29.4
45.9
Average
2005
24.0
33.7
48.9
2004
21.8
34.2
52.4
Minimum
2005
22.0
29.6
42.6
2004
20.6
22.6
40.3
Maximum
2005
26.1
45.9
56.6
2004
24.1
47.2
68.4
A principal tool in the management of market risk is the projected sensitivity of HSBC Holdings' net interest income to future changes in yield
curves.
(Unaudited information)
The table below sets out the effect on HSBC Holdings' future net interest income of an incremental 25 basis point parallel fall or rise in all yield
curves worldwide at the beginning of each quarter during the 12 month period from 1 January 2006.
Assuming no management action, a series of such rises would decrease HSBC Holdings' planned net interest income for 2006 by US$7 million while a
series of such falls would increase planned net interest income by US$7 million. These figures incorporate the impact of any option features in the underlying exposures.
Unaudited
information
US dollar
Sterling
Euro
bloc
bloc
bloc
Total
US$m
US$m
US$m
US$m
Change in 2006 projected net interest income
+
25
basis points shift in yield curves at the beginning of each quarter
(18
)
5
6
(7
)
–
25
basis points shift in yield curves at the beginning of each quarter
18
(5
)
(6
)
7
Change in 2005 projected net interest income
+
25
basis points shift in yield curves at the beginning of each quarter
(5
)
6
4
5
–
25 basis points shift in yield curves at the beginning of each quarter
5
(6
)
(4
)
(5
)
HSBC Holdings' principal exposure to changes in its net interest income from movements in interest rates arises on short-term cash balances, floating
rate loans advanced to subsidiary undertakings and fixed rate debt capital securities in issue which have been swapped to floating rate.
The interest rate sensitivities set out in the table above are illustrative only and are based on simplified scenarios. The figures represent the effect of
pro forma movements in net interest income based on the projected yield curve scenarios and HSBC Holdings' current interest rate risk profile. This
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effect, however, does not incorporate actions that could be taken to mitigate the effect of this interest rate risk.
HSBC Holdings' interest rate risk has not changed materially in the year.
Residual
    value risk management
(Audited
      information)
A significant part of a lessor's leasing activities is its management of residual value risk. This arises from operating lease transactions to the extent that the values recovered
from disposing of leased assets or re-letting them at the end of the lease terms (the 'residual values') differ from those projected at the inception of the leases. The business regularly monitors residual value exposure by reviewing the
recoverability of the residual value projected at lease inception. This entails considering the re-lettability and projected disposal proceeds of operating lease assets at the end of their lease terms. Provision is made to the extent that the
carrying values of leased assets are impaired through residual values not being fully recoverable.
The net book value of equipment on operating leases includes projected residual values at the end of current lease terms, to be recovered through re-letting
or disposal in the following periods:
2005
2004
US$m
US$m
Within 1 year
355
172
Between 1-2 years
–
484
Between 2-5 years
465
1,042
More than 5 years
1,684
2,073
Total exposure
2,504
3,771
Operational
    risk management
(Unaudited
      information)
Operational risk is the risk of loss arising from fraud, unauthorised activities, error, omission, inefficiency, systems failure or external events. It is inherent in every business
organisation and covers a wide spectrum of issues.
HSBC manages this risk through a controls-based environment in which processes are documented, authorisation is independent and transactions are reconciled
and monitored. This is supported by an independent programme of periodic reviews undertaken by Internal Audit, and by monitoring external operational risk events, which ensure that HSBC stays in line with best practice and takes account of lessons
learned from publicised operational failures within the financial services industry.
HSBC has codified its operational risk management process by issuing a high level standard, supplemented by more detailed formal guidance issued in January
2005. This explains how HSBC manages operational risk by identifying, assessing, monitoring, controlling and mitigating the risk, rectifying operational risk events, and implementing any additional procedures required for compliance with local
regulatory requirements. The processes undertaken to manage operational risk are determined by reference to the scale and nature of each HSBC operation. The HSBC standard covers the following:
•
operational
        risk management responsibility is
assigned
    to senior management within each
business operation;
•
information
        systems are used to record the
identification
        and assessment of operational
risks and to generate appropriate,
        regular
management
    reporting;
•
assessments
        are undertaken of the operational
risks
        facing each business and the risks inherent
in its processes, activities
        and products. Risk
assessment
        incorporates a regular review of
identified risks to monitor
    significant changes;
•
operational
        risk loss data is collected and
reported
        to senior management at the business
unit level. Aggregate operational
        risk losses are
recorded
        and details of incidents above a
materiality threshold are reported
        to Group
Head
        Office. A regular report on operational
losses is made to Group Audit
        Committee and
the
    Risk Management Meeting; and
•
risk mitigation,
        including insurance, is
considered
    where this is cost-effective.
In each of HSBC
'
s subsidiaries, local management is responsible for implementing HSBC standards on operational risk throughout their operations and, where deficiencies are evident, rectifying them within a reasonable timeframe. Subsidiaries
acquired by HSBC are required to assess, plan and implement the standard's requirements within an agreed timescale.
HSBC maintains and tests contingency facilities to support operations in the event of disasters. Additional reviews and tests are conducted in the event that
any HSBC office is affected by a business disruption event, to incorporate lessons learned in the operational recovery from those circumstances. HSBC has requested all country managers to prepare plans for the operation of their businesses, with
reduced staffing levels, should a flu pandemic occur.
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H S B C   H O L
    D I N G S   P L C
Financial
Review
(continued)
Reputational
    risk management
(Unaudited
    information)
The safeguarding of HSBC's reputation is of paramount importance to its continued prosperity and is the responsibility of every member of staff. Reputational risks can arise from
social, ethical or environmental issues, or as a consequence of operational risk events. As a banking group, HSBC's good reputation depends upon the way in which it conducts its business, but it can also be affected by the way in which clients,
to whom it provides financial services, conduct themselves.
Reputational risks are considered and assessed by the Board, the Group Management Board, the Risk Management Meeting, subsidiary company boards, board
committees and/or senior management during the formulation of policy and the establishment of HSBC standards. Standards on all major aspects of business are set for HSBC and for individual subsidiaries, businesses and functions. These policies,
which are an integral part of the internal control systems, are communicated through manuals and statements of policy and are promulgated through internal communications and training. The policies set out operational procedures in all areas of
reputational risk, including money laundering deterrence, environmental impact, anti-corruption measures and employee relations.
Management in all operating entities is required to establish a strong internal control structure to minimise the risk of operational and financial failure,
and to ensure that a full appraisal of reputational implications is made before strategic decisions are taken. The Group Internal Audit function monitors compliance with policies and standards.
Risk
    management of insurance operations
(Forms
    part of the audited financial statements)
Insurance
risk
Within its service proposition, HSBC offers its personal and commercial customers a wide range of insurance products, many of which complement other bank and consumer finance
products.
Both life and non-life insurance is underwritten. Underwriting occurs in nine countries through 27 licensed insurers, principally in the UK, Hong Kong,
Mexico, Brazil, the US and Argentina.
Life insurance contracts include participating business (with discretionary participation features) such as endowments and pensions, credit life business in
respect of income and payment
protection, annuities, term assurance and critical illness covers.
Non-life insurance contracts include motor, fire and other damage, accident, repayment protection and a limited amount of commercial and liability
business.
The principal insurance risk faced by HSBC is that the costs of claims combined with acquisition and administration costs may exceed the aggregate amount of
premiums received and investment income. HSBC manages its insurance risks through the application of formal underwriting, reinsurance and claims procedures. These procedures are designed also to ensure compliance with regulations.
The Group's overall approach to insurance risk is to maintain a good diversification of insurance business by type and geography, and to focus on risks
that are straightforward to manage and frequently are directly related to the underlying banking activity (for example, with credit life products). The following tables provide an analysis of the insurance risk exposures by geography and by type of
business. These tables demonstrate the Group's diversification of risk and the strong emphasis on personal lines. Personal lines tend to be higher volume and with lower individual value than commercial lines, which further diversifies the risk.
Separate tables are provided for life and non-life business, reflecting their very distinct risk characteristics. Life business tends to be longer term than non-life and also frequently involves an element of savings and investment in the premium.
For this reason, the life insurance risk table provides an analysis of the insurance liabilities as the best available overall measure of the insurance exposure. By contrast for non-life business, the table uses written premium as representing the
best available measure of risk exposure.
Both life and non-life business insurance risks are controlled through a combination of local and central procedures and policies. These include a
centralised approach to the authorisation to write certain classes of business, with restrictions applying particularly to commercial and liability non-life business. For life business in particular, use is also made of ALCOs in order to monitor the
risk exposures. Market risk limits are also applied centrally as an additional control over the extent of insurance risk that is retained.
As indicated in the specific comments relating to particular classes, use is also made of reinsurance as a means of further mitigating exposure, in
particular to aggregations as a result of catastrophe risk.
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Analysis of insurance risk
The insurance risk is illustrated by an analysis of business by type of contract and geographic location.
Analysis of life insurance risk – policyholder liabilities
Rest of
Hong
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Life (non-linked)
Insurance
contracts
with
DPF
1
155
3,886
152
–
–
4,193
Credit
    life
156
–
–
196
–
352
Annuities
202
–
22
1,651
515
2,390
Term
              assurance and other
long-term
    contracts
1,063
68
82
51
170
1,434
Total life (non-linked)
1,576
3,954
256
1,898
685
8,369
Life (linked)
1,201
536
332
–
826
2,895
Investment
        contracts
with
    DPF
1
–
–
9
–
–
9
Life
              insurance
policyholders'
liabilities
2,777
4,490
597
1,898
1,511
11,273
1
Insurance contracts and investment contracts with discretionary participation features ('DPF') give policyholders a contractual right to receive, as a supplement to
their guaranteed benefits, additional benefits that are likely to be a significant portion of the total contractual benefits and whose amount or timing is contractually at the discretion of HSBC. The additional benefits are contractually based on
the performance of a specified pool of contracts or assets, or the profit of the company issuing the contracts.
The above table of life insurance policyholder liabilities provides an overall summary of the life insurance activity across the Group. For life insurance
business, the insurance risk will vary considerably depending on the type of business. The principal risks are in relation to mortality, morbidity, lapse and surrender, investment (market) and expense levels. As indicated above, the geographic and
product diversity of HSBC's life insurance business provides an effective mitigation of exposure to insurance risk. This is in addition to the local underwriting, claims handling and expense control management functions.
In general terms, mortality and morbidity risks are mitigated through medical underwriting and the ability in a number of cases to amend the premium in the
light of changes in experience. Lapse and surrender risks are mitigated by the setting of appropriate surrender values. Market risk is usually mitigated through a combination of investment policy to match liabilities and the risk being shared with
policyholders. In the case of unit-linked business, market risk is generally borne by policyholders. In the case of life business with a discretionary participation feature, the risk is shared with policyholders through the management of
bonuses.
The principal division of life business is between unit linked and non-linked. There are a number of major sub-categories of non-linked life
assurance.
Insurance contracts with discretionary participation features include with-profits business. The largest portfolio is in Hong Kong. This is a book of
endowment life policies, with annual bonuses awarded to policyholders. Although
prima facie
this
business entails significant market risk, this is managed in conjunction with other risks through the investment policy and adjustment to bonus rates. In practice this means that the majority of the market risk is borne by policyholders. The main
risk associated with this product is the value of assigned assets falling below that required to support benefit payments. HSBC manages this risk by conducting regular actuarial investigations on the supportability of the bonus rates.
Credit life insurance business is written in relation to the banking and finance products. The insurance risk relates to mortality and morbidity risk for the
duration of the loans advanced. Claims experience is continuously monitored and premium rates adjusted accordingly. For much of this business, the average term of the credit risk exposure is for two to three years, which limits the insurance risk
exposure.
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H S B C   H O L
    D I N G S   P L C
Financial
Review
(continued)
Annuities are contracts providing income from capital investment paid in a stream of regular payments for either a fixed period or during the
annuitant's lifetime. Deferred annuities are those whose payments to the annuitant begin at a designated future date as opposed to immediate annuities where payments begin at once. The principal risks in respect of annuity business relate to
mortality and market risk in relation to the need to match investments against the anticipated cash flow profile of the policies. HSBC has a number of annuity books, some of which have been in run-off for several years. The majority of the annuity
book is composed of contracts with a duration of no longer than five years. Investments are managed to match the anticipated cash flow profile, and the mortality risk is regularly monitored. HSBC has annuity business in the US, Mexico, Cayman
Islands and Argentina.
The major component of the 'Term assurance and other long-term contracts' category is term assurance and critical illness policies written in the
UK. The principal risks are in respect of mortality and morbidity, and are mitigated through a combination of underwriting practices, premium adjustment in light of changes in experience and reinsurance.
For linked insurance business, market risk is usually borne by policyholders. The principal risk retained by HSBC relates to expenses, although mortality,
disability and morbidity risks are also associated with this product and are managed through the application of the techniques set out above for non-linked lines of business.
Analysis of
    non-life insurance risk – net written insurance premiums
1
Rest of
Hong-
Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Accident and health
33
67
3
8
1
112
Motor
192
20
11
47
259
529
Fire and other damage
251
34
3
8
58
354
Liability
229
17
2
90
15
353
Credit (non-life)
225
–
–
202
–
427
Marine, aviation
and
transport
–
16
4
–
22
42
Other non-life insurance
contracts
10
29
–
17
12
68
Total net written insurance
premiums
940
183
23
372
367
1,885
1
Net
              written insurance premiums represent gross written premiums less gross
              written premiums ceded to
reinsurers.
Non-life insurance contracts include liability and property insurance. However, only a small proportion of HSBC's non-life insurance portfolio is
liability insurance which is in general underwritten as part of a product business proposal. The key risks associated with non-life business are underwriting risk and claims experience risk. Underwriting risk is the risk that HSBC does not charge
premiums appropriate for the cover provided and claims experience risk is the risk that portfolio experience is worse than expected. HSBC manages these risks through prudent pricing (for example, imposing restrictions and deductibles in the policy
terms and conditions), product design, risk selection, claims handling, investment strategy and reinsurance policy. All non-life insurance contracts are annually renewable and the underwriters have the right to
refuse renewal or to change the terms and conditions of the contract at renewal.
HSBC underwrites non-life insurance business in Ireland, the UK, Hong Kong, Argentina, the US, Mexico and Singapore.
Accident and health insurance business is underwritten in all major markets with the largest portfolio being Hong Kong. Potential accumulations of personal
accident risks are mitigated by the purchase of catastrophe reinsurance.
Motor insurance business covers vehicle damage and liability for personal injury. It includes a large portfolio underwritten in Brazil for US$105
million, which was disposed of during 2005. Other significant portfolios are written in the
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UK, Mexico and Argentina. Reinsurance protection has been arranged where necessary to avoid excessive exposure to larger losses, particularly those relating to personal injury
claims.
Fire and other damage business is written in all major markets, most significantly in Europe. The predominant focus in most markets is insurance for homes
and contents while covers for selected commercial customers are largely written in Asian and South American markets. All portfolios at risk from catastrophic losses are protected by reinsurance in accordance with information obtained from
professional risk-modelling organisations.
A very limited portfolio of liability business is written in major markets.
Following the disposal of the non-life insurance portfolio in Brazil, credit non-life business now represents the largest single class and is concentrated in
the US and the UK. This business is written in relation to the banking and finance products.
Present value of in-force long-term insurance business ('PVIF')
The HSBC life insurance business is accounted for using the embedded value approach, which,
inter
alia
, provides a comprehensive framework for the evaluation of insurance and related risks. The present value of the shareholders' interest in the profits expected to
emerge from the book of in-force policies at 31 December 2005 can be stress-tested to assess the ability of the book of life business to withstand adverse developments. A key feature of life insurance business is the importance of managing the
assets, liabilities and risks in a coordinated fashion rather than individually. This reflects the greater interdependence of these three elements for life insurance than is generally the case for non-life insurance.
The following table shows the effect on the PVIF as at 31 December 2005 of reasonably possible changes in the main economic assumptions across all insurance
underwriting subsidiaries:
PVIF
US$m
+ 100 basis points shift in risk-free rate
90
– 100 basis points shift in risk-free rate
(100
)
+ 100 basis points shift in risk discount rate
(54
)
– 100 basis points shift in risk discount rate
57
+ 100 basis points shift in expenses inflation
(8
)
– 100 basis points shift in expenses inflation
7
+ 100 basis points shift in lapse rate
47
– 100 basis points shift in lapse rate
(49
)
The effects on PVIF shown above are illustrative only and employ simplified scenarios. They do not incorporate actions that could be taken by management to
mitigate effects nor do they take account of consequential changes in policyholder behaviour.
General economic and business assumptions
The sensitivity of profit for the year to, and net assets at, 31 December 2005 to reasonably possible changes in conditions at 31 December 2005 across all insurance underwriting
subsidiaries is as follows:
Impact on:
Profit for
Net
the year
assets
US$m
US$m
Economic assumptions
20 per cent increase in claims costs
(82
)
(78
)
20 per cent decrease in claims costs
81
78
Non-economic assumptions
10 per cent increase in mortality and/or morbidity rates
(8
)
(9
)
10 per cent decrease in mortality and/or morbidity rates
18
18
50 per cent increase in lapse rates
(17
)
(14
)
50 per cent decrease in lapse rates
56
51
10 per cent increase in expense rates
(20
)
(20
)
10 per cent decrease in expense rates
19
19
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H S B C   H O L
    D I N G S   P L C
Financial
Review
(continued)
A key aspect of the risk management for insurance business, and life insurance in particular, is the need actively to manage the assets in relation to the
liabilities. Of particular importance for a number of lines of business is the need to match the expected pattern of cash flow, which in some cases (such as annuities) can run for many years. The following table shows the overall disposition of
assets and liabilities and demonstrates that there is an
appropriate level of matching. It is generally not possible to achieve a complete matching of asset and liability duration. This is partly because with annual premium contracts there are
uncertain future cash flows yet to be received from policyholders and partly because the duration of some liability cash flows exceeds the duration of the longest available dated fixed interest investments.
Investment
Insurance contracts
contracts
Term
assurance
Contracts
and other
with
Unit-
long-term
Unit-
Other
DPF
1
linked
Annuities
contracts
2
Non-life
linked
Other
Assets
3
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Financial assets:
–
trading assets
–
–
–
49
58
–
–
170
277
–
financial assets
designated at fair
value
1,005
2,132
52
947
14
6,995
1,415
1,488
14,048
–
derivatives
57
426
–
–
–
1
4
–
488
–
financial investments
2,581
–
1,272
339
1,230
–
1,527
1,896
8,845
–
other assets
635
268
828
182
619
174
376
1,098
4,180
Total financial assets
4,278
2,826
2,152
1,517
1,921
7,170
3,322
4,652
27,838
Reinsurance assets
2
69
193
612
669
–
–
40
1,585
PVIF
–
–
–
–
–
–
–
1,400
1,400
Other assets
18
9
45
33
329
1
–
760
1,195
Total assets
4,298
2,904
2,390
2,162
2,919
7,171
3,322
6,852
32,018
Financial liabilities
designated at fair value .
–
–
–
–
–
7,156
3,289
–
10,445
Liabilities under insurance
contracts issued
4,193
2,895
2,390
1,786
2,871
–
9
–
14,144
Deferred tax
–
–
–
–
–
–
–
322
322
Other liabilities
–
–
–
–
–
–
–
2,125
2,125
Total liabilities
4,193
2,895
2,390
1,786
2,871
7,156
3,298
2,447
27,036
Shareholders' equity
–
–
–
–
–
–
–
4,982
4,982
Total liabilities and
shareholders' equity
4
4,193
2,895
2,390
1,786
2,871
7,156
3,298
7,429
32,018
1
Discretionary participation features.
2
Includes credit life insurance.
3
Other assets comprise solvency and unencumbered assets.
4
Excludes assets, liabilities and shareholders' funds of associate insurance companies Erisa S.A. and Ping An Insurance.
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The balance sheet of insurance underwriting operations by geographical region at 31 December 2005 was as follows:
Rest of Asia-
North
South
Europe
Hong Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Financial assets:
–
trading
    assets
–
–
–
277
–
277
–
financial
    assets designated at fair
value
9,276
3,164
545
–
1,063
14,048
–
derivatives
386
102
–
–
–
488
–
financial
    investments
1,053
4,429
60
2,962
341
8,845
–
other
    assets
886
1,512
157
1,142
483
4,180
Total financial assets
11,601
9,207
762
4,381
1,887
27,838
Reinsurance assets
1,293
48
24
153
67
1,585
PVIF
796
557
47
–
–
1,400
Other assets
307
64
19
306
499
1,195
Total assets
13,997
9,876
852
4,840
2,453
32,018
Financial liabilities designated at fair
value
6,375
3,874
42
–
154
10,445
Liabilities under insurance contracts
issued
4,284
4,724
655
2,787
1,694
14,144
Deferred tax
237
83
9
(17
)
10
322
Other liabilities
1,374
123
21
395
212
2,125
Total liabilities
12,270
8,804
727
3,165
2,070
27,036
Shareholders' equity
1,727
1,072
125
1,675
383
4,982
Total liabilities and shareholders'
equity
1
13,997
9,876
852
4,840
2,453
32,018
1
Excludes
          assets, liabilities and shareholders' funds of associate insurance
          companies Erisa S.A. and
Ping An Insurance.
Financial risks
HSBC's insurance businesses are exposed to a range of financial risks, including market risk, credit risk and liquidity risk. The nature and management of these risks is described
below.
Underwriting subsidiaries incur financial risk, for example, when the proceeds from financial assets are not sufficient to fund the obligations arising from
insurance and investment contracts. Other non-underwriting insurance-related activities undertaken by HSBC subsidiaries such as insurance broking; insurance management (including captive management); and insurance, pensions and annuities
administration and intermediation are exposed to financial risk but not to a significant extent.
The insurance underwriting subsidiaries have developed their own risk management policies appropriate for the business. Where applicable they also comply
with HSBC's banking risk management procedures. However, in some cases, such as the use of one day VAR measures, these are not appropriate for insurance and, therefore, not applied.
The majority of HSBC's insurance underwriting subsidiaries are owned and primarily managed by local banking subsidiaries. Their activities are subject
to a variety of locally applied controls and to external regulatory monitoring. Centralised insurance management, including risk and capital management, is relatively limited in scope, acting primarily as an additional level of control. In many
jurisdictions, local regulatory requirements prescribe the type, quality and concentration of assets that HSBC's insurance underwriting subsidiaries must maintain in local currency to meet local insurance liabilities. Within each subsidiary,
ALCOs are responsible for the management of financial risks within local requirements and ensure compliance with the control framework and risk appetite established centrally.
The following table analyses the assets held in HSBC's insurance underwriting subsidiaries at 31 December 2005 by type of liability against which the
assets are held, and provides an overall framework for considering exposure to financial risk:
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Life linked
Life non-linked
Non-life
insurance
1
insurance
2
insurance
3
Other assets
4
Total
5
US$m
US$m
US$m
US$m
US$m
Trading assets
Treasury bills
–
–
21
103
124
Debt securities
–
49
37
67
153
–
49
58
170
277
Financial assets designated
at fair value
Treasury bills
9
26
–
17
52
Debt securities
2,374
2,118
4
745
5,241
Equity securities
6,744
1,275
10
726
8,755
9,127
3,419
14
1,488
14,048
Financial investments
Held-to-maturity:
Debt securities
–
4,603
157
226
4,986
–
4,603
157
226
4,986
Available-for-sale:
Treasury bills
–
–
70
101
171
Other eligible bills
–
–
447
116
563
Debt securities
–
1,116
556
1,437
3,109
Equity securities
–
–
–
16
16
–
1,116
1,073
1,670
3,859
9,127
9,187
1,302
3,554
23,170
1
Comprises life linked insurance contracts, linked long-term investment contracts and investment contracts with discretionary participation features.
2
Comprises life non-linked insurance contracts and non-linked long-term investment contracts.
3
Comprises non-life insurance contracts.
4
Comprises solvency and unencumbered assets.
5
Excludes financial assets of insurance underwriting associates, Erisa, S.A. and Ping An Insurance.
Under linked insurance and investment contracts, premium income less charges levied is invested in unit-linked funds. HSBC manages the financial risk of this
product by holding appropriate assets in funds or portfolios to which the liabilities are linked. This generally transfers the financial risk to the policyholder. The assets held to support unit-linked liabilities represent 35.9 per cent of the
total financial assets of HSBC's insurance underwriting subsidiaries at the reporting date.
Market risk
Interest rate risk
HSBC's insurance underwriting subsidiaries are exposed to interest rate risk when there is a mismatch in terms of duration or yields between the assets and liabilities. Examples of
interest rate risk exposure are as follows:
•
lower market
        interest rates result in lower yields
on
        the assets supporting guaranteed investment
returns payable to policyholders;
    and
•
higher
        market interest rates result in a reduction
of
        the value of the fixed income securities
portfolio which may result in
        losses if, as a
result
    of an increase of the level of surrenders,
the corresponding
      fixed income securities have to be sold.
HSBC manages the interest rate risk arising from its insurance underwriting subsidiaries by establishing limits centrally. These govern the sensitivity of
the net present values of expected cash flows from subsidiaries' assets and liabilities to a one basis point parallel upward shift in the discount curve used to calculate values. Adherence to these limits is monitored by local ALCOs.
Interest rate risk is also assessed by measuring the impact of defined movements in interest yield curves on the profits after tax and net assets of the
insurance underwriting subsidiaries. An immediate and permanent movement in interest yield curves as at 31 December 2005 in all territories in which HSBC's insurance subsidiaries operate would have the following impact on the profit for the
year and net assets at that date:
Profit for
the year
Net assets
US$m
US$m
+ 100 basis points shift in
yield curves
(46
)
(122
)
– 100 basis points shift in
yield curves
63
181
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The interest rate sensitivities set out above are illustrative only and employ simplified scenarios. They are based on US$8,068 million of
interest-bearing securities held by insurance underwriting subsidiaries at 31 December 2005 and US$3,350 million of insurance liabilities under insurance contracts and long-term investment contracts issued. The sensitivities do not incorporate
actions that could be taken by management to mitigate the effect of the interest rate movements, nor do they take account of consequential changes in policyholder behaviour.
The majority of interest rate exposure arises within insurance underwriting subsidiaries in the UK, the US and Hong Kong.
HSBC's insurance underwriting subsidiaries are also exposed to the risk that the yield on assets held may fall short of the return guaranteed on certain
contracts issued to policyholders. This investment return guarantee risk is managed by matching assets held to liability requirements. In addition, a provision is established when analysis indicates that, over the life of the contracts, the returns
from the designated assets may not be adequate to cover the related liabilities.
The guarantees offered to policyholders in respect of certain insurance products are divided into broad categories as follows:
•
annuities
      in payment;
•
deferred
        annuities: these consist of two phases –
the
      savings and investing phase, and the
retirement income phase;
•
annual
        return: the investment return credited to
the
        policyholder every year (referred to as a
'hard' guarantee),
        or the average annual
investment
        return credited to the policyholder
over the life of the policy
        to its maturity or
surrender
        (referred to as a 'soft' guarantee) is
guaranteed to be no lower than
      a specified rate;
•
capital:
        policyholders are guaranteed to receive
back
        no less than the premiums paid less
expenses, or a cash payment
        or series of cash
payments
        whose amounts are at least equal to
those defined within the policy;
      and
•
market
        performance: policyholders receive an
investment
        return which is guaranteed to be
within a prescribed range of
        average investment
returns
        earned by predetermined market
participants on the specified
      product.
The table below shows, in respect of each category of guarantee, the total reserves established for guaranteed products, the range of investment returns
implied by the guarantees, and the range of current yields of the investment portfolios supporting the guarantees.
Investment
returns implied
Reserve
by guarantee
1
Current yields
US$m
%
%
Annuities in payment
1,063
0.0 – 4.2%
4.0 – 13.0%
Deferred annuities
408
0.0 – 6.0%
6.1 – 8.6%
Deferred annuities
674
6.0 – 9.0%
5.7%
Annual return
4,362
0.0 – 3.0%
3.5 – 5.6%
Annual return
581
3.0 – 6.0%
3.5 – 11.5
          %
Capital
1,168
0.0%
2.9 – 5.6
          %
Market performance
2
2,938
n/a
n/a
1
The above table excludes guarantees from associate insurance companies Erisa, S.A. and Ping An Insurance.
2
There is no specific investment return implied by market performance guarantees because the guarantees are expressed as lying within prescribed ranges of average market
returns.
The Group manages the annuities, annual return and capital guarantees by seeking to match the exposure predominantly with bonds which are producing a return
at least equal to the investment return implied by the guarantee. Provision is made for any anticipated shortfall, generally calculated by recourse to stress testing of the likely outcomes.
The main risk arising from these guarantees is reinvestment risk, which arises primarily when the duration of the policy extends beyond the
maturity
dates of the bonds. Future reinvestment yields may be less than the investment rates implied by the guarantee.
A certain number of these products have been discontinued to new business; this includes the deferred annuity portfolio in HSBC Finance, where the current
portfolio yield is less than the guarantee and highlighted in the above table. For this block of business, a purchase accounting reserve was made at the time of the acquisition of HSBC Finance to mitigate the impact of the disparity in yields.
In
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addition, in the UK there is an annuity portfolio where the risk is fully reinsured.
For market performance guarantee business in the table above, the Group seeks to match the composition of the investment portfolio with the composition of
the average investment portfolio of the other market participants. These are published by the regulator monthly. Reserves have also been established to cover any potential shortfall although, since inception, they have never been called
upon.
Equity risk
HSBC manages the equity risk arising from its holdings of equity securities centrally by setting limits on the maximum market value of equities that each insurance underwriting subsidiary
may hold. Equity risk is also monitored by estimating the effect of predetermined movements in equity prices on the profit and total net assets of the insurance underwriting subsidiaries.
The following table illustrates the impact on the aggregated profit for the year and net assets of a reasonably possible 10 per cent variance in equity
prices:
Profit for
the year
Net assets
US$m
US$m
10 per cent increase in
equity prices
61
62
10 per cent decrease in
equity prices
(45
)
(46
)
These equity sensitivities are illustrative only and employ simplified scenarios. They are based on US$6,753 million of marketable equity securities held
by insurance underwriting subsidiaries at 31 December 2005, and US$6,137 million of liabilities under insurance contracts and long-term investment contracts issued. They do not allow for any management actions to mitigate the effects of the
equity price decline, nor for any consequential changes, such as in policyholder behaviour, that could accompany such a fall.
Foreign exchange risk
HSBC's insurance underwriting subsidiaries are exposed to this risk when the assets supporting insurance liabilities are denominated in currencies other than the currencies of the
liabilities.
HSBC manages the foreign exchange risk arising from its insurance underwriting subsidiaries centrally, by establishing limits on the net positions
by currency and the total net short position that each insurance subsidiary may hold. The risk is also monitored by tracking the effect of predetermined exchange differences on the total
profit and net assets of the insurance underwriting subsidiaries.
The following table illustrates the impact on the aggregated profit for the year and net assets of a reasonably possible 10 per cent variance in the US
dollar exchange rate:
Profit
for the
Net
year
assets
US$m
US$m
10 per cent increase in
US dollar exchange rate
5
5
10 per cent decrease in
US dollar exchange rate
(5
)
(5
)
These sensitivities to movements in the US dollar are for illustrative purposes only and employ simplified scenarios applied to local US dollar positions
only. They are based on US$1,444 million of liabilities
under insurance contracts and long-term investment contracts and
US$1,505 million of assets denominated in US dollars. They do not allow for actions that could be taken by management to mitigate the effect of exchange differences, nor for any consequential changes in policyholder
behaviour.
Credit risk
HSBC's insurance underwriting subsidiaries are exposed to credit risk in respect of their investment portfolios and their reinsurance transactions.
Local management of HSBC's underwriting insurance subsidiaries is responsible for the quality and performance of the investment portfolios. Investment
guidelines are set at Group level. Local ALCOs set investment parameters appropriate to the local environment within the framework of the Group guidelines and review investment performance and compliance with the guidelines. Assessment of the
creditworthiness of issuers and counterparties is based primarily upon internationally recognised credit ratings and other publicly available information. In addition, to reduce the impact of individual entity or industry sector failures, centrally
determined issuer and industry sector concentration limits are complied with.
Investment credit exposures are aggregated and reported to HSBC's Group Credit and Risk function on a quarterly basis.
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Rating agency designation
The following table presents the analysis of treasury bills, other eligible bills and debt securities within HSBC's insurance business by rating agency designation at 31 December
2005 based on Standard and Poor's ratings or equivalent:
Treasury
Other eligible
Debt
bills
bills
securities
Total
US$m
US$m
US$m
US$m
Supporting liabilities under non-linked insurance
contracts
AAA
117
224
3,367
3,708
AA– to
    AA+
–
223
3,372
3,595
A– to
    A+
–
–
1,459
1,459
Lower
    than A–
–
–
382
382
Unrated
–
–
60
60
117
447
8,640
9,204
Supporting shareholder's funds
AAA
221
109
892
1,222
AA– to
    AA+
–
7
606
613
A– to
    A+
–
–
787
787
Lower
    than A–
–
–
183
183
Unrated
–
–
7
7
221
116
2,475
2,812
Total
1
AAA
338
333
4,259
4,930
AA– to
    AA+
–
230
3,978
4,208
A– to
    A+
–
–
2,246
2,246
Lower
    than A–
–
–
565
565
Unrated
–
–
67
67
338
563
11,115
12,016
Of which issued by:
– government
338
–
2,224
2,562
– local
    authorities
–
–
76
76
– corporates
–
–
8,424
8,424
– other
–
563
391
954
Of which classified as:
– trading
    assets
124
–
153
277
– financial
    instruments designated at fair value
43
–
2,867
2,910
– available-for-sale
    securities
171
563
3,109
3,843
– held-to-maturity
    investments
–
–
4,986
4,986
1
Excludes treasury bills, other eligible bills and debt securities held by insurance underwriting associates Erisa, S.A. and Ping An Insurance.
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Credit
    risk also arises when part of the insurance
risk
    incurred by HSBC is assumed by reinsurers.
HSBC's
    Reinsurance Security Committee
establishes
    the minimum security criteria for
acceptable
    reinsurance and monitors the purchase of
reinsurance
against these criteria.
At 31 December
      2005, the split of liabilities ceded to
reinsurers
      and outstanding reinsurance recoveries,
analysed
      by Standard and Poor's reinsurance credit rating
data
  or their equivalent, was as follows:
Reinsurers' share
    of liabilities under
insurance contracts
Linked
Non-linked
insurance
insurance
Reinsurance
contracts
contracts
Total
debtors
US$m
US$m
US$m
US$m
AAA
7
61
68
–
AA– to AA
29
735
764
5
A– to A+
8
536
544
27
Lower than A–
25
68
93
2
Unrated
–
76
76
6
Total
1
69
1,476
1,545
40
1
Excludes reinsurers' share of liabilities under insurance contracts and reinsurance debtors of insurance underwriting associates Erisa, S.A. and Ping An
Insurance.
Liquidity risk
It is an inherent characteristic of almost all insurance contracts that there is uncertainty over the amount and the timing of settlement of claims liabilities that may arise, and this
leads to liquidity risk. As part of the management of this exposure, estimates are prepared for most lines of insurance business of cash flows expected to arise from insurance funds at the balance sheet date. The estimates frequently include future
renewal premiums and new business cash flows. As indicated by the asset and liability table for insurance business, and the analysis of insurance risk of the Group, a significant proportion of the Group's non-life insurance business is viewed
as very short
term, with the settlement of claims expected to occur within one year of the period of risk. There is a greater spread of anticipated duration for the life business where, in a large
proportion of cases, the liquidity risk is borne in conjunction with policyholders (wholly in the case of unit-linked business). To ensure adequate cash resources are available to meet short-term requirements that can arise as a consequence of large
claims events, the local insurance operations may obtain intra-group borrowing facilities at short notice.
The following table presents an analysis of the remaining contractual maturity of the long-term investment contract liabilities at 31 December
2005:
Liabilities under investment contracts issued by
insurance underwriting subsidiaries
1
Linked
Non-linked
investment
investment
contracts
contracts
designated
designated
at fair value
at fair value
Total
US$m
US$m
US$m
Remaining contractual maturity:
– due
    within 1 year
118
11
129
– due
    between 1 and 5 years
1,043
185
1,228
– due
    between 5 and 10 years
683
–
683
– due
    after 10 years
2,431
–
2,431
– undated
2
2,881
3,093
5,974
7,156
3,289
10,445
1
Excludes investment contracts issued by insurance underwriting associates Erisa, S.A. and Ping An Insurance.
2
In most cases, policyholders have the option to terminate their contracts at any time and receive the surrender values of their policies. These may be significantly lower than
the amounts shown above.
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Capital
    management and allocation
(Forms
    part of the audited financial statements except where stated)
Capital measurement and allocation
The Financial Services
Authority ('FSA') supervises HSBC on a consolidated basis and, as such,
receives information on the capital adequacy of, and sets capital requirements

for, HSBC as a whole.
Individual
banking subsidiaries are directly regulated by their local banking supervisors,
who set and monitor their capital adequacy requirements. In most jurisdictions,
non-banking financial subsidiaries are also subject to the supervision and capital
requirements of local regulatory authorities. Since 1988, when the governors
of the Group of Ten central banks agreed to guidelines for the international
convergence of capital
measurement and standards, the banking supervisors of HSBC's major banking
subsidiaries have exercised capital adequacy supervision within a broadly similar
framework.
In implementing
the EU's Banking
Consolidation
Directive, the FSA requires each bank and banking group to maintain an individually
prescribed ratio of total capital to risk-weighted assets taking into account
both
balance sheet assets and off-balance sheet transactions. Under the EU's
Amending Directive to the Capital Adequacy Directive, the FSA allows banks to
calculate capital requirements for market risk in the trading book using VAR
techniques.
HSBC's capital is divided into two tiers:
•
Tier 1
        capital comprises shareholders' funds,
innovative
        tier 1 securities and minority
interests in tier 1 capital,
        after adjusting for
items
        reflected in shareholders' funds which are
treated differently for the
        purposes of capital
adequacy.
        The book values of goodwill and
intangible assets are deducted
        in arriving at
tier
    1 capital.
•
Tier 2
        capital comprises qualifying subordinated
loan
        capital, collective impairment allowances
(previously, general provisions),
        minority and
other
        interests in tier 2 capital and unrealised
gains arising on the fair valuation
        of equity
instruments
        held as available-for-sale. Tier 2
capital also includes reserves
        arising from the
revaluation
    of properties.
Various limits are applied to elements of the capital base. The amount of innovative tier 1 securities cannot exceed 15 per cent of overall tier 1 capital,
qualifying tier 2 capital cannot exceed tier 1 capital, and qualifying term subordinated loan
capital may not exceed 50 per cent of tier 1 capital. There are also limitations on the amount of collective impairment allowances which may be included as part of tier 2 capital. From
the total of tier 1 and tier 2 capital are deducted the carrying amounts of unconsolidated investments, investments in the capital of banks, and certain regulatory items.
Banking operations are categorised as either trading book or banking book and risk-weighted assets are determined accordingly. Banking book risk-weighted
assets are measured by means of a hierarchy of risk weightings classified according to the nature of each asset and counterparty, taking into account any eligible collateral or guarantees. Banking book off-balance sheet items giving rise to credit,
foreign exchange or interest rate risk are assigned weights appropriate to the category of the counterparty, taking into account any eligible collateral or guarantees. Trading book risk-weighted assets are determined by taking into account
market-related risks such as foreign exchange, interest rate and equity position risks, and counterparty risk.
Effect of IFRSs
In October 2004, the FSA published a consultation paper CP04/17 'Implications of a changing accounting framework'. This was followed in April 2005 with a policy statement with
the same title, PS05/5. These papers set out the FSA's approach to assessing banks' capital adequacy after implementation of IFRSs. PS05/5 took effect on publication.
Under the new policy, there have been changes to the measurement of banks' capital adequacy, the most significant of which for HSBC are set out
below.
•
The capital
        treatment for collective impairment
allowances
        is the same as previously applied to
general provisions, that is
        they are included in
tier
        2 capital. This had a positive impact on
HSBC's total capital ratio
        as the amount of
collective
        impairment allowances exceeds the
amount of the previous general
    provisions.
•
The effect
        of recognising defined benefit
pension
        plan deficits on the balance sheet will
be reversed for regulatory reporting.
        However,
whereas
        previously banks deducted from capital
prepayments to pension plans,
        they must now
deduct
        from capital their best estimate of the
additional funding that they
        expect to pay into
the
        plans over the following five years to reduce
the defined benefit liability.
        This estimate is
arrived
    at in conjunction with the plans'
actuaries and/or trustees.
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•
Under IFRSs,
        dividends are not recognised as a
liability
        on the balance sheet until they are
declared. This gives rise to
        an increase in
shareholders' funds
        at the balance sheet date
compared with the previous accounting,
        which
is
        reversed when the relevant dividend is
subsequently declared. Banks
        reflect the benefit
of
        this increase in their regulatory capital until
the dividend declaration, in
        line with the
accounting
    treatment.
•
Unrealised
          gains on available-for-sale equities
held
    are included as part of tier 2 capital;
previously these were not recognised.
The FSA plan to review certain elements of this policy in mid-2007. In addition, in January 2006, the FSA published a consultation paper, CP06/1, which set
out proposed amendments to the handbook, on which comments are due in March 2006. These proposals are not expected to have a significant impact for HSBC.
Future developments
The Basel Committee on Banking Supervision ('the Basel Committee') has published a new framework for calculating minimum capital requirements. Known as 'Basel II', it
will replace the 1988 Basel Capital Accord. Basel II is structured around three 'pillars': minimum capital requirements, supervisory review process and market discipline. The supervisory objectives for Basel II are to promote safety and
soundness in the financial system and maintain at least the current overall level of capital in the system; enhance competitive equality; constitute a more comprehensive approach to addressing risks; and focus on internationally active
banks.
With respect to pillar one minimum capital requirements, Basel II provides three approaches, of increasing sophistication, to the calculation of credit risk
regulatory capital. The most basic one, the standardised approach, requires banks to use external credit ratings to determine the risk weightings applied to rated counterparties, and group other counterparties into broad categories and apply
standardised risk weightings to these categories. In the next level, the internal ratings-based foundation approach allows banks to calculate their credit risk regulatory capital requirement on the basis of their internal assessment of the
probability that a counterparty will default, but with quantification of exposure and loss estimates being subject to standard supervisory formulae. Finally, the internal ratings-based advanced approach will allow banks to use their own internal
assessment of not only the
probability of default but also the quantification of exposure at default and loss given default.
Basel II also introduces capital requirements for operational risk and, again, three levels of sophistication are proposed. The capital required under the
basic indicator approach will be a simple percentage of gross revenues: under the standardised approach it will be one of three different percentages of gross revenues applicable to each of eight business lines, and under advanced measurement
approaches it will be an amount determined using banks' own statistical analysis of operational risk data.
The EU Capital Requirements Directive ('CRD') recast the Banking Consolidation Directive and the Capital Adequacy Directive and will be the means
by which Basel II will be implemented in the EU. The CRD was approved by the European Parliament in September 2005 and the European Parliament's amendments were subsequently endorsed by EU Finance Ministers on 12 October 2005. The CRD is
expected to be published in its final form in the spring of 2006. It requires EU Member States to bring implementing provisions into force on 1 January 2007, although in the case of the provisions relating to the implementation of the internal
ratings-based advanced approach to credit risk and the advanced measurement approach to operational risk, implementation may be delayed until 1 January 2008.
In January 2005, the FSA published a consultation paper, CP05/3 'Strengthening capital standards', setting out proposals for implementing the
recast EU Directives. The FSA proposed that the new requirements should take effect from 1 January 2007, except that firms may elect to continue applying the existing capital adequacy framework until 1 January 2008. A further FSA consultation paper,
CP06/3 'Strengthening Capital Standards 2', was published in February 2006 setting out the FSA's latest proposals for implementing the CRD in the UK, together with the draft FSA Handbook text.
HSBC continues to participate actively in industry consultations surrounding the development and implementation of Basel II and the recast EU Directives, and
fully supports the more risk-sensitive regulatory capital framework proposed to replace the original 1988 Basel Capital Accord. The application of Basel II across HSBC's geographically diverse businesses, which operate in a large number of
different regulatory environments, represents a significant logistical and technological challenge, and an extensive programme of implementation projects is currently in progress. Basel II permits
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local discretion in a number of areas for determination by local regulators. The extent to which requirements will diverge, coupled with how the FSA, HSBC's home regulator, and the
local host regulators in the other countries in which HSBC operates interact will be key factors in completing implementation of Basel II. In view of this ongoing uncertainty, it remains premature to establish with precision the effect of Basel II
on HSBC's capital ratios or how the competitive landscape will change. One example of regulatory uncertainty relates to the US, where banking supervisory authorities have yet to produce draft rules (termed Notice of Proposed Rulemaking). They
are now expected to be published in the first half of 2006. The US authorities have decided to apply the advanced credit and operational risk methodologies of Basel II only to the largest US banks and holding companies, although other banks may
decide to opt in. HSBC North America Holdings Inc. (HSBC's highest level US bank holding company in the US, which holds all HSBC's major US operating subsidiaries and HSBC Canada) has been mandated to comply with these rules. For smaller
US banks, the US banking authorities are considering applying an updated version of the existing Basel I rules (dubbed Basel Ia). The Basel Ia rules may also be used in the determination of Basel II capital floors during the transition period
(2009-11).
Capital management
It is HSBC's policy to maintain a strong capital base to support the development of its business. HSBC seeks to maintain a prudent balance between the
different components of its capital and, in HSBC Holdings, between the composition of its capital and that of its investment in subsidiaries. This is achieved by each subsidiary managing
its own capital within the context of an approved annual plan which determines the optimal amount and mix of capital required to support planned business growth and meet Group and local regulatory capital requirements and, in the case of HSBC
Finance, its ratings targets. Capital generated in excess of planned requirements is returned to HSBC Holdings, normally by way of dividends, and represents a source of strength for HSBC.
HSBC Holdings is primarily a provider of equity capital to its subsidiaries. These investments are substantially funded by HSBC Holdings' own equity
issuance and profit retentions. Major subsidiaries usually raise their own non-equity tier 1 capital and subordinated debt in accordance with HSBC guidelines regarding market and investor concentration, cost, market conditions, timing and the effect
on the composition and maturity profile of HSBC's capital. The subordinated debt requirements of other HSBC companies are met internally.
HSBC recognises the impact on shareholder returns of the level of equity capital employed within HSBC and seeks to maintain a prudent balance between the
advantages and flexibility afforded by a strong capital position and the higher returns on equity possible with greater leverage. In the current environment, HSBC uses a benchmark tier 1 capital ratio of 8.25 per cent in considering its long-term
capital planning.
Source and application of tier 1 capital
(Unaudited information)
2005
2004
US$m
US$m
Movement in tier 1 capital
At 1 January
67,259
54,863
Consolidated profits attributable to shareholders of the parent company
15,081
11,840
Add back: goodwill amortisation
–
1,818
Dividends
(7,750
)
(7,301
)
Add back: shares issued in lieu of dividends
1,811
2,607
Increase in goodwill and intangible assets deducted
(1,631
)
(3,088
)
Preference shares issued
1,405
–
Ordinary shares issued
690
581
Innovative tier 1 capital issued
–
1,983
Other (including exchange differences)
(2,462
)
3,956
At 31 December
74,403
67,259
Movement in risk-weighted assets
At 1 January
759,210
618,662
Movements
67,954
140,548
At 31 December
827,164
759,210
175
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H S B C   H O L
D I N G S   P L C
Financial
Review
(continued)
Capital structure
(Unaudited
information)
2005
2004
US$m
US$m
Composition of regulatory capital
Tier 1 capital
Shareholders' funds
92,432
86,623
Minority interests and preference shares
6,741
4,253
Innovative tier 1 securities
9,383
10,077
Less :
Goodwill capitalised and intangible assets
(32,821
)
(31,190
)
Other regulatory adjustments
1
(1,332
)
(2,504
)
Total qualifying tier 1 capital
74,403
67,259
Tier 2 capital
Reserves arising from revaluation of property and unrealised gains on
available-for-sale equities
1,593
2,660
Collective impairment allowances
8,749
–
General provisions
–
2,624
Perpetual subordinated debt
3,640
3,670
Term subordinated debt
24,519
21,373
Minority and other interests in tier 2 capital
425
519
Total qualifying tier 2 capital
38,926
30,846
Unconsolidated investments
(6,437
)
(6,361
)
Investments in other banks
(1,147
)
(799
)
Other deductions
(296
)
(165
)
Total regulatory capital
105,449
90,780
Risk-weighted assets
Banking book
762,037
705,302
Trading book
65,127
53,908
Total
827,164
759,210
Risk-weighted assets were included in the totals above in respect of:
– contingent
    liabilities
43,333
41,264
– commitments
51,288
47,541
Capital ratios
%
%
Total capital
12.8
12.0
Tier 1 capital
9.0
8.9
1
Other
          regulatory adjustments mainly arise from the implementation of IFRSs
          in conjunction with the
FSA's policy statement PS05/5.
The above figures were computed in accordance with the EU Banking Consolidation Directive and the FSA policy statement PS05/5. The comparative figures at 31 December 2004 have not been
restated to reflect the implementation of IFRSs and PS05/5. HSBC complied with the FSA's capital adequacy requirements throughout 2005 and 2004.
Tier 1 capital increased by US$7.1 billion. Retained profits contributed US$7.3 billion, shares issued in lieu of dividends, together with preference
shares issued, contributed US$3.2 billion and other movements, including net other IFRS transitional adjustments, added US$0.8 billion. These increases
were partly offset by reductions due to exchange differences of US$4.2 billion.
The increase of US$8 billion in tier 2 capital mainly reflects collective impairment allowances becoming eligible for inclusion in capital in place of
general provisions.
Total risk-weighted assets increased by US$68 billion, or 9 per cent. The increase mainly reflects growth in the loan book and trading positions. At
constant currency, risk-weighted asset growth was 13 per cent.
176
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Risk-weighted assets by principal subsidiary
(Unaudited information)
In order to give an indication of how HSBC's capital is deployed, the table below analyses the disposition
of risk-weighted assets by principal subsidiary. The risk-weighted assets are calculated using FSA rules and exclude intra-HSBC items.
2005
2004
US$m
US$m
Risk-weighted assets
Hang Seng Bank
45,525
37,918
The Hongkong and Shanghai Banking Corporation and other subsidiaries
123,906
119,595
The Hongkong and Shanghai Banking Corporation
169,431
157,513
HSBC Private Banking Holdings (Suisse)
21,224
19,815
HSBC France
54,684
54,569
HSBC Bank and other subsidiaries
221,355
220,824
HSBC Bank
297,263
295,208
HSBC Finance
129,282
110,744
HSBC Bank Canada
30,275
26,127
HSBC Bank USA and other subsidiaries
123,829
108,577
HSBC North America
283,386
245,448
HSBC Mexico
13,166
8,750
HSBC Bank Middle East
14,682
10,088
HSBC Bank Malaysia
5,991
5,472
HSBC South American operations
15,736
9,743
Bank of Bermuda
4,195
4,107
HSBC Holdings sub-group
780
1,380
Other
22,534
21,501
827,164
759,210
177
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H S B C   H O
      L
D I N G S   P L C
Other Information
Loan maturity
      and interest sensitivity analysis
At 31 December
      2005, the geographical analysis of loan maturity and interest sensitivity
      by loan type on a contractual repayment basis was as follows:
Rest
Hong
of
      Asia-
North
South
Europe
Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Maturity
      of 1 year or less
Loans
      and advances to banks
43,254
42,684
18,898
11,293
5,265
121,394
Commercial
        loans to customers
Commercial,
        industrial and international trade
54,243
11,155
17,478
6,759
2,229
91,864
Real
      estate and other property related
12,884
6,189
3,814
5,472
218
28,577
Non-bank
      financial institutions
32,287
1,588
1,606
8,655
109
44,245
Governments
782
116
1,439
253
55
2,645
Other
      commercial
27,223
1,942
4,700
6,240
855
40,960
127,419
20,990
29,037
27,379
3,466
208,291
Hong
      Kong Government Home Ownership
Scheme
–
489
–
–
–
489
Residential
      mortgages and other personal loans
30,066
10,685
9,538
49,629
3,827
103,745
Loans
      and advances to customers
157,485
32,164
38,575
77,008
7,293
312,525
200,739
74,848
57,472
88,301
12,558
433,918
Maturity
      after 1 year but within 5 years
Loans
      and advances to banks
750
67
266
124
17
1,224
Commercial
        loans to customers
Commercial,
        industrial and international trade
13,558
5,192
3,335
5,128
655
27,868
Real
      estate and other property related
9,180
9,036
3,734
7,651
57
29,658
Non-bank
      financial institutions
1,726
348
558
1,480
18
4,130
Governments
363
186
472
2,647
163
3,831
Other
      commercial
6,984
3,532
2,253
1,536
317
14,622
31,811
18,294
10,352
18,442
1,210
80,109
Hong
      Kong Government Home Ownership
Scheme
–
1,564
–
–
–
1,564
Residential
        mortgages and other personal loans .
34,043
6,836
7,535
50,515
1,268
100,197
Loans
      and advances to customers
65,854
26,694
17,887
68,957
2,478
181,870
66,604
26,761
18,153
69,081
2,495
183,094
Interest
        rate sensitivity of loans and advances to
banks
        and commercial loans to customers:
Fixed
      interest rate
6,991
69
3,070
3,791
430
14,351
Variable
      interest rate
25,570
18,292
7,548
14,775
797
66,982
32,561
18,361
10,618
18,566
1,227
81,333
Maturity
      after 5 years
Loans
      and advances to banks
364
–
396
2,596
–
3,356
Commercial
      loans to customers
Commercial,
      industrial and international trade
8,886
389
473
1,312
10
11,070
Real
      estate and other property related
7,610
3,479
959
3,725
3
15,776
Non-bank
      financial institutions
1,292
30
38
296
1
1,657
Governments
676
1
236
602
227
1,742
Other
      commercial
8,739
1,953
938
600
8
12,238
27,203
5,852
2,644
6,535
249
42,483
Hong
      Kong Government Home Ownership
Scheme
–
2,627
–
–
–
2,627
Residential
      mortgages and other personal loans
65,486
16,269
11,746
118,270
83
211,854
Loans
      and advances to customers
92,689
24,748
14,390
124,805
332
256,964
93,053
24,748
14,786
127,401
332
260,320
Interest
        rate sensitivity of loans and advances to
banks
        and commercial loans to customers
Fixed
      interest rate
6,633
30
927
1,673
11
9,274
Variable
      interest rate
20,934
5,822
2,113
7,458
238
36,565
27,567
5,852
3,040
9,131
249
45,839
178
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H S B C   H O L
D I N G S   P L C
Other information
(continued)
Deposits
The following
      table analyses the average amount of bank and customer deposits and certificates
      of deposit ('CDs') and other money market instruments (which are
      included within 'debt securities in issue' in the balance sheet),
      together with the average interest rates paid thereon for each of the past
      three years. The geographical analysis of average deposits is based on the
      location of the office in which the deposits are recorded and excludes balances
      with HSBC companies. The 'Other' category includes securities
      sold under agreements to repurchase.
Year
      ended 31 December
2005
2004
2003
Average
Average
Average
Average
Average
Average
balance
rate
balance
rate
balance
rate
US$m
%
US$m
%
US$m
%
Deposits
          by banks
Europe
14,252
–
14,746
–
Demand
          and other – non-interest bearing
9,895
–
9,418
4.5
9,237
1.5
Demand – interest
          bearing
6,418
3.3
28,021
3.9
22,029
2.8
Time
17,877
1.9
16,111
4.9
22,870
2.5
Other
13,828
2.5
67,802
68,882
48,018
Hong
        Kong
2,054
–
1,752
–
Demand
          and other – non-interest bearing
1,253
–
3,104
3.5
2,484
1.2
Demand – interest
          bearing
2,059
1.0
2,012
3.2
1,016
1.6
Time
450
1.1
218
2.3
416
1.7
Other
110
5.5
7,388
5,668
3,872
Rest of
        Asia-Pacific
2,164
–
1,641
–
Demand
          and other – non-interest bearing
1,438
–
1,442
1.9
1,013
2.3
Demand – interest
          bearing
737
1.8
4,375
4.3
4,410
3.1
Time
3,055
3.6
761
5.4
1,146
2.7
Other
664
1.7
8,742
8,210
5,894
North
        America
1,344
–
1,948
–
Demand
          and other – non-interest bearing
1,442
–
3,647
3.6
3,098
1.4
Demand – interest
          bearing
3,161
0.7
3,886
6.3
3,176
3.3
Time
3,151
2.9
40
47.5
4,480
1.8
Other
2,526
1.2
8,917
12,702
10,280
South
        America
39
–
13
–
Demand
          and other – non-interest bearing
17
–
117
7.7
148
6.8
Demand – interest
          bearing
181
8.3
330
5.5
238
6.3
Time
273
12.8
1,073
10.2
703
5.7
Other
299
19.1
1,559
1,102
Total
770
19,853
–
20,100
–
Demand
          and other – non-interest bearing
14,045
–
17,728
4.0
15,980
1.5
Demand – interest
          bearing
12,556
2.2
38,624
4.1
30,869
2.9
Time
24,806
2.3
18,203
5.3
29,615
2.4
Other
17,427
2.6
94,408
96,564
68,834
179
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H S B C   H
    O L D I N G S   P L C
Other Information
(continued)
Year ended
      31 December
Year
    ended
2005
2004
31
      December 2003
Average
Average
Average
Average
Average
Average
balance
rate
balance
rate
balance
rate
US$m
%
US$m
%
US$m
%
Customer
          accounts
Europe
28,501
–
37,184
–
Demand
          and other – non-interest bearing
30,667
–
146,484
2.4
128,249
2.0
Demand – interest
          bearing
101,189
1.8
46,248
3.3
37,846
2.5
Savings
33,876
2.3
48,201
3.9
47,941
3.1
Time
41,010
2.8
10,967
4.2
15,167
2.2
Other
9,696
3.6
280,401
266,387
216,438
Hong
        Kong
13,365
–
13,508
–
Demand
          and other – non-interest bearing
8,829
–
91,723
0.9
94,629
0.1
Demand – interest
          bearing
74,818
0.1
50,281
2.4
46,817
1.0
Savings
58,646
0.9
14,054
2.7
12,015
1.6
Time
10,101
1.4
15
(26.7
)
106
4.7
Other
379
1.3
169,438
167,075
152,773
Rest
        of Asia-Pacific
11,825
–
8,592
–
Demand
          and other – non-interest bearing
6,467
–
27,721
1.7
24,480
1.2
Demand – interest
          bearing
18,483
1.1
31,584
3.3
27,171
2.9
Savings
25,685
2.7
10,484
3.5
7,597
2.1
Time
6,105
1.6
1,895
3.9
2,866
1.2
Other
2,304
1.2
83,509
70,706
59,044
North
        America
17,084
–
21,508
–
Demand
          and other – non-interest bearing
21,364
–
17,788
1.6
16,395
1.0
Demand – interest
          bearing
11,648
1.3
53,328
1.7
52,919
1.3
Savings
48,295
1.2
23,945
3.8
13,971
2.3
Time
6,652
3.3
2,534
4.5
16,989
2.7
Other
11,672
3.3
114,679
121,782
99,631
South
        America
2,126
–
1,428
–
Demand
          and other – non-interest bearing
1,192
–
276
2.5
308
1.6
Demand – interest
          bearing
207
1.9
10,110
16.3
5,976
13.5
Savings
4,271
18.1
343
5.2
269
0.4
Time
157
–
1,444
17.3
411
16.3
Other
246
18.3
14,299
8,392
6,073
Total
72,901
–
82,220
–
Demand
          and other – non-interest bearing
68,519
–
283,992
1.8
264,061
1.2
Demand – interest
          bearing
206,345
1.1
191,551
3.3
170,729
2.2
Savings
170,773
2.0
97,027
3.7
81,793
2.6
Time
64,025
2.5
16,855
5.3
35,539
2.5
Other
24,297
3.3
662,326
634,342
533,959
CDs
          and other money market instruments
27,778
5.8
24,684
2.6
Europe
11,156
2.8
1,599
3.1
10,031
3.3
Hong
          Kong
9,656
3.6
7,467
6.2
6,804
4.4
Rest
          of Asia-Pacific
4,906
4.1
24,150
3.7
20,790
2.1
North
          America
14,309
2.4
73
17.8
102
14.7
South
          America
63
19.0
61,067
5.0
62,411
2.9
40,090
3.0
180
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Certificates
      of deposit and other time deposits
At 31 December
      2005, the maturity analysis of certificates of deposit and other wholesale
      time deposits, by remaining maturity, was as follows:
After
      3 months
After
      6 months
3
      months
but
      within
but
      within
After
or
      less
6
      months
12
      months
12
      months
Total
US$m
US$m
US$m
US$m
US$m
Europe
Certificates
      of deposit
12,713
1,581
325
3
14,622
Time
      deposits:
–
      banks
12,192
5,012
1,497
1,630
20,331
–
      customers
39,800
3,652
1,495
4,496
49,443
64,705
10,245
3,317
6,129
84,396
Hong
      Kong
Certificates
      of deposit
340
988
1,178
9,598
12,104
Time
      deposits:
–
      banks
889
5
7
37
938
–
      customers
13,438
330
353
1,335
15,456
14,667
1,323
1,538
10,970
28,498
Rest
      of Asia-Pacific
Certificates
      of deposit
4,251
894
1,031
498
6,674
Time
      deposits:
–
      banks
2,923
299
397
284
3,903
–
      customers
9,408
1,321
79
1,426
12,234
16,582
2,514
1,507
2,208
22,811
North
      America
Certificates
      of deposit
5,114
49
15
–
5,178
Time
      deposits:
–
      banks
2,490
611
552
212
3,865
–
      customers
15,713
3,797
1,803
4,537
25,850
23,317
4,457
2,370
4,749
34,893
South
      America
Certificates
      of deposit
–
–
–
56
56
Time
      deposits:
–
      banks
160
83
71
1
315
–
      customers
312
10
37
21
380
Total
472
93
108
78
751
Certificates
      of deposit
22,418
3,512
2,549
10,155
38,634
Time
      deposits:
–
      banks
18,654
6,010
2,524
2,164
29,352
–
      customers
78,671
9,110
3,767
11,815
103,363
119,743
18,632
8,840
24,134
171,349
The
      geographical analysis of deposits is based on the location of the office
      in which the deposits are recorded and excludes balances with HSBC companies.
      The majority of certificates of deposit and time deposits are in amounts
      of US$100,000 and over or the equivalent in other currencies.
181
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H S B C   H O L
D I N G S   P L C
Other information
(continued)
Short-term
      borrowings
HSBC includes
      short-term borrowings within customer accounts, deposits by banks and debt
      securities in issue and does not show short-term borrowings separately on
      the balance sheet. Short-term borrowings are defined by the US Securities
      and Exchange Commission ('SEC') as Federal funds purchased and
      securities sold under agreements to repurchase, commercial paper and other
      short-term borrowings. HSBC's only significant short-term borrowings
      are securities sold under agreements to repurchase and certain debt securities
      in issue. Additional information on these is provided in the tables below.
Year ended
    31 December
2005
2004
2003
US$m
US$m
US$m
Securities
          sold under agreements to repurchase
75,745
43,726
Outstanding
        at 31 December
27,427
74,143
46,229
Average
        amount outstanding during the year
25,883
78,590
53,188
Maximum
        quarter-end balance outstanding during the year
30,938
3.6%
2.7%
Weighted
        average interest rate during the year
2.0%
4.0%
2.9%
Weighted
        average interest rate at the year-end
1.9%
Short
          term bonds
40,642
36,085
Outstanding
        at 31 December
29,979
31,908
29,238
Average
        amount outstanding during the year
17,445
40,642
36,085
Maximum
        quarter-end balance outstanding during the year
29,979
4.6%
2.8%
Weighted
        average interest rate during the year
2.5%
3.7%
2.5%
Weighted
        average interest rate at the year-end
2.5%
Off-balance
      sheet arrangements
HSBC enters
      into certain off-balance sheet arrangements with customers in the ordinary
      course of business, as described below.
(i)
Financial
      guarantees, letters of credit and similar undertakings
Note 40
      on the Financial Statements on page 327 describes various types of guarantees
      and discloses the maximum potential future payments under such arrangements.
      Credit risk associated with all forms of guarantees is assessed in the same
      manner as for on-balance sheet credit advances and, where necessary, provisions
      for assessed impairment are included in 'Other provisions'.
(ii)
Commitments
      to lend
Undrawn
      credit lines are disclosed in Note 40 on the Financial Statements on page
      327. The majority by value of undrawn credit lines arise from 'open
      to buy' lines on personal credit cards, cheques issued to potential
      customers offering them a pre-approved loan, advised overdraft limits, and
      mortgage offers awaiting customer acceptance. HSBC generally has the right
      to change or terminate any conditions of a personal customer's overdraft,
      credit card or other credit line upon notification to the customer. In respect
      of corporate commitments to lend, in most contracts HSBC's position
      will be protected through restrictions on access to funding in the event
      of material adverse change.
(iii)
Credit
      derivatives
HSBC uses
      credit derivatives through its principal dealing operations, acting as a
      principal counterparty to a broad range of users, structuring deals to produce
      risk management products for its customers, or making markets in certain
      products. Risk is typically controlled through entering into offsetting
      credit derivative contracts with other counterparties.
HSBC manages
      the credit risk arising on buying and selling credit derivative protection
      by including the exposure to any credit risk that arises from such transactions
      within its overall credit limits structure to the relevant counterparty.
      The trading of credit derivatives is restricted to a small number of offices
      within the major centres which in management's view have the control
      infrastructure and market skills to manage effectively the credit risk inherent
      in the products.
Credit
      derivatives are also used for the management of credit risk in the Group's
      loan portfolio. HSBC's use of credit derivatives in this manner is
      not significant, however.
182
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The following
      table presents the notional amounts of credit derivatives protection bought
      and sold by HSBC:
Notional
      amount of protection
Bought
Sold
US$m
US$m
At
      31 December 2005
249,347
262,393
At
      31 December 2004
93,750
102,321
The mismatch
      between these notional amounts is attributable to HSBC selling protection
      on large, diversified, predominantly investment grade portfolios (including
      the most senior tranches) and then hedging these positions by buying protection
      on the more subordinated tranches of the same portfolios. In addition, HSBC
      uses securities to hedge certain derivative positions. Consequently, while
      there is a mismatch in notional amounts of credit derivatives, the risk
      positions are largely matched.
(iv)
Special
      purpose and variable interest entities
HSBC predominantly
      uses special purpose entities ('SPE'), or variable interest entities ('VIE'),
      to securitise loans and advances it has originated where this source of
      funding is cost effective. Such loans and advances generally remain on the
      balance sheet under IFRSs.
HSBC also
      administers SPEs that have been established for the purpose of providing
      alternative sources of financing to HSBC's customers. Such arrangements
      also enable HSBC to provide tailored investment opportunities for investors.
      These SPEs, commonly referred to as asset-backed or multi-seller conduits,
      purchase interests in a diversified pool of receivables from customers or
      in the market using finance provided by a third party. The cash flows received
      by SPEs on pools of receivables are used to service the finance provided
      by investors. HSBC administers this arrangement, which facilitates diversification
      of funding sources and the tranching of credit risk. HSBC also typically
      provides part of the liquidity facilities to the entities, together with
      secondary credit enhancement.
HSBC also
      has relationships with SPEs which offer management of investment funds,
      provide finance to public and private sector infrastructure projects, and
      facilitate capital funding through the issue of preference shares via partnerships.
All SPEs
      used by HSBC are authorised centrally upon initial establishment to ensure
      appropriate purpose and governance. The activities of SPEs administered
      by HSBC are closely monitored by senior management. The use of SPEs is not
      a significant part of HSBC's activities and HSBC is not reliant on
      the use of SPEs for any material part of its business operations or profitability.
      For a further discussion of HSBC's involvement with SPEs and the accounting
      treatments under IFRSs and US GAAP, see Note 47(j) on the Financial Statements
      on page 398.
Contractual
      obligations
The table
      below provides details of HSBC's material contractual obligations as
      at 31 December 2005.
Payments
      due by period
Less
      than
More
      than
Total
1
      year
1–5
      years
5
      years
US$m
US$m
US$m
US$m
Long-term
      debt obligations
252,008
107,741
104,285
39,982
Term
      deposits and certificates of deposit
171,349
147,215
24,134
–
Capital
      (finance) lease obligations
639
25
54
560
Operating
      lease obligations
3,950
744
1,754
1,452
Purchase
      obligations
1,218
922
296
–
Short
      positions in debt securities and equity shares
66,696
55,491
3,687
7,518
Pension
      obligations
4,050
390
1,440
2,220
499,910
312,528
135,650
51,732
183
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H
        S B C   H O L D I N G S   P L C
Other
            information
(continued)
Disclosure
    controls
The
    Group Chairman and Group Finance Director, with the assistance of other members
    of management, carried out an evaluation of the effectiveness of the design
    and operation of HSBC
Holdings' disclosure controls and procedures as of 31 December 2005. Based
upon that evaluation, the Group Chairman and Group Finance Director concluded
that HSBC's
disclosure controls and procedures as of 31 December 2005 were effective to provide
reasonable assurance that information required to be disclosed in the reports
which the company files and submits under the US Securities Exchange Act of 1934,
as amended, is recorded, processed, summarised and reported as and when
required. There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and procedures. Accordingly,
even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives.
There
    has been no change in HSBC Holdings' internal
control over financial reporting during the year ended 31 December 2005 that
has materially
affected, or is reasonably likely to materially affect, HSBC Holdings' internal
control over financial reporting.
Board
            of Directors and Senior Management
Directors
Sir John Bond,
Group Chairman
(retiring on 26 May 2006)
Age 64. An executive
Director since 1990; Group Chief Executive from 1993 to 1998. Joined HSBC in
1961; a non-executive Director of The Hongkong and Shanghai Banking Corporation
Limited,  having been an executive Director from 1988 to 1992. A Director of
HSBC North America Holdings Inc. A Director of HSBC Bank plc from 1993 to 1997
and Chairman from 1998 to 2004. A non-executive Director of Ford Motor Company
and of Vodafone Group
Plc.
Chairman
of the
Mayor of Shanghai's International Business Leaders' Advisory Council.
*
The Baroness Dunn,
DBE, Deputy Chairman and senior non-executive Director
Age 66. An executive Director of John Swire & Sons Limited and a Director of Swire Pacific Limited. A non-executive Director since 1990 and a non-executive Deputy Chairman since 1992.
A member of the Nomination Committee. A non-executive Director of The Hongkong and Shanghai Banking Corporation
Limited from 1981 to 1996. A member of the Asia Task Force. A former Senior Member of the Hong Kong Executive Council and Legislative Council.
†
Sir Brian Moffat,
OBE, Deputy Chairman and senior independent non-executive Director
Age 67. Former Chairman of Corus Group plc. A non- executive Director since 1998 and a non-executive Deputy Chairman since 2001. Chairman of the Group Audit Committee and of the
Nomination Committee. A member of the Court of the Bank of England. A non- executive Director of Macsteel Global BV.
S
K
Green,
Group Chief Executive,
(Group Chairman designate)
Age 57. An executive Director since 1998. Executive Director, Corporate, Investment Banking and Markets from 1998 to 2003. Joined HSBC in 1982. Group Treasurer from 1992 to 1998. Chairman
of HSBC Bank plc, HSBC Bank Middle East Limited, HSBC Bank USA, N.A., HSBC Group Investment Businesses Limited, HSBC Private Banking Holdings (Suisse)
A.,
and HSBC USA Inc. A Director of The Bank of
Bermuda
Limited, HSBC France, The Hongkong and Shanghai Banking Corporation Limited,
Grupo
184
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Financiero
        HSBC, S.A. de C.V., HSBC North America
Holdings
    Inc. and HSBC Trinkaus & Burkhardt
KGaA.
A
          W Jebson,
Group
    Chief Operating Officer
(retiring
    on 26 May 2006)
Age 56.
        An executive Director since 2000. Group IT
Director
        from 2000 to 2003. Group General Manager,
Information Technology
        from 1996 to 2000. Joined
HSBC
    in 1978. A Director of HSBC Finance
Corporation.
†
The
    Rt Hon the Lord Butler of Brockwell,
KG,
    GCB, CVO
Age 68.
        Master, University College, Oxford. A non-
executive
        Director since 1998. Chairman of the
Corporate Social Responsibility
        Committee, a member
of
        the Nomination Committee and Chairman of the
HSBC Education Trust. A non-executive
        Director of
Imperial
        Chemical Industries plc. A member of the
International Advisory Board
        of Marsh McLennan Inc.
Chaired
        the UK Government Review of Intelligence on
Weapons of Mass Destruction.
        Secretary of the
Cabinet
        and Head of the Home Civil Service in the
United Kingdom from 1988 to
    1998.
†
R
    K F Ch'ien,
CBE
Age 54.
        Chairman of CDC Corporation and of its
subsidiary,
        China.com Inc. A non-executive Director
since 1998. A member of the
        Group Audit Committee.
Non-executive
        Chairman of HSBC Private Equity
(Asia) Limited and a non-executive
        Director of The
Hongkong
        and Shanghai Banking Corporation Limited
since 1997. Non-executive Chairman
    of MTR Corporation Limited and a non-executive Director of
Convenience
    Retail Asia Limited, Inchcape plc, VTech
Holdings Limited and
    The Wharf (Holdings) Limited.
†
J
    D Coombe
Age 60.
        Former executive Director and Chief Financial
Officer
        of GlaxoSmithKline plc. A non-executive
Director since 1 March
        2005. A member of the Group
Audit
        Committee since 1 July 2005. Appointed a
member of the Remuneration Committee
        with effect
from
        1 June 2006. A non-executive Director of the
Supervisory Board of Siemens
        AG and a non-
executive
        Director of GUS plc. A member of The Code
Committee of the Panel on Takeovers
        and Mergers. A
trustee
        of the Royal Academy Trust. A former
Chairman of The Hundred Group
        of Finance Directors
and
    a former member of the Accounting Standards
Board.
†
R
    A Fairhead
Age 44.
    Finance Director of Pearson plc. A non-
executive Director since March 2004. A member of the Group Audit Committee. A non-executive Director of The Economist Newspaper Limited. Former Executive Vice President, Strategy and
Group Control of Imperial Chemical Industries plc.
DJ Flint,
Group Finance Director
Age 50. Joined HSBC as an executive Director in 1995. A Director of HSBC Bank Malaysia Berhad. Chaired the Financial Reporting Council's review of the Turnbull Guidance on Internal
Control. Served on the Accounting Standards Board and the Standards Advisory Council of the International Accounting Standards Board from 2001 to 2004. A non-executive Director of BP p.l.c. since 1 January 2005. A former partner in
KPMG.
†
W K L Fung,
OBE
Age 57. Group Managing Director of Li & Fung Limited. A non-executive Director since 1998. A member of the Corporate Social Responsibility Committee and of the Remuneration Committee.
Deputy Chairman and non-executive Director of The Hongkong and Shanghai Banking Corporation Limited. A non-executive Director of Bank of Communications Limited. Former Chairman of the Hong Kong General Chamber of Commerce, the Hong Kong
Exporters' Association and the Hong Kong Committee for the Pacific Economic Co-operation Council.
F Geoghegan,
CBE, Deputy Chairman, HSBC
Bank
plc.
(Group
Chief Executive designate)
Age 52. An executive Director since March 2004. Joined HSBC in 1973. A Director and, since 6 March 2006, Deputy Chairman of HSBC Bank plc. A Director of HSBC France and HSBC Private
Banking Holdings (Suisse) S.A. President of HSBC Bank Brasil S.A.- Banco Múltiplo from 1997 to 2003 and responsible for all of HSBC's business throughout South America from 2000 to 2003. Chief Executive of HSBC Bank plc from January 2004
to 6 March 2006. A non-executive Director and Chairman of Young Enterprise.
†
S Hintze
Age 61. Former
Chief Operating Officer of Barilla
P.A.
A non-executive Director since 2001. A
member
of the Corporate Social Responsibility Committee and of the Remuneration Committee.
A non-executive Director of Premier Foods plc and the Society of Genealogists,
a registered
charity. A former Senior Vice President of Nestlé S.A. With Mars Incorporated from 1972 to 1993, latterly as Executive Vice President of M&M/Mars in New Jersey. A former non-executive Director of Safeway plc.
185
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H
        S B C   H O L D I N G S   P L C
Board
            of Directors and Senior Management
(continued)
†
J
    W J Hughes-Hallett
Age 56.
        Chairman of John Swire & Sons Limited. A
non-executive
        Director since 1 March 2005. Appointed
a member of the Group
        Audit Committee with effect
from
        1 June 2006. A non-executive Director of The
Hongkong and Shanghai Banking
        Corporation Limited
from
        1999 to 2004. A non-executive Director and
formerly Chairman of Cathay
        Pacific Airways Limited
and
        Swire Pacific Limited. A trustee of the Dulwich
Picture Gallery, the Hong Kong
        Maritime Museum and
the
    Esmée Fairbairn Foundation.
†
Sir
    John Kemp-Welch
(retiring
    on 26 May 2006)
Age 69.
        Former Joint Senior Partner of Cazenove &
Co
        and former Chairman of the London Stock
Exchange. A non-executive Director
        since 2000. A
member
        of the Group Audit Committee and of the
Remuneration Committee. A Deputy
        Chairman of the
Financial
        Reporting Council and a member of the
Panel on Takeovers and Mergers
    from 1994 to 2000.
†
Sir
    Mark Moody-Stuart,
KCMG
Age 65.
        Chairman of Anglo American plc. A non-
executive
        Director since 2001. Chairman of the
Remuneration Committee and a
        member of the
Corporate
        Social Responsibility Committee. A non-
executive Director of Accenture
        Limited, a Governor
of
        Nuffield Hospitals, President of the Liverpool
School of Tropical Medicine
        and Chairman of the
Global
        Business Coalition on HIV/AIDS. A former
Director and Chairman of The 'Shell' Transport
        and
Trading
        Company, plc and former Chairman of the
Committee of Managing Directors
        of the Royal
Dutch/Shell
    Group of Companies.
†
S
    W Newton
Age 64.
        Chairman of The Real Return Holdings
Company
        Limited. A non-executive Director since
2002. A Member of the Advisory
        Board of the East
Asia
        Institute and of the Investment Board at
Cambridge University. A Member
        of The Wellcome
Trust
        Investment Committee. Founder of Newton
Investment Management, from
    which he retired in
2002.
†
S
    M Robertson
Age 65.
        Non-executive Chairman of Rolls-Royce
Group
        plc and the founder member of Simon
Robertson Associates LLP. A
        non-executive Director
since
        3 January 2006. A Director of The Economist
Newspaper Limited, The Royal
        Opera House Covent
Garden
        Limited and a non-executive Director of Berry
Bros. & Rudd Limited. Chairman
        of Trustees of the
Royal
    Academy Trust and the Ernest Kleinwort
Charitable Trust. A trustee of the Eden Project and the Royal Opera House Endowment Fund. A former Managing Director of Goldman Sachs International. Former Chairman of Dresdner Kleinwort
Benson and a former non-executive Director of Inchcape plc, Invensys plc and the London Stock Exchange.
*
H Sohmen,
OBE
Age 66. Chairman of Bergesen Worldwide Limited and Bergesen Worldwide Gas ASA. Chairman and President of BW Corporation Limited (formerly World-Wide Shipping Group Limited) and Chairman
of The International Tanker Owners Pollution Federation Limited. A non-executive Director since 1990. A non-executive Director of The Hongkong and Shanghai Banking Corporation Limited from 1984 to May 2005 and Deputy Chairman from 1996 to May
2005.
†
Sir
      Brian Williamson,
CBE
Age 61.
      Chairman of Electra Private Equity plc. A non-executive Director since
      2002. A member of the Nomination Committee. A non-executive Director of
      Resolution plc. A member of the Supervisory Board of Euronext NV. A senior
      adviser to Fleming Family and Partners. Former Chairman of London International
      Financial Futures and Options Exchange, Gerrard Group plc and Resolution
      Life Group Limited. A former non-executive Director of the Financial Services
      Authority and of the Court of The Bank of Ireland.
*
Non-executive
      Director
†
Independent
      non-executive Director
Adviser
      to the Board
D
      J Shaw
Age 59. An
      Adviser to the Board since 1998. Solicitor. A partner in Norton Rose from
      1973 to 1998. A Director of The Bank of Bermuda Limited and HSBC Private
      Banking Holdings (Suisse)
S.A.
Secretary
R
      G Barber
Age 55. Group
      Company Secretary since 1990. Joined HSBC in 1980; Corporation Secretary
      of The Hongkong and Shanghai Banking Corporation Limited from 1986 to 1992.
      Company Secretary of
HSBC Bank plc from 1994 to 1996.
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Group
    Managing Directors
V
          H C Cheng,
OBE
Age 57.
        Chairman of The Hongkong and Shanghai Banking Corporation Limited. A
        Group Managing Director since 25 May 2005. Joined HSBC in 1978. Appointed
        a Group General Manager in 1995. Deputy Chairman and Chief Executive
    Officer of Hang Seng Bank Limited from 1998 to 25 May 2005.
C-H
    Filippi
Age 53.
        Chairman and Chief Executive Officer of HSBC France. A Group Managing
        Director since 2004. A Director of HSBC Bank plc. Joined HSBC France
        in 1987 having previously held senior appointments in the French civil
        service. Appointed a Group General Manager in 2001. Global Head of Corporate
    and Institutional Banking from 2001 to 2004.
ST
    Gulliver
Age 46.
        Co-Head Corporate, Investment Banking and Markets. A Group Managing Director
        since 2004. Joined HSBC in 1980. Appointed a Group General Manager in
        2000. Head of Treasury and Capital Markets in Asia-Pacific from 1996
    to 2002 and Head of Global Markets from 2002 to 2003.
D
    D J John
Age 55.
        Chief Executive, HSBC Bank plc and a Group Managing Director since 6
        March 2006. Joined HSBC Bank plc in 1971. Appointed a Group General Manager
        in 2000. Deputy Chairman and Chief Executive Officer, HSBC Bank Malaysia
        Berhad from 1999 to 2002. Chief Operating Officer of HSBC Bank plc from
        2003 to May 2005 and Deputy Chief Executive from May 2005 to 6 March
    2006.
S
    N Mehta
Age 47.
        Chief Executive of HSBC North America Holdings Inc, and Chairman and
        Chief Executive Officer of HSBC Finance Corporation since March 2005.
        A Group Managing Director since 30 April 2005. Joined HSBC Finance Corporation
    in 1998 and was appointed Vice Chairman in April 2004.
Y
    A Nasr
Age 51.
        President, HSBC Bank Brasil S.A.-Banco Múltiplo. A Group Managing
        Director since 2004. Joined HSBC in 1976. Appointed a Group General Manager
        in 1998. President and Chief Executive Officer of HSBC Bank Canada from
        1997 to 1999. President and Chief Executive Officer of HSBC USA Inc.
    and HSBC Bank USA from 1999 to 2003.
J
    J Studzinski
Age 49.
        Co-Head Corporate, Investment Banking and Markets. A Group Managing Director
        since 2004. Joined HSBC in 2003 as a Group General Manager, having previously
        been with Morgan Stanley from 1980 to 2003, latterly as Deputy Chairman
    of Morgan Stanley International.
Group
    General Managers
PY
    Antika
Age 45.
        Chief Executive Officer, HSBC Turkey. Joined HSBC in 1990. Appointed
    a Group General Manager 1 August 2005.
R
    J Arena
Age 57.
        Group General Manager, Global e-business. Joined HSBC in 1999. Appointed
    a Group General Manager in 2000.
C
    C R Bannister
Age 47.
        Chief Executive Officer, Group Private Banking. Joined HSBC in 1994.
    Appointed a Group General Manager in 2001.
R
    E T Bennett
Age 54.
        Group General Manager, Legal and Compliance. Joined HSBC in 1979. Appointed
    a Group General Manager in 1998.
N
    S K Booker
Age 47.
        Chief Executive Officer, India. Joined HSBC in 1981. Appointed a Group
    General Manager in January 2004.
P
    W Boyles
Age 50.
        Group General Manager, Human Resources. Joined HSBC in 1975. Appointed
    a Group General Manager on 1 January 2006.
D
    C Budd
Age 52.
        Chief Operating Officer and Executive Director, HSBC Bank plc. Joined
    HSBC in 1972. Appointed a Group General Manager on 5 May 2005.
G
    P S Calvert,
OBE
Age 53.
        Group General Manager Special Duties. Joined HSBC in 1974. Appointed
    a Group General Manager in June 2004.
Z
    J Cama
Age 58.
        Deputy Chairman and Chief Executive Officer, HSBC Bank Malaysia Berhad.
    Joined HSBC in 1968. Appointed a Group General Manager in 2001.
187
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H
        S B C   H O L D I N G S   P L C
Board
            of Directors and Senior Management
(continued)
S L Derickson
Age 52. Vice
    Chairman of HSBC Finance Corporation. Joined HSBC Finance Corporation in
2000. Appointed a Group General Manager on 30 April 2005.
A
A Flockhart
Age 54. Chief
    Executive Officer and Chairman, Grupo Financiero HSBC, S.A. de C.V. and HSBC
    México, S.A. Joined HSBC in 1974. Appointed a Group General Manager
in 2002.
M
J G Glynn
Age 54. President
    and Chief Executive Officer, HSBC Bank USA, N.A. Joined HSBC in 1982. Appointed
    a Group General Manager in 2001.
L
Gordon
Age 53. President
    and Chief Executive Officer, HSBC Bank Canada. Joined HSBC in 1987. Appointed
    a Group General Manager on 1 August 2005.
K
M Harvey
Age 45. Group
    General Manager and Group Chief Information Officer. Joined HSBC Finance
    Corporation in 1989. Appointed a Group General Manager in August 2004.
D
H Hodgkinson
Age 55. Chief
    Executive Officer and Deputy Chairman, HSBC Bank Middle East Limited. Joined
    HSBC in 1969. Appointed a Group General Manager in 2003.
A
P Hope
Age 59. Group
    General Manager, Insurance. Joined HSBC in 1971. Appointed a Group General
    Manager in 1996.
M
J W King
Age 49. Group
    General Manager, Internal Audit. Joined HSBC in 1986. Appointed a Group General
    Manager in 2002.
P
      J Lawrence
Age 44. Chief
    Executive Officer, HSBC Singapore. Joined HSBC in 1982. Appointed a Group
    General Manager on 1 August 2005.
M
      Leung
Age 53. Global
    Co-Head Commercial Banking. Joined HSBC in 1978. Appointed a Group General
    Manager on 1 August 2005.
B McDonagh
Age 47. Chief Operating Officer, HSBC Bank USA, N.A. Joined HSBC in 1979. Appointed a Group General Manager on 1 August 2005.
R C F Or
Age 56. Vice-Chairman
    and Chief Executive, Hang Seng Bank Limited and Executive Director, The Hongkong
    and Shanghai Banking Corporation Limited. Joined HSBC in 1972. Appointed
    a Group
General Manager in 2000.
K Patel
Age 57. Chief Executive Officer, South Africa branch of HSBC Bank plc and Head of Africa. Joined HSBC in 1984. Appointed a Group General Manager in 2000.
R C Picot
Age 48. Group Chief Accounting Officer. Joined HSBC in 1993. Appointed a Group General Manager in 2003.
B Robertson
Age 51. Group General Manager, Credit and Risk. Joined HSBC in 1975. Appointed a Group General Manager in 2003.
M R P Smith,
OBE
Age 49. President
    and Chief Executive Officer, The Hongkong and Shanghai Banking Corporation
    Limited. Chairman, Hang Seng Bank Limited. Joined HSBC in 1978. Appointed
    a Group General
Manager in 2000.
I A Stewart
Age 47. Head
    of Transaction Banking, Corporate, Investment Banking and Markets. Joined
HSBC in 1980. Appointed a Group General Manager in 2000.
P E Stringham
Age 56. Group General Manager, Marketing. Joined HSBC in 2001. Appointed a Group General Manager in 2001.
P A Thurston
Age 52. Group General Manager, Personal Financial Services, Asia-Pacific. Joined HSBC in 1975. Appointed a Group General Manager in 2003.
PT S Wong
Age 54. Executive Director, Hong Kong and Mainland China of The Hongkong and Shanghai Banking Corporation Limited. Joined HSBC 28 February 2005. Appointed a Group General Manager on 1
April 2005.
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H S B C   H O
    L D
I N G S   P L C
Report of
the
Directors
Results
      and dividends for 2005
HSBC reported profit before tax of US$20,966 million. Profit attributable
to shareholders of HSBC Holdings, transferred to retained earnings, was US$15,081
million, a 16.8 per cent return on average total shareholders' equity.
First, second and third interim dividends for 2005, each of US$0.14 per ordinary share, were paid on 6 July 2005, 5 October 2005 and 19 January 2006 respectively. Note 11 on the Financial Statements gives more information on the dividends declared in 2005. On 6 March 2006, the Directors declared a fourth interim dividend for 2005 of US$0.31 per ordinary share in lieu of a final dividend, which will be payable to ordinary shareholders on 11 May 2006 in cash in US dollars, or in sterling or Hong Kong dollars at exchange rates to be determined on 2 May 2006, with a scrip dividend alternative. As the fourth interim dividend for 2005 was declared after the balance sheet date it has not been included as a creditor at 31 December 2005. The reserves available for distribution at 31 December 2005 are US$10,643 million.
A
      first dividend of US$14.294444 per 6.20 per cent non-cumulative US dollar
      preference share, Series A ('Series A dollar preference share'), equivalent to a dividend of US$0.357361 per Series A American Depositary Shares ('Series A ADS'),
      each of which represents one-fortieth of a Series A dollar preference share,
      was paid on 15 December 2005.
Further information about the results is given in the consolidated income statement on page 236.
Principal
      activities and business review
Through its subsidiaries and associates, HSBC provides a comprehensive
range of banking and related financial services. HSBC operates through long-established
businesses and has an international network in 76 countries and territories in
Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. Taken
together, the five largest customers of HSBC do not account for more than one
per cent of HSBC's income.
The principal acquisitions and disposals made during the year were:
In June 2005,
    US$430 million was invested in the initial public offering of Bank of Communications
    Co. Limited, maintaining the Group's investment at 19.9 per cent.
In August 2005, a further 9.91 per cent of Ping An Insurance (Group)
Company of China Ltd. was
acquired for
    US$1,039 million, bringing the Group's aggregate holding to 19.9 per cent.
In December 2005, Metris Companies Inc. was acquired for US$1,595 million.
In
      October 2005, the Group's interest in Framlington Group Limited was
      sold for US$156 million.
A
      review of the development of the business of HSBC undertakings during the
      year and an indication of likely future developments are given in the 'Description of Business' on
      pages 7 to 19.
Share
      capital and reserves
The following events in relation to the share capital of HSBC Holdings occurred during the year:
Ordinary shares of US$0.50 each
Scrip dividends
1.
14,944,042
       ordinary shares were issued at par on 20 January 2005 to shareholders
       who elected to receive new shares in lieu of the 2004 third interim dividend.
      The market value per share used to calculate shareholders' entitlements to new shares was US$16.9969, being the US dollar equivalent of £8.934.
2.
27,142,444
       ordinary shares were issued at par on 4 May 2005 to shareholders who elected
       to receive new shares in lieu of the 2004 fourth interim dividend. The
      market value per share used to calculate shareholders' entitlements to new shares was US$15.8923, being the US dollar equivalent of £8.371.
3.
42,694,641
       ordinary shares were issued at par on 6 July 2005 to shareholders who
       elected to receive new shares in lieu of the 2005 first interim dividend.
      The market value per share used to calculate shareholders' entitlements to new shares was US$15.8448, being the US dollar equivalent of £8.656.
4.
19,180,779
       ordinary shares were issued at par on 5 October 2005 to shareholders who
       elected to receive new shares in lieu of the 2005 second interim dividend.
      The market value per share used to calculate shareholders' entitlements to new shares was US$16.2305, being the US dollar equivalent of £9.032.
All-Employee share plans
5.
29,692,885
        ordinary shares were issued at prices ranging from £5.3496 to £8.442
    per share in connection with the exercise of options under
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H S B C   H O
    L D
I N G S   P L C
Report of
the Directors
(
continued
)
the
      HSBC Holdings savings-related share option plans. Options over 8,607,677
    ordinary shares lapsed.
6.
3,705,594
       ordinary shares were issued at €10.525 per share in connection with a Plan d'Epargne
       Entreprise for the benefit of non-UK resident employees of HSBC France
      and its subsidiaries.
7.
Options
       over 26,994,655 ordinary shares were awarded at nil consideration on 24
       May 2005 to over 48,700 HSBC employees resident in nearly 60 countries
       and territories under the HSBC Holdings savings-related share option plans.
       The options are exercisable within six months following the third or fifth
       anniversary of the commencement of the relevant savings contracts on 1
       August 2005 at a price of £6.6792 per share, a 20 per cent discount
       to the average market value over the five business days immediately preceding
      the date of the invitation.
Discretionary share incentive plans
8.
11,205,883
       ordinary shares were issued at prices ranging from £2.1727 to £7.46
       per share in connection with the exercise of options under the HSBC Holdings
      Executive Share Option Scheme. Options over 530,920 ordinary shares lapsed.
9.
11,764,081
       ordinary shares were issued at prices ranging from £6.91 to £8.712
       per share in connection with the exercise of options under the HSBC Holdings
      Group Share Option Plan. Options over 6,393,502 ordinary shares lapsed.
10.
Options
       over 552,526 ordinary shares were awarded at nil consideration on 21 June
       2005 under The HSBC Share Plan. The options are normally exercisable between
       the third and fourth anniversaries of the award at a price of £8.794
      per share, the market value of the ordinary shares on the date of award.
11.
Options
       over 74,985 ordinary shares were awarded at nil consideration on 30 September
       2005 under The HSBC Share Plan. The options are normally exercisable between
       the third and tenth anniversaries of the award at a price of £9.17
      per share, the market value of the ordinary shares on the date of award.
HSBC Finance
12.
324,726
        ordinary shares were issued at US$9.60 in connection with the early settlement
    of HSBC Finance 8.875 per cent Adjustable Conversion-
Rate Equity
    Security Units.
13.
878,224
        ordinary shares were issued at prices ranging from US$15.51 to US$16.86
        in connection with the vesting of Restricted Stock Rights under HSBC
        Finance share plans that have been converted into rights over HSBC Holdings
    ordinary shares.
Authority to repurchase ordinary shares
14.
At the Annual
        General Meeting in 2005, shareholders renewed the authority for the Company
        to make market repurchases of up to 1,119,000,000 ordinary shares. The
        Directors have not exercised this authority. In accordance with the terms
        of a waiver granted by the Hong Kong Stock Exchange on 19 December 2005,
        HSBC Holdings will comply with the applicable law and regulation in the
        UK in relation to the holding of any shares in treasury and with the
        conditions of the waiver, in connection with any shares it may hold in
    treasury.
Non-cumulative US dollar preference shares of US$0.01 each
15.
On 22 September
        and 6 October 2005, a total of US$1,450 million was raised by the issue
        of a total of 1,450,000 non-cumulative US dollar preference shares of
        US$0.01 each (the 'Series A dollar preference shares') which
        trade in the form of Series A ADS. The Series A dollar preference shares
        were issued to bearer for a consideration of US$1,000 each and qualify
        as core Tier 1 capital in HSBC's regulatory capital base. The aggregate
        nominal value of the Series A dollar preference shares which have been
        issued is US$14,500. The net proceeds after expenses were approximately
        US$1,405 million, which was used to support the development of HSBC Holdings
    and further strengthen HSBC's capital base.
A non-cumulative
        fixed-rate dividend of 6.20 per cent per annum is payable quarterly on
        the Series A dollar preference shares. Dividends will be payable at the
        sole and absolute discretion of the Board of HSBC Holdings and will not
        be payable if the payment of the dividend would cause HSBC Holdings not
        to meet the applicable capital adequacy requirements of the UK Financial
        Services Authority, or the profits of HSBC Holdings available for distribution
        as dividends are not sufficient to enable HSBC Holdings to pay in full
        both dividends on the Series A dollar
preference
    shares and dividends on any other of
190
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its shares
        that are scheduled to be paid on the same date and that have an equal
        right to dividends. HSBC Holdings may not declare or pay dividends or
        distributions on any class of its shares ranking lower in the right to
        dividends than the Series A dollar preference shares nor redeem nor purchase
        in any manner any of its other shares ranking equal to or lower than
        the Series A dollar preference shares, unless it has paid in full, or
        set aside an amount to provide for payment in full, the dividends on
    the Series A dollar preference shares for the then-current dividend period.
Holders
        of the Series A dollar preference shares will only be entitled to attend
        and vote at general meetings of shareholders of HSBC Holdings if the
        dividend payable on the Series A dollar preference shares has not been
        paid in full for four consecutive dividend payment dates. In such circumstances,
        holders of the Series A dollar preference shares will be entitled to
        vote on all matters put to general meetings until such time as HSBC Holdings
        shall have paid in full a dividend on the Series A dollar preference
        shares. The Series A dollar preference shares carry no rights of conversion
    into ordinary shares of HSBC Holdings.
Subject
        to the prior consent of the UK Financial Services Authority, HSBC Holdings
        may redeem the Series A dollar preference shares in whole (but not in
        part only) at any time on or after 16 December 2010, at a redemption
        price equal to US$1,000 per Series A dollar preference share (which is
        equal to US$25 per Series A ADS) together with any accrued and unpaid
        dividends for the then-current dividend period up to the date fixed for
    redemption.
Authority to allot shares
16.
At the
        Annual General Meeting in 2005 shareholders renewed the authority for
        the Directors
        to allot new shares. The authority was to allot up to 2,238,000,000 ordinary
        shares, 10,000,000 non-cumulative preference shares of £0.01 each,
        10,000,000 non-cumulative preference shares of US$0.01 each and 10,000,000
    non-cumulative preference shares of €0.01 each.
Other than
        as described in paragraphs 1 to 13 and 15 above, the Directors did not
    allot any shares during 2005.
Employee
    share option plans
To help align the interests of employees with those
of shareholders,
    share options are granted under all-employee share plans. Since 2005, discretionary
    options have not been granted on a widespread basis. The following are particulars
    of outstanding employee share options, including those held by employees
    working under employment contracts that are regarded as 'continuous
    contracts' for
    the purposes of the Hong Kong Employment Ordinance. The options were granted
    at nil consideration. No options have been granted to substantial shareholders,
    suppliers of goods or services, or in excess of the individual limit for
    each share plan. No options were cancelled during the year. Employee share
    plans are subject to the following limits on the number of HSBC Holdings
    ordinary shares that may be subscribed for. In any 10-year period not more
    than 10 per cent of the HSBC Holdings ordinary shares in issue from time
    to time (approximately 1,137 million HSBC Holdings ordinary shares at 6 March
    2006) may in aggregate become issuable pursuant to the grant of options or
    be issued other than pursuant to options under all-employee share plans.
    In any 10-year period not more than 5 per cent of the HSBC Holdings ordinary
    shares in issue from time to time (approximately 568 million HSBC Holdings
    ordinary shares on 6 March 2006) may in aggregate be put under option under
    The HSBC Share Plan or be issuable pursuant to the HSBC Holdings Group Share
    Option Plan, the HSBC Executive Share Option Scheme, the HSBC
Holdings Restricted Share Plan 2000 or The HSBC Share Plan. The number of HSBC Holdings ordinary shares that may be issued on exercise of all options granted on or after 27 May 2005 under The HSBC Share Plan and any other plans must not exceed 1,119,000,000 HSBC Holdings ordinary shares. Under the HSBC Holdings savings-related share option plans, The HSBC Share Plan, HSBC
Holdings
Group Share Option Plan and the HSBC Holdings Executive Share Option Scheme there
were options outstanding over 341,281,540 HSBC Holdings
ordinary shares at 31 December 2005. Particulars of options over HSBC Holdings
shares held by Directors of HSBC Holdings are set out on pages 215 to 232 of
the Directors' Remuneration Report.
All-employee share plans
The HSBC Holdings Savings-Related Share Option Plan and the HSBC Holdings Savings-Related Share Option Plan: International are all-employee share plans under which eligible HSBC employees (those employed within the Group on the first working day
of the year of grant)
are granted options to acquire HSBC Holdings ordinary shares. Employees may make
contributions of up to £250 (or equivalent)
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H S B
        C   H
O L D I N G S   P L C
Report of the Directors
(
continued
)
overall each month
over a period of three or five years which may be used on the third or fifth
anniversary of the commencement of the relevant savings contract, at their election,
to exercise the options; alternatively the employee may elect to have the savings
(plus interest) repaid in cash. The options are exercisable within six months
following the third or fifth anniversary of the commencement of the relevant
savings contract. In the case of redundancy, retirement on grounds of injury
or ill health, retirement at or after normal retirement age, the transfer of
the employing business to another party, or a change of control of the employing
company, options may be exercised before completion of the relevant savings contract.
Following approval at the 2005 Annual General Meeting, the HSBC Holdings Savings-Related
Share
Option Plan: International will offer the choice of options over one year in addition to the existing
three and five
    year terms. Employees will also be able to save and have option prices expressed
    in US dollars, Hong Kong dollars or euros. Options granted over a one-year
    period will be exercisable within three months following the first anniversary
    of the commencement of the savings contract. Under the HSBC Holdings Savings-Related
    Share Option Plan and the HSBC Holdings Savings-Related Share Option Plan:
    International the option exercise price is determined by reference to the
    average market value of the ordinary shares on the five business days immediately
    preceding the invitation date, then applying a discount of 20 per cent (except
    for the one-year options granted under the US sub-plan where a 15 per cent
    discount will be applied). The all-employee share plans will terminate on
    27 May 2015 unless the Directors resolve to terminate the plans at an earlier
    date.
HSBC Holdings Savings-Related Share Option Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
awarded
exercised
lapsed
31 December
award
price
    (£)
from
1
until
2
2005
during year
3
during year
4
during year
2005
1 Apr 1999
5.3980
1 Aug 2004
31 Jan 2005
199,542
–
166,335
33,207
–
10 Apr 2000
6.0299
1 Aug 2005
31 Jan 2006
10,085,436
–
9,722,684
204,222
158,530
11 Apr 2001
6.7536
1 Aug 2004
31 Jan 2005
68,525
–
42,156
26,369
–
11 Apr 2001
6.7536
1 Aug 2006
31 Jan 2007
3,728,076
–
186,369
213,351
3,328,356
2 May 2002
6.3224
1 Aug 2005
31 Jan 2006
1,474,971
–
1,393,516
49,678
31,777
2 May 2002
6.3224
1 Aug 2007
31 Jan 2008
4,212,972
–
125,068
281,882
3,806,022
23 Apr 2003
5.3496
1 Aug 2006
31 Jan 2007
7,878,002
–
303,561
693,981
6,880,460
23 Apr 2003
5.3496
1 Aug 2008
31 Jan 2009
13,049,424
–
236,973
1,021,175
11,791,276
21 Apr 2004
6.4720
1 Aug 2007
31 Jan 2008
4,255,200
–
70,818
634,349
3,550,033
21 Apr 2004
6.4720
1 Aug 2009
31 Jan 2010
6,327,198
–
43,850
554,868
5,728,480
24 May 2005
6.6792
1 Aug 2008
31 Jan 2009
–
4,779,913
1,631
195,390
4,582,892
24 May 2005
6.6792
1 Aug 2010
31 Jan 2011
–
5,890,418
568
136,735
5,753,115
1
May be advanced to an earlier date in certain circumstances, e.g. retirement.
2
May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to six months beyond the normal exercise period.
3
The
           closing price per share on 23 May 2005, the day before the options
    were awarded, was £8.68.
4
The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.15.
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HSBC Holdings Savings-Related Share Option Plan: International
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
awarded
exercised
lapsed
31 December
award
price
    (£)
from
1
until
2
2005
during year
3
during year
4
during year
2005
1 Apr 1999
5.3980
1 Aug 2004
31 Jan 2005
170,388
–
103,666
66,722
–
10 Apr 2000
6.0299
1 Aug 2005
31 Jan 2006
15,687,141
–
14,377,189
849,721
460,231
11 Apr 2001
6.7536
1 Aug 2004
31 Jan 2005
374,043
–
85,864
288,179
–
11 Apr 2001
6.7536
1 Aug 2006
31 Jan 2007
1,341,245
–
12,748
53,127
1,275,370
2 May 2002
6.3224
1 Aug 2005
31 Jan 2006
3,063,749
–
2,691,243
250,711
121,795
2 May 2002
6.3224
1 Aug 2007
31 Jan 2008
1,151,329
–
4,457
47,291
1,099,581
23 Apr 2003
5.3496
1 Aug 2006
31 Jan 2007
10,459
–
–
–
10,459
23 Apr 2003
5.3496
1 Aug 2008
31 Jan 2009
10,488
–
–
–
10,488
8 May 2003
5.3496
1 Aug 2006
31 Jan 2007
16,384,589
–
76,043
820,236
15,488,310
8 May 2003
5.3496
1 Aug 2008
31 Jan 2009
6,265,693
–
15,748
240,748
6,009,197
21 Apr 2004
6.4720
1 Aug 2007
31 Jan 2008
49,524
–
–
–
49,524
21 Apr 2004
6.4720
1 Aug 2009
31 Jan 2010
14,488
–
357
1,766
12,365
10 May 2004
6.4720
1 Aug 2007
31 Jan 2008
10,118,832
–
23,169
860,067
9,235,596
10 May 2004
6.4720
1 Aug 2009
31 Jan 2010
3,272,604
–
6,479
169,196
3,096,929
24 May 2005
6.6792
1 Aug 2008
31 Jan 2009
–
12,304,413
2,202
316,101
11,986,110
24 May 2005
6.6792
1 Aug 2010
31 Jan 2011
–
4,019,911
191
70,113
3,949,607
1
May be advanced to an earlier date in certain circumstances, e.g. retirement.
2
May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to six months beyond the normal exercise period.
3
The
           closing price per share on 23 May 2005, the day before the options
    were awarded, was £8.68.
4
The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.22.
Discretionary share option plans
The HSBC Share Plan and previously the HSBC Holdings Group Share
Option Plan and the HSBC Holdings Executive Share Option Scheme, are discretionary
share option plans under which HSBC employees, based on performance criteria
and potential, have been granted options to acquire HSBC Holdings ordinary shares.
Since 1996 the vesting of these options has been subject to the attainment of
pre-determined performance criteria, except within HSBC France (which was acquired
in 2000) where performance criteria are being phased in. The maximum value of
options which may be granted to an employee in any one year under The HSBC Share
Plan (when taken together with any Performance Share awards made under The HSBC
Share Plan) is 700 per cent of the employee's annual salary at the date of grant. Whilst having flexibility to make total awards of options and Performance Shares at this level in certain exceptional circumstances, the Remuneration Committee does not intend seven times salary to be the normal level of award. Under the HSBC Holdings Group Share Option Plan the maximum value of options which could have been granted to an employee in any one year (together with any Performance Share awards under the HSBC Holdings Restricted Share Plan 2000) was 150 per cent of the employee's
annual salary at the date of grant plus any bonus paid for the previous year
(or in exceptional circumstances 225
per cent). Subject to achievement of the performance condition where applicable, options are generally exercisable between the third and tenth anniversary of the date of grant. Employees of a subsidiary that is sold or transferred out of HSBC may exercise options awarded under the HSBC Holdings Group Share Option Plan within six months of the sale or transfer regardless of whether the performance condition is met.
The Remuneration Committee favours the use of Performance Shares and Restricted Shares and, following the introduction of The HSBC Share Plan in 2005, does not intend to continue granting discretionary options on any widespread basis. There are locations, and there may be particular circumstances in the future, however, where option grants may be appropriate.
The exercise price of options granted under The HSBC Share Plan, and previously under the HSBC Holdings Group Share Option Plan, is the higher of the average market value of the ordinary shares on the five business days prior to the grant of the option or the market value of the ordinary shares on the date of grant of the option. The exercise price of options granted under the HSBC Holdings Executive Share Option Scheme was the market value of the ordinary shares on the business day prior to the grant of the option. The HSBC Share Plan will terminate on 27 May 2015 unless the Directors resolve to terminate the Plan at an earlier date.
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H S B C   H
O L D I N G S   P L C
Report of
      the Directors
(
continued
)
HSBC Holdings Executive Share Option Scheme
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (£)
from
1
until
2
2005
during year
3
during year
2005
7 Mar 1995
2.1727
7 Mar 1998
7 Mar 2005
100,500
100,500
–
–
1 Apr 1996
3.3334
1 Apr 1999
1 Apr 2006
350,670
142,401
–
208,269
24 Mar 1997
5.0160
24 Mar 2000
24 Mar 2007
781,911
209,092
–
572,819
12 Aug 1997
7.7984
12 Aug 2000
12 Aug 2007
14,625
–
–
14,625
16 Mar 1998
6.2767
16 Mar 2001
16 Mar 2008
1,433,143
369,532
–
1,063,611
29 Mar 1999
6.3754
3 Apr 2002
29 Mar 2009
23,318,365
6,223,911
89,668
17,004,786
10 Aug 1999
7.4210
10 Aug 2002
10 Aug 2009
142,658
24,750
–
117,908
31 Aug 1999
7.8710
31 Aug 2002
31 Aug 2009
4,000
–
–
4,000
3 Apr 2000
7.4600
3 Apr 2003
3 Apr 2010
17,845,939
4,135,697
441,252
13,268,990
1
May be advanced to an earlier date in certain circumstances, e.g. retirement.
2
May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to twelve months beyond the normal exercise period.
3
The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.03.
The HSBC Holdings Executive Share Option Scheme expired on 26 May 2000. No options have been granted under the Scheme since that date.
HSBC Holdings Group Share Option Plan
HSBC Holdings ordinary shares of US$0.50
Options
Options
Options
Options at
awarded
exercised
lapsed
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
during
during
during
31 December
award
price
    (£)
from
1
until
2
2005
year
3
year
4
year
2005
4 Oct 2000
9.6420
4 Oct 2003
4 Oct 2010
389,352
–
–
17,467
371,885
23 Apr 2001
8.7120
23 Apr 2004
23 Apr 2011
44,805,457
–
4,274,514
1,289,115
39,241,828
30 Aug 2001
8.2280
30 Aug 2004
30 Aug 2011
317,230
–
46,200
8,075
262,955
7 May 2002
8.4050
7 May 2005
7 May 2012
52,613,475
–
7,128,292
1,217,131
44,268,052
30 Aug 2002
7.4550
30 Aug 2005
30 Aug 2012
444,625
–
28,000
6,000
410,625
2 May 2003
6.9100
2 May 2006
2 May 2013
54,801,850
–
138,475
1,832,345
52,831,030
29 Aug 2003
8.1300
29 Aug 2006
29 Aug 2013
569,070
–
–
13,990
555,080
3 Nov 2003
9.1350
3 Nov 2006
3 Nov 2013
4,069,800
–
–
–
4,069,800
30 Apr 2004
8.2830
30 Apr 2007
30 Apr 2014
62,319,187
–
148,600
1,953,979
60,216,608
27 Aug 2004
8.6500
27 Aug 2007
27 Aug 2014
339,860
–
–
2,100
337,760
20 Apr 2005
8.3620
30 Apr 2008
20 Apr 2015
–
7,470,195
–
53,300
7,416,895
1
May be advanced to an earlier date in certain circumstances, e.g. retirement.
2
May be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to twelve months beyond the normal exercise period.
3
The
           closing price per share on 19 April 2005, the day before the options
    were awarded, was £8.29.
4
The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.19.
The HSBC Holdings Group Share Option Scheme expired on 26 May 2005. No options have been granted under the Scheme since that date.
The HSBC Share Plan
HSBC Holdings ordinary shares of US$0.50
Options
Options
Options
Options at
awarded
exercised
lapsed
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
during
during
during
31 December
award
price
    (£)
from
1
until
2
2005
period
period
period
2005
21 Jun 2005
8.794
21 Jun 2008
21 Jun 2009
–
552,526
3
–
–
552,526
30 Sep 2005
9.170
30 Sep 2008
30 Sep 2015
–
74,985
4
–
–
74,985
1
May be advanced to an earlier date in certain circumstances, e.g. on the death of a participant.
2
Exercise date may be extended to a later date in certain circumstances, e.g. on the death of a participant the executors may exercise the option up to 12 months beyond the normal exercise period.
3
The
           closing price per share on 20 June 2005, the day before the options
    were awarded, was £8.78.
4
The
           closing price per share on 29 September 2005, the day before the options
    were awarded, was £9.21.
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HSBC France and subsidiary company plans
When it was acquired in 2000, HSBC France and certain of its subsidiary companies operated employee share option plans under which options could be granted over their respective shares. No further options will be granted under any of these subsidiary company plans. The following are details of options to acquire shares in HSBC France and its subsidiaries.
HSBC France
shares of €5
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
1
during year
2005
1
22 Jun 1995
34.00
22
    Jun 1997
22
    Jun 2005
52,000
52,000
–
–
9 May 1996
35.52
9 May 1998
9 May 2006
64,500
20,000
–
44,500
7 May 1997
37.05
7 Jun 2000
7 May 2007
215,560
53,560
–
162,000
29 Apr 1998
73.50
7 Jun 2000
29 Apr 2008
388,298
103,054
–
285,244
7 Apr 1999
81.71
7 Jun 2000
7 Apr 2009
588,422
112,920
–
475,502
12 Apr 2000
142.50
1 Jan 2002
12 Apr 2010
860,000
94,250
–
765,750
1
Following
          exercise of the options, the HSBC France shares will be exchanged for
          HSBC Holdings ordinary shares in the same ratio as for the acquisition
          of HSBC France (13 HSBC Holdings ordinary shares for each HSBC France
          share). At 31 December 2005, The HSBC Holdings Employee Benefit Trust
          2001 (No. 1) held 21,102,823 HSBC Holdings ordinary shares which may
          be exchanged for HSBC France shares arising from the exercise of these
    options.
Banque Chaix
shares
of €16
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
2005
7 Jun 2000
105.94
7 Jun 2005
7 Dec 2005
10,000
10,000
–
–
HSBC de Baecque
Beau
shares
of no par value
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
2005
22 Dec 2000
61.66
22 Dec 2003
22 Dec 2005
11,500
11,500
–
–
Banque de Savoie
shares
of €16
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
2005
9 Sep 1999
64.79
9 Sep 2004
9 Mar 2005
5,000
5,000
–
–
14 Jun 2000
69.52
14 Jun 2005
14 Dec 2005
5,100
5,100
–
–
Banque Dupuy
de Parseval
shares
of €20
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
2005
3 Apr 2000
36.36
3 Apr 2005
3 Jul 2005
5,000
5,000
–
–
8 Jun 2000
39.48
8 Jun 2005
8 Sep 2005
5,000
5,000
–
–
Crédit
Commercial du Sud Ouest
shares
of €15.25
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
2005
9 Sep 1999
95.89
9 Sep 2004
9 Mar 2005
7,500
7,500
–
–
7 Jun 2000
102.29
7 Jun 2005
7 Dec 2005
7,500
7,500
–
–
195
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H S B
  C   H
O L D I N G S   P L C
Report of the Directors
(
continued
)
HSBC Private Bank France
shares
        of €2
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
1
during year
2005
1
21 Dec 1999
10.84
21 Dec 2000
21 Dec 2009
170,500
79,350
–
91,150
9 Mar 2000
12.44
27 Jun 2004
31 Dec 2010
149,460
67,300
–
82,160
15 May 2001
20.80
15 May 2002
15 May 2011
254,025
24,750
–
229,275
7 Sep 2001
15.475
7 Sep 2005
7 Oct 2007
331,500
302,000
29,500
–
1 Oct 2002
22.22
2 Oct 2005
1 Oct 2012
225,450
–
30,375
195,075
1
Following
            exercise of the options, the HSBC Private Bank France shares will
            be exchanged for HSBC Holdings ordinary shares in the ratio of 1.83
            HSBC Holdings ordinary shares for each HSBC Private Bank France share.
            At 31 December 2005, The CCF Employee Benefit Trust 2001 held 1,452,775
            HSBC Holdings ordinary shares which may be exchanged for HSBC Private
    Bank France shares arising from the exercise of these options.
Netvalor
shares
of €415
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
1
2005
22 Dec 1999
415
22 Dec 2004
22 Dec 2006
2,410
–
2,410
–
19 Dec 2000
415
19 Dec 2005
19 Dec 2007
3,270
–
3,270
–
1
Netvalor
            was sold by HSBC France on 2 August 2005 and all outstanding options
    lapsed at that date.
Sinopia Asset
Management
shares
of €
0.50
Options
    at
Options
Options
Options
    at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
Lapsed
31 December
award
price
    (€)
from
until
2005
during
    year
¹
during year
2005
15 Oct 1999
18.80
15 Oct 2004
15 Apr 2005
30,000
30,000
–
–
18 Feb 2000
18.66
18 Feb 2005
18 Aug 2005
95,500
95,500
–
–
1
Following
            exercise of the options, the Sinopia shares were exchanged for HSBC
            Holdings ordinary shares in the ratio of 2.143 HSBC Holdings ordinary
            shares for each Sinopia share, such shares being delivered from The
    CCF Employee Benefit Trust 2001.
HSBC UBP
shares of €16
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price
    (€)
from
until
2005
during year
during year
2005
12 Jul 2000
47.81
12 Jul 2005
12 Jan 2006
22,400
22,400
–
–
HSBC Finance and subsidiary company plans
Following the acquisition of HSBC Finance in 2003, all outstanding options and equity-based awards over HSBC Finance common shares were converted into rights to receive HSBC Holdings ordinary shares in the same ratio as the share exchange offer for the acquisition of HSBC Finance (2.675 HSBC
Holdings ordinary shares for each HSBC Finance common share) and the exercise prices per share were adjusted accordingly. No further options will be granted under any of these plans.
All
      outstanding options and other equity-based awards over HSBC Finance common
      shares granted
before
14 November 2002, being the date the
transaction
      was announced, vested on completion of the acquisition. Options and equity-based
      awards granted on or after 14 November
  2002 will be exercisable on their original terms, save that they have been
      adjusted to reflect the exchange ratio.
At
      31 December 2005, the HSBC (Household) Employee Benefit Trust 2003 held
      3,006,623 HSBC Holdings ordinary shares and 2,198,829 American Depositary
      Shares ('ADSs'), each of which represents five HSBC Holdings
      ordinary shares, which may be used to satisfy the exercise of employee
      share options.
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HSBC Finance
1984 Long-Term Executive Incentive Compensation Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during year
1
during year
2005
7 Feb 1995
5.09
7 Feb 1996
7 Feb 2005
148,142
148,142
–
–
13 Nov 1995
7.43
13 Nov 1996
13 Nov 2005
283,131
283,131
–
–
1
The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was £8.91.
HSBC Finance
1996 Long-Term Executive Incentive Compensation Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during year
1
during year
2005
11 Nov 1996
11.43
11 Nov 1997
11 Nov 2006
1,006,469
399,244
–
607,225
14 May 1997
11.29
14 May 1998
14 May 2007
200,630
20,063
–
180,567
10 Nov 1997
14.60
10 Nov 1998
10 Nov 2007
4,016,020
627,350
–
3,388,670
15 Jun 1998
17.08
15 Jun 1999
15 Jun 2008
802,500
–
–
802,500
1 Jul 1998
19.21
1 Jul 1999
1 Jul 2008
80,250
–
–
80,250
9 Nov 1998
13.71
9 Nov 1999
9 Nov 2008
4,695,629
152,475
–
4,543,154
17 May 1999
16.99
17 May 2000
17 May 2009
334,375
–
–
334,375
3 Jun 1999
16.32
3 Jun 2000
3 Jun 2009
200,625
–
–
200,625
31 Aug 1999
13.96
31 Aug 2000
31 Aug 2009
345,077
–
–
345,077
8 Nov 1999
16.96
8 Nov 2000
8 Nov 2009
4,869,841
–
–
4,869,841
30 Jun 2000
15.70
30 Jun 2001
30 Jun 2010
26,846
–
–
26,846
8 Feb 2000
13.26
8 Feb 2001
8 Feb 2010
66,875
–
–
66,875
13 Nov 2000
18.40
13 Nov 2001
13 Nov 2010
6,379,208
–
–
6,379,208
12 Nov 2001
21.37
12 Nov 2002
12 Nov 2011
7,571,322
–
–
7,571,322
20 Nov 2002
10.66
20 Nov 2003
2
20 Nov 2012
7,111,494
753,689
–
6,357,805
1
The
           weighted average closing price of the shares immediately before the
    dates on which options were exercised was £8.81.
2
25 per cent of the original award is exercisable on each of the first, second, third and fourth anniversaries of the date of award. May be advanced to an earlier date in certain circumstances, e.g. retirement.
HSBC Finance
1996 Long-Term
Executive Incentive Compensation Plan
1
HSBC
Holdings ordinary shares of US$0.50
Rights at
Rights
Rights
Rights at
Date of
Vesting
Vesting
1 January
vested
lapsed
31 December
award
from
2
until
2
2005
during year
3
during year
2005
15 Nov 2002
15 Nov 2005
15 Nov 2007
7,222
2,405
–
4,817
20 Nov 2002
20 Nov 2005
20 Nov 2007
1,789,084
598,947
57,531
1,132,606
2 Dec 2002
2 Dec 2005
2 Dec 2007
10,701
3,564
–
7,137
16 Dec 2002
16 Dec 2005
16 Dec 2007
35,846
11,944
–
23,902
20 Dec 2002
20 Dec 2005
20 Dec 2007
164,514
59,286
13,375
91,853
2 Jan 2003
2 Jan 2006
2 Jan 2008
1,338
–
–
1,338
15 Jan 2003
15 Jan 2006
15 Jan 2008
31,432
–
–
31,432
3 Feb 2003
3 Feb 2006
3 Feb 2008
9,635
134
–
9,501
14 Feb 2003
14 Feb 2006
14 Feb 2008
187,518
40,125
–
147,393
3 Mar 2003
3 Mar 2006
3 Mar 2008
1,338
–
–
1,338
1
Awards of Restricted Stock Rights which represent a right to receive shares for nil consideration if the employee remains in the employment of HSBC Finance at the date of vesting.
2
Restricted Stock Rights vest one-third on each of the third, fourth and fifth anniversaries of the date of award. May be advanced to an earlier date in certain circumstances, e.g. retirement.
3
The
           weighted average closing price of the shares immediately before the
    dates on which rights vested was £9.41.
197
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H S B C   H
O L D I N G S   P L C
Report
        of the Directors
(
continued
)
HSBC Finance
Non-Qualified Deferred Compensation Plan for Restricted Stock Rights
HSBC
Holdings ordinary shares of US$
0.50
Rights at
Rights
Rights
Rights at
Date of
Vesting
Vesting
1 January
vested
lapsed
31 December
award
from
until
2005
during year
1
during year
2005
10 May 2000
10 May 2002
10 May 2005
181,125
181,125
–
–
1
The
            weighted average closing price of the shares immediately before the
    dates on which rights vested was £8.61.
HSBC Finance
Non-Qualified Deferred Compensation Plan for Stock Option Exercises
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during year
1
during year
2005
2 Feb 1991
2.48
2 Feb 1992
15 Jul 2005
20,819
20,819
–
–
1
The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.00.
Beneficial Corporation
1990 Non-Qualified Stock Option Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during year
1
during year
2005
15 Nov 1995
6.00
15 Nov 1996
15 Nov 2005
177,600
177,600
–
–
20 Nov 1996
7.86
20 Nov 1997
20 Nov 2006
289,704
45,529
–
244,175
13 Dec 1996
7.54
13 Dec 1997
13 Dec 2006
65,624
–
65,624
–
14 Nov 1997
9.20
14 Nov 1998
14 Nov 2007
131,248
–
–
131,248
19 Nov 1997
9.39
19 Nov 1998
19 Nov 2007
405,274
21,328
–
383,946
1 Dec 1997
9.68
1 Dec 1998
1 Dec 2007
65,624
–
16,406
49,218
1
The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.00.
Beneficial Corporation
BenShares Equity Participation Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during year
1
during year
2005
31 Jan 1997
9.87
31 Jan 1998
31 Jan 2007
41,317
4,926
–
36,391
15 Nov 1997
11.04
15 Nov 1998
15 Nov 2007
55,696
6,977
–
48,719
1
The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was £8.98.
Renaissance Holdings, Inc.
Amended and Restated 1997 Incentive Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during year
1
during year
2005
31 Oct 1997
1.25
31 Oct 1998
31 Oct 2007
4,739
3,414
–
1,325
1 Jan 1998
1.25
1 Jan 1999
1 Jan 2008
1,424
–
–
1,424
1 Oct 1998
1.74
1 Oct 1999
1 Oct 2008
1,606
803
–
803
1 Jan 1999
2.24
1 Jan 2000
1 Jan 2009
5,024
–
–
5,024
1
The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was £8.98.
198
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Bank of Bermuda plans
Following the acquisition of Bank of Bermuda in February 2004, all outstanding options over Bank of Bermuda shares were converted into rights to receive HSBC Holdings ordinary shares based on the consideration of US$40 for each Bank of Bermuda share and the average closing price of HSBC Holdings ordinary shares, derived from the London Stock Exchange Daily Official List, for the five
business days preceding the closing date of the acquisition. No
further options will be granted under any of these plans.
All
      outstanding options over Bank of Bermuda shares vested on completion of
      the acquisition. At 31 December 2005, the HSBC (Bank of Bermuda) Employee
      Benefit Trust 2004 held 2,796,182 HSBC Holdings ordinary shares which may
      be used to satisfy the exercise of these options.
Bank of
Bermuda
Executive Share Option Plan 1997
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during period
1
during period
2005
1 Jul 1998
9.61
1 Jul 1999
1 Jul 2008
67,813
–
–
67,813
23 Feb 1999
7.40
23 Feb 2000
23 Feb 2009
18,464
–
6,780
11,684
3 Aug 1999
7.10
3 Aug 2000
3 Aug 2009
9,331
–
–
9,331
4 Feb 2000
7.21
4 Feb 2001
4 Feb 2010
67,925
1,540
9,249
57,136
7 Apr 2000
7.37
7 Apr 2001
7 Apr 2010
385
385
–
–
29 May 2000
7.21
29 May 2001
29 May 2010
15,411
–
15,411
–
1 Jun 2000
7.04
1 Jun 2001
1 Jun 2010
61,649
–
–
61,649
31 Jul 2000
10.11
31 Jul 2001
31 Jul 2010
166,454
120,215
–
46,239
19 Sep 2000
11.31
19 Sep 2001
19 Sep 2010
40,458
–
40,458
–
11 Jan 2001
14.27
11 Jan 2002
11 Jan 2011
161,829
–
–
161,829
1
The
            weighted average closing price of the shares immediately before the
    dates on which options were exercised was £9.14
Bank of Bermuda
Share Option Plan 2000
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during period
1
during period
2005
11 Jan 2001
14.27
11 Jan 2002
11 Jan 2011
161,829
26,972
–
134,857
6 Feb 2001
16.41
6 Feb 2002
6 Feb 2011
1,067,606
22,972
245,300
799,334
29 Mar 2001
15.39
29 Mar 2002
29 Mar 2011
540
–
270
270
16 Apr 2001
15.57
16 Apr 2002
16 Apr 2011
539
–
–
539
6 Jun 2001
18.35
6 Jun 2002
6 Jun 2011
8,091
–
–
8,091
16 Jul 2001
16.87
16 Jul 2002
16 Jul 2011
224,631
–
66,146
158,485
28 Aug 2001
15.39
28 Aug 2002
28 Aug 2011
13,486
–
–
13,486
26 Sep 2001
12.79
26 Sep 2002
26 Sep 2011
459,651
10,706
–
448,945
16 Jan 2002
16.11
16 Jan 2003
16 Jan 2012
3,678
–
3,678
–
30 Jan 2002
15.60
30 Jan 2003
30 Jan 2012
1,226
–
–
1,226
5 Feb 2002
16.09
5 Feb 2003
5 Feb 2012
1,421,151
45,976
323,361
1,051,814
5 Feb 2002
16.41
5 Feb 2003
5 Feb 2012
1,383
–
–
1,383
10 Jul 2002
15.84
10 Jul 2003
10 Jul 2012
12,260
–
–
12,260
9 Sep 2002
12.34
9 Sep 2003
9 Sep 2012
61,299
61,299
–
–
16 Dec 2002
11.27
16 Dec 2003
16 Dec 2012
6,130
6,130
–
–
4 Feb 2003
10.69
4 Feb 2004
4 Feb 2013
359,867
134,355
26,167
199,345
1 Apr 2003
11.97
1 Apr 2004
1 Apr 2013
28,541
28,541
–
–
21 Apr 2003
11.85
21 Apr 2004
21 Apr 2013
48,853
–
–
48,853
1
The
              weighted average closing price of the shares immediately before
    the dates on which options were exercised was £9.04.
199
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H S B C   H
O L D I N G S   P L C
Report
        of the Directors
(
continued
)
Bank of Bermuda
Directors' Share Option Plan
HSBC Holdings ordinary shares of US$0.50
Options at
Options
Options
Options at
Date of
Exercise
Exercisable
Exercisable
1 January
exercised
lapsed
31 December
award
price (US$)
from
until
2005
during period
during period
2005
22 Sep 1999
8.02
22 Sep 2000
22 Sep 2009
7,706
–
–
7,706
20 Sep 2000
11.31
20 Sep 2001
20 Sep 2010
9,440
–
–
9,440
28 Mar 2001
15.76
28 Mar 2002
28 Mar 2011
18,205
–
2,697
15,508
3 Apr 2002
16.01
3 Apr 2003
3 Apr 2012
34,328
–
4,904
29,424
30 Apr 2003
12.23
30 Apr 2004
30 Apr 2013
9,808
–
–
9,808
Valuation of
    freehold and leasehold land and buildings
HSBC's
      freehold and long leasehold properties, together with all leasehold properties
      in Hong Kong, were valued in 2005. The value of these
properties was US$1.1 billion in excess of their carrying amount in the consolidated
balance sheet.
Further details are included in Note 23 on the Financial Statements on page 298.
Corporate Governance
          Report
The information set out on pages 184 to 233 and information incorporated by reference constitutes the Corporate Governance Report of HSBC Holdings.
Board of Directors
The objective of the management structures within HSBC, headed by the Board of Directors of HSBC Holdings and led by the Group Chairman, is to deliver sustainable value to shareholders.
Implementation of the strategy set by the Board is delegated to the Group Management Board under the leadership of the Group Chief Executive.
The
      Board sets the strategy for HSBC through the five-year strategic plan and
      approves the annual operating plans presented by management for the achievement
      of the strategic objectives. The annual operating plans ensure the efficient
      disposition of HSBC's resources for the achievement of these objectives.
      The Board delegates the management and day to day running of HSBC to the
      Group Management Board but retains to itself approval of certain matters
      including annual plans and performance targets, procedures for monitoring
      and control of operations, specified senior appointments, acquisitions
      and disposals above predetermined thresholds and any substantial change
      in balance sheet management policy.
The Board of Directors meets regularly and Directors receive information between meetings
about the activities of committees and developments in HSBC's
business. All Directors have full and timely access to all relevant information
and may take independent professional advice if necessary.
HSBC Holdings has a unitary Board of
Directors.
The authority of each Director is exercised in Board Meetings where the Board
acts collectively as a unit. At 6 March 2006 the Board
comprises five executive and 15 non-executive Directors. The roles of Group Chairman
and Group Chief Executive are separated and held by experienced executive Directors.
Before assuming the role of Group Chairman in 1998, Sir John Bond had been the
Group Chief Executive for five years. The Group Chairman's knowledge of HSBC's
complex and widespread geographical business from his previous service as Group
Chief Executive has been a considerable benefit to HSBC.
On 28 November 2005, it was announced that S K Green, the Group Chief Executive since 2003, would succeed Sir John Bond as Group Chairman at the conclusion of the 2006 Annual General Meeting on 26 May 2006 and that M F Geoghegan would succeed S K Green as Group Chief Executive. Sir Brian Moffat, the senior independent non-executive Director and the Chairman of the Nomination Committee, wrote to shareholders regarding these appointments.
He
      explained that the decision by the Board to appoint S K Green as Group
      Chairman was made after a thorough selection process. This was conducted
      by the Nomination Committee, assisted by external advisers, and included
      extensive benchmarking against external candidates. The Committee considered
      carefully the requirements of the position in terms of HSBC's size, geographical spread and complexity; the need for full time executive commitment and experience of international banking at the highest level; and took account of the need for the Group Chairman to have a wide range of skills, the capacity for strategic thinking and the ability to sustain and enhance the Group's
      corporate character. The Committee also
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took into consideration the need for the Group Chairman to be able to work closely and effectively with the Group Chief Executive, to have the authority to run the Board and to have the personal standing to represent HSBC externally at the highest level. Job specifications for the Group Chairman and the Group Chief Executive, setting out their respective authorities and responsibilities, have been agreed by the Board. The Nomination Committee came to the unanimous conclusion that S K Green was the outstanding candidate.
S K Green joined HSBC in 1982. He was Group Treasurer from 1992 to 1998, and Executive Director, Corporate, Investment Banking and Markets from 1998 to 2003, when he was appointed to his current position. He has worked in Hong Kong, New York, the Middle East and London, and has immense international experience and knowledge of HSBC. The Committee concluded that S K Green is superbly well qualified to serve as Group Chairman.
S
        K Green's successor as Group Chief Executive will be M F Geoghegan, who has led HSBC Bank, HSBC's principal subsidiary in the United Kingdom, since 2004. He too is highly qualified for his new position and his appointment also has the unanimous support of the Board. Mr Geoghegan has 33 years' experience
        with HSBC and has worked in 10 countries in North and South America,
Asia, the Middle East and Europe.
Nowadays, success in financial services depends in a large measure on the relative strengths of competing management teams. Planning management succession is key to this, has long been established in the Group and the plan is regularly reviewed by the non-executive Directors.
Furthermore, HSBC is a remarkable organisation with a distinctive character and culture. The business is managed through international teamwork and HSBC believes this is best achieved by management continuity and amongst colleagues who have similar values. By way of example, the top 50 executives have a combined service approaching 1,000 years with HSBC, although 20 per cent of these executives have joined the Group in the last six years, thus ensuring there is a balance of new talent to help run the business.
The Directors believe strongly that these appointments are in the best interests of the shareholders. The appointments have the unanimous support of the Directors and have been made after consulting with representatives of major institutional investors and explaining the succession planning and independent external search process.
Executive Directors are employees who carry out executive functions in HSBC in addition to their duties as Directors. Non-executive Directors are not HSBC employees and do not participate in the daily business management of HSBC. Non-executive Directors bring an external perspective, constructively challenge and help develop proposals on strategy, scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. The non-executive Directors have a wealth of experience across a number of industries and business sectors, including the leadership of large, complex multinational enterprises. The roles of non-executive Directors as members of Board committees are set out below. It is estimated that non-executive Directors spend 24 days per annum on HSBC business after an induction phase, with Committee members devoting significant additional time. The
names and brief biographical particulars of the Directors are listed on pages 184 to 188.
The
        Board considers all of the non-executive Directors to be independent
      in character and judgement. Baroness
        Dunn and H Sohmen have served on the Board for more than nine years,
      however, and in that respect only, do not meet the usual criteria for independence
        set out in the UK Combined Code on corporate governance. The Board has
        therefore determined Lord Butler, R K F Ch'ien, J D Coombe, R A Fairhead, W K L Fung, S Hintze, J W J Hughes-Hallett, Sir John Kemp-Welch, Sir Brian Moffat, Sir Mark Moody-Stuart, S M Robertson, S W Newton and Sir Brian Williamson to be independent. In reaching its determination of each non-executive Director's independence the Board has concluded that there are no relationships or circumstances which are likely to affect a Director's
        judgement and any relationships or circumstances which could appear to
do so were considered not to be material.
In accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, each non-executive Director determined by the Board to be independent has provided confirmation of his or her independence to HSBC Holdings.
The
        Directors who served during the year were W F Aldinger, Sir John Bond,
        Lord Butler, R K F Ch'ien,
        J D Coombe, Baroness Dunn, D G Eldon, R A Fairhead, D J Flint, W K L
        Fung, M F Geoghegan, S K Green, S Hintze, J W J Hughes-Hallett, A W Jebson,
        Sir
        John Kemp-Welch, Sir Brian Moffat, Sir Mark Moody-Stuart, S W Newton,
H Sohmen, C S Taylor and Sir Brian Williamson.
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H S B C   H
O L D I N G S   P L C
Report
        of the Directors
(
continued
)
C S Taylor resigned as a Director on 14 March 2005, W F Aldinger resigned as a Director on 29 April 2005 and D G Eldon retired as a Director on 27 May 2005. J D Coombe and J W J Hughes-Hallett were appointed Directors with effect from 1 March 2005.
S M Robertson was appointed a Director with effect from 3 January 2006. Having been appointed since the Annual General Meeting in 2005, he will retire at the forthcoming Annual General Meeting and offer himself for re-election.
Sir John Bond, A W Jebson and Sir John Kemp-Welch will retire at the conclusion of the forthcoming Annual General Meeting and will not therefore seek re-election.
Baroness Dunn, M F Geoghegan, S K Green, Sir Mark Moody-Stuart, H Sohmen and Sir Brian Williamson will retire by rotation at the forthcoming Annual General Meeting and offer themselves for re-election.
The Board has undertaken an evaluation of its performance and that of its committees. This evaluation covered board composition and capabilities; dynamics; strategy; corporate governance; and the performance of individual Directors. In undertaking this review the Group Chairman held structured meetings with each Director using a framework adapted from that employed in the two previous reviews. The report on the evaluation of the Board and its committees has been reviewed by the Board and has been used by the non-executive Directors, led by Sir Brian Moffat, in their evaluation of the performance of the Group Chairman. The review concluded that the board and its committees were functioning effectively. The Group Audit Committee, the Remuneration Committee, the Nomination Committee and the Corporate Social Responsibility Committee have also each undertaken a review of their terms of reference and their
own effectiveness in 2005.
Following the review of the Board, the Group Chairman has confirmed that the Directors standing for re-election at the Annual General Meeting continue to perform effectively and to demonstrate commitment to their roles. It is the intention of the Board of HSBC Holdings to continue to review its performance and that of its Directors annually.
Seven
      regular Board meetings were held during 2005. Sir John Bond, Lord Butler,
      R K F Ch'ien, Baroness
      Dunn, D J Flint, W K L Fung, M F Geoghegan, S K Green, S Hintze, A W Jebson,
      Sir John Kemp-Welch, Sir Brian Moffat, Sir Mark Moody-Stuart, S W Newton,
      H Sohmen and
Sir Brian Williamson attended all of the Board meetings. R A Fairhead attended five of the Board meetings. W F Aldinger and C S Taylor attended the two Board meetings held before they ceased to be Directors. D G Eldon attended all four Board meetings held before his retirement. J D Coombe and J W J Hughes-Hallett attended all five of the Board meetings held following their appointments.
During 2005, the non-executive Directors and the Group Chairman met three times to discuss Board performance and succession planning, and the non-executive Directors met once without the Group Chairman to discuss his performance.
In addition to the meetings of the principal Committees referred to below, ten other meetings of committees of the Board were held during the year to discharge business delegated by the Board.
All Directors attended the 2005 Annual General Meeting.
The Board regularly reviews reports on progress against financial objectives, on business developments and on investor issues and external relations and receives reports from the Chairmen of Board Committees, the Group Chief Executive and the Chief Operating Officer. The Board also receives regular reports and presentations on strategy and developments in the customer groups and principal geographical areas. Regular reports are also provided to the Board, the Group Audit Committee and the Group Management Board on credit exposures and the loan portfolio, asset and liability management, liquidity, litigation and compliance and reputational issues. The agenda and supporting papers are distributed in advance of all Board and Committee meetings to allow time for appropriate review and to facilitate full discussion at the meetings.
The Directors have free and open contact with management at all levels. Group Managing Directors and Group General Managers meet informally with Directors after Board meetings. Board offsite visits are made each year to enable Directors to see at first hand subsidiary company operations at their operating environments and to meet local management, employees and customers. In 2005 the Board visited Bermuda, India and the HSBC Management Training College in Hertfordshire, United Kingdom.
The Board ensures all Directors, including non-executive Directors, develop an understanding of the views of major shareholders through attendance at analyst meetings following results announcements and other
ad hoc
meetings with investors and their representative bodies. In April 2005, the Board held
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an informal meeting with representatives of institutional shareholders to discuss corporate governance matters. An Investor Day, attended by executive and non-executive Directors, was held in September 2005. During 2005, major shareholders were consulted on the employee share plan proposals considered at the 2005 Annual General Meeting and the succession plans for the Group Chairman and Group Chief Executive.
The Group Chairman, Group Chief Executive and the Group Finance Director hold regular meetings with institutional investors and report to the Board on those meetings.
Sir Brian Moffat, Deputy Chairman and senior independent non-executive Director, is available to shareholders should they have concerns which contact through the normal channels of Group Chairman, Group Chief Executive, Group Finance Director or other executives has failed to resolve or for which such contact would be inappropriate. Sir Brian Moffat may be contacted through the Group Company Secretary at 8 Canada Square, London E14 5HQ.
The
        Group Chairman's principal
        commitments outside HSBC are as a non-executive Director of Ford Motor
        Company and of Vodafone Group plc.
Full, formal and tailored induction programmes with particular emphasis on internal controls, are arranged for newly appointed Directors to enable them to familiarise themselves with HSBC. Opportunities to update and develop skills and knowledge, through externally-run seminars and through briefings by senior executives, are provided to all Directors. The terms and conditions of appointments of non-executive Directors are available for inspection at 8 Canada Square, London E14 5HQ and will be made available for 15 minutes before the Annual General Meeting and during the Meeting itself.
The Articles of Association of HSBC Holdings provide that Directors are entitled to be indemnified out of the assets of the Company against claims from third parties in respect of certain liabilities arising in connection with the performance of their functions, in accordance with the provisions of the UK
Companies Act 1985. Indemnity provisions of this nature have been in place during the financial year but have not been utilised by the Directors.
None of the Directors had, during the year or at the end of the year, a material interest, directly or indirectly, in any contract of significance with HSBC Holdings or any of its subsidiary undertakings.
Board
          committees
The Board has appointed a number of committees consisting of certain Directors, Group Managing Directors and, in the case of the Corporate Social Responsibility Committee, certain co-opted non-director members. The following are the principal committees:
Group Management Board
The Group Management Board meets regularly and operates as a general management committee under the direct authority of the Board. The objective of the Group Management Board is to maintain a reporting and control structure whereby all of the line operations of HSBC are accountable to individual members of the Group Management Board, who in turn report to Group Chairman or Group Chief Executive. The members of the Group Management Board are S K Green (Chairman), Sir John Bond, D J Flint, M F Geoghegan and A W Jebson, all of whom are executive Directors, and V H C Cheng, C-H Filippi, S T Gulliver, D D J John, S N Mehta, Y A Nasr and J J Studzinski, all of whom are Group Managing Directors.
The Group Management Board exercises the powers, authorities and discretions of the Board in so far as they concern the management and day to day running of HSBC in accordance with such policies and directions as the Board may from time to time determine. Matters reserved for approval by the Board include annual plans and performance targets, procedures for monitoring and control of operations, specified senior appointments, acquisitions and disposals above predetermined thresholds and any substantial change in balance sheet management policy. The Group Management Board sub-delegates credit, investment and capital expenditure authorities to its members.
Group Audit Committee
The Group Audit Committee meets regularly with HSBC's senior financial, internal audit, legal and compliance management and the external auditor to consider HSBC Holdings' financial reporting, the nature and scope of audit reviews and the effectiveness of the systems of internal control and compliance. The members of the Group Audit Committee throughout 2005 were Sir Brian Moffat (Chairman), R K F Ch'ien,
      R A Fairhead and Sir John Kemp-Welch. J D Coombe was appointed a member
    of the Committee with effect from 1 July 2005. J W J Hughes-Hallett has been
      appointed a member of the Committee with effect from 1 June 2006. All members
      of the
      Committee are
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independent non-executive Directors.
The
        Board has determined that Sir Brian Moffat, R A Fairhead and J D Coombe
        are independent according to SEC criteria, may be regarded as audit committee
        independent financial experts for the purposes of section 407 of the
        Sarbanes-Oxley Act and as having recent and relevant financial experience.
Since 2004 appointments to the Committee have been made for periods of up to three years, extendable by no more than two additional three-year periods, so long as members continue to be independent.
Formal and tailored induction programmes are held for newly appointed Committee members and appropriate training is provided on an ongoing and timely basis.
There
        were seven meetings of the Group Audit Committee during 2005. Sir John
        Kemp-Welch and Sir Brian Moffat
        attended all of the meetings; R K F Ch'ien attended five meetings;
        R A Fairhead attended six meetings; and J D Coombe attended each of the
        five
        meetings held following his appointment.
At the beginning of each meeting, the Committee has the opportunity to meet with the external auditor, without management present, to facilitate the discussion of any matter relating to its remit and any issue arising from the audit. Similar arrangements have been adopted for the Committee to meet with the internal auditor.
The terms of reference of the Committee, which are reviewed annually, are available at www.hsbc.com/committeeg. To ensure consistency of scope and approach by subsidiary company audit committees, the Group Audit Committee has established minimum core terms of reference for those committees. These are in the course of being adopted.
The Group Audit Committee is accountable to the Board and assists the Board in meeting its responsibilities for maintaining an effective system of internal control and compliance and for meeting its external financial reporting obligations. The Committee is directly responsible on behalf of the Board for the selection, oversight and remuneration of the external auditor. The Committee receives frequent comprehensive reports from the Group General Manager Credit and Risk, the Head of Group Compliance, the Group General Manager, Legal and Compliance, the Group General Manager Internal Audit and the Head of Group Security and receives periodic presentations from other functional heads and line management.
Regular
        comprehensive reports on the work of the internal audit function are submitted
        to the Committee.
        These reports include reports on frauds and special investigations and
        summaries of internal audit findings, regulatory reports and external auditors' reports.
        The Committee also receives summaries of periodic peer reviews of the internal
        audit functions around HSBC.
The
        Committee undertakes an annual review of the effectiveness of HSBC's
        system of internal control. This is described on page 208. The Committee
        receives regular updates on changes
        in law, regulations and accounting standards and practices and the preparations
        being made to respond to those requirements, including the preparations
        for reporting on the review of internal financial reporting controls required
        by section 404 of the Sarbanes-Oxley Act.
The Committee reports on its activities at each Board meeting and, twice annually, produces a written summary of its activities.
The Committee has approved procedures for the receipt, retention and handling of complaints regarding accounting, internal accounting controls and auditing matters. The Committee receives regular reports regarding the nature, investigation and resolution of material complaints and concerns from the Head of Group Compliance.
The Committee reviews and monitors the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements. The Committee receives reports from the external auditor on its own policies and procedures regarding independence and quality control and oversees the appropriate rotation of audit partners within the external auditor.
The
        Group Audit Committee has adopted policies for the pre-approval of specific
        services that may be provided
        by the principal auditor, KPMG Audit Plc and its affiliates ('KPMG'),
        since 2003. These policies are kept under review and amended as necessary
        to meet the dual objectives of ensuring that HSBC benefits in a cost effective
        manner from the cumulative knowledge and experience of its auditor, whilst
        also ensuring that the auditor maintains the necessary degree of independence
        and objectivity. These pre-approval policies apply to all services where
        HSBC Holdings or any of its subsidiaries pays for the service, or is a
        beneficiary or addressee of the service and has selected, or influenced
        the choice of,
        KPMG. All services entered into with KPMG during 2005 were pre-approved
        by the Group Audit Committee or were entered into
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under pre-approval policies established by the Group Audit Committee.
The pre-approved services relate to the provision of objective advice, attestation type services or opinions on areas such as controls and are used as an input into management decision-making. They fall into the following four categories:
Audit services
In addition to the statutory audit appointments, which are approved
      by the Group Audit Committee, this category includes services that are
    normally provided by the independent auditor in connection with statutory
    and regulatory
      filings or engagements, such as reviews of interim financial information,
      letters to securities underwriters in connection with debt or equity offerings,
      the
      inclusion of auditors' reports in filings with the SEC and certain
      reports on internal control over financial reporting.
Audit-related services
These services are those provided by the principal auditor that
      are reasonably related to the performance of the audit or review of the
    Group's
      financial statements. Examples of such services are due diligence services
      provided in connection with potential acquisitions, audits or reviews of
      employee benefit plans,
ad hoc
attestation or agreed-upon procedures reports (including reports requested by regulators), and accounting and regulatory advice on actual or contemplated transactions.
Tax services
This category includes both tax advice and compliance services. Examples of such services are advice on national and local income taxation matters, (including assistance in data gathering for preparation, review and submission as agent of tax filings), advice on tax consequences of management-proposed transactions and assistance in responding to tax examinations by governmental authorities. The pre-approved tax services explicitly exclude proposals for tax structures unconnected with a contemplated transaction and whose main motive is to reduce taxation.
Other services
This category includes various other assurance and advisory services, such as training, or advice or assurance provided on specific elements of financial data and models, IT security and advice, and providing due diligence on financial reviews of HSBC customers and private equity investments.
All services provided by KPMG relating to the implementation of section 404 of the Sarbanes-Oxley Act were specifically pre-approved by the Group Audit Committee.
An analysis of the remuneration paid in respect of audit and non-audit services provided by KPMG for each of the last two years is disclosed in Note 8 on the Financial Statements.
The Committee has recommended to the Board that KPMG Audit Plc be reappointed as Auditor at the forthcoming Annual General Meeting.
Remuneration Committee
The role of the Remuneration Committee and its membership are
      set out in the Directors' Remuneration Report on page 215.
Nomination Committee
The Nomination Committee is responsible for leading the process for Board appointments and for identifying and nominating, for approval by the Board, candidates for appointment to the Board. Before recommending an appointment to the Board, the Committee evaluates the balance of skills, knowledge and experience on the Board and, in the light of this, identifies the role and capabilities required for a particular appointment. Candidates are considered on merit against these criteria. Care is taken to ensure that appointees have enough time to devote to HSBC. All Directors are subject to election by shareholders at the Annual General Meeting following their appointment and to re-election at least every three years. The members of the Nomination Committee throughout 2005 were Sir Brian Moffat (Chairman), Lord Butler, Baroness Dunn and Sir Brian Williamson.
There were three Nomination Committee meetings during 2005, each of which was attended by all members.
Following each meeting the Committee reports to the Board on its activities.
The terms of reference of the Committee are available at www.hsbc.com/committeen.
The appointments of J D Coombe,
J W J Hughes-Hallett and S M Robertson as non-executive Directors were made on the advice and recommendation of the Nomination Committee. An external consultancy was used in connection with these appointments.
As set out on page 205, the Committee conducted the selection process which recommended to the Board that S K Green succeed Sir John Bond
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as Group Chairman at the conclusion of the 2006 Annual General Meeting and that M F Geoghegan succeed S K Green as Group Chief Executive.
The
      Committee makes recommendations to the Board concerning plans for succession
      for both executive and non-executive
      Directors; the appointment of any Director to executive or other office;
      suitable candidates for the role of senior independent Director; the re-election
      by shareholders of Directors retiring by rotation; the renewal of the terms
      of office of non-executive Directors; membership of Board Committees, in
      consultation with the Group Chairman and the chairman of such committee
      as appropriate; any matters relating to the continuation in office of any
      Director
      at any time; Directors' fees and committee fees for the Company and
      any of its subsidiaries as appropriate; and appointments and re-appointments
      to the Boards of Directors of major subsidiary companies as appropriate.
The Committee regularly reviews the structure, size and composition (including the skills, knowledge and experience required) of the Board and makes recommendations to the Board as appropriate. It keeps under review the leadership needs of HSBC, with a view to ensuring the continued ability of HSBC to compete effectively in the marketplace. The Board has satisfied itself that the Nomination Committee has in place appropriate plans for orderly succession to the Board and Senior Management positions as well as procedures to ensure an appropriate balance of skills and experience within HSBC and on the Board.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee is responsible for overseeing Corporate Social Responsibility and Sustainability policies, principally environmental, social and ethical matters and for advising the Board, committees of the Board and executive management on such matters. The terms of reference of the Committee are available at www.hsbc.com/committeec. The members of the Committee throughout 2005 were Lord Butler (Chairman), W K L Fung, S Hintze, each of whom is an independent non-executive Director, and G V I Davis, E M Diggory and Lord May, who are non-Director members of the Committee. C S Taylor, a former independent non-executive Director, was a member of the Committee until 14 March 2005. Sir Mark Moody-Stuart, an independent non-executive Director, was appointed a member of the Committee from 29 April 2005.
There were four meetings of the Corporate Social Responsibility Committee during 2005. Following each meeting the Committee reports to the Board on its activities.
Further information is available in HSBC's
Corporate Social Responsibility Report 2005
, available in April 2006.
Corporate
            Governance Codes
HSBC is committed to high standards of corporate governance. HSBC Holdings complied throughout the year with the applicable code provisions of the Combined Code on Corporate Governance issued by the Financial Reporting Council. The terms of reference of the Group Audit Committee and the Remuneration Committee were modified in February 2005 to incorporate certain provisions set out in the Code on Corporate Governance Practice in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited which came into effect on 1 January 2005. HSBC Holdings has complied throughout the year with all other applicable code provisions of the Code on Corporate Governance Practices in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
The
      Board of HSBC Holdings has adopted a code of conduct for transactions in
      HSBC Group securities by Directors
      that complies with The Model Code in the Listing Rules of the Financial
      Services Authority and with The Model Code for Securities Transactions
      by Directors
      of Listed Issuers ('Hong Kong Model Code') set out in the Rules
      Governing the Listing of Securities on The Stock Exchange of Hong Kong
      Limited, save that The Stock Exchange of Hong Kong has granted certain
      waivers from
      strict compliance with the Hong Kong Model Code, primarily to take into
      account accepted practices in the UK, particularly in respect of employee
      share plans.
      Following a specific enquiry, each Director has confirmed he or she has
      complied with the code of conduct for transactions in HSBC Group securities
      throughout
      the year.
Differences in HSBC Holdings/New York Stock Exchange corporate governance practices
Under the New York Stock Exchange's ('NYSE')
      corporate governance rules for listed companies, as a NYSE-listed foreign
      private issuer,
      HSBC Holdings must disclose any significant ways in which its corporate
    governance practices differ from those followed by US companies subject to
    NYSE listing
      standards. HSBC Holdings believes the following to
be the
  significant differences between its corporate
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governance practices and NYSE corporate governance rules applicable
  to US companies.
US
        companies listed on the NYSE are required to adopt and disclose corporate
        governance guidelines. The Listing
        Rules of the UK Financial Services Authority require each listed company
        incorporated in the United Kingdom to include in its Annual Report and
        Accounts a narrative statement of how it has applied the principles of
        the Combined
        Code on Corporate Governance issued by the Financial Reporting Council
        ('Combined Code')
        and a statement as to whether or not it has complied with the code provisions
        of the Combined Code throughout the accounting period covered by the
        Annual Report and Accounts. A company that has not complied with the
        Code provisions,
        or complied with only some of the Code provisions or (in the case of
        provisions whose requirements are of a continuing nature) complied for
        only part of
        an accounting period covered by the report, must specify the Code provisions
        with which it has not complied, and (where relevant) for what part of
        the reporting period such non-compliance continued, and give reasons
        for any
        non-compliance. As stated above, HSBC Holdings complied throughout 2005
        with the applicable code provisions of the Combined Code. The Combined
        Code does
        not require HSBC Holdings to disclose the full range of corporate governance
        guidelines with which it complies.
Under
        NYSE standards, companies are required to have a nominating/corporate
      governance committee, composed
        entirely of independent directors. In addition to identifying individuals
        qualified to become board members, this committee must develop and recommend
        to the board a set of corporate governance principles. HSBC's Nomination Committee, which follows the requirements of the Combined Code, includes a majority of members who are independent. All members of the Committee are non-executive Directors and three of the four members, including the Committee chairman, are independent non-executive Directors. The Committee's
        terms of reference do not require the Committee to develop and recommend
        corporate governance principles for HSBC Holdings. As stated above, HSBC
        Holdings is subject to the corporate governance principles of the Combined
        Code.
Pursuant
        to NYSE listing standards, non-management directors must meet on a regular
        basis without management
        present and independent directors must meet separately at least once
      per year. During 2005, HSBC Holdings' non-executive Directors met
      three times as a group with the Group
Chairman,
but with no other executive Directors
present,
      and met once as a group without the Group Chairman or other executive Directors
        present.
        HSBC Holdings' practice, in this regard, complies with the Combined
        Code.
In
        accordance with the requirements of the Combined Code, HSBC Holdings
      discloses in its annual report how the
        Board, its committees and the Directors are evaluated and the results
      of the evaluation (on pages 202 to 203) and it provides extensive information
        regarding Directors' compensation in the Directors' Remuneration Report (on pages 215 to 232). The terms of reference of HSBC Holdings' Audit,
        Nomination and Remuneration Committees are available at www.hsbc.com/committeeb.
NYSE
        listing standards require US companies to adopt a code of business conduct
        and ethics for directors,
        officers and employees, and promptly disclose any waivers of the code
      for directors or executive officers. In addition to the Group Business
      Principles
        and Values, which apply to the employees of all HSBC companies, pursuant
        to the requirements of the Sarbanes-Oxley Act the Board of HSBC Holdings
        has adopted a Code of Ethics applicable to the Group Chairman, the Group
        Finance Director and Group Chief Accounting Officer. HSBC Holdings' Code
        of Ethics is available on www.hsbc.com/codeofethics or from the Group
        Company Secretary at 8 Canada Square, London E14 5HQ. If the Board amends
        or waives
        the provisions of the Code of Ethics, details of the amendment or waiver
        will appear at the same website address. During 2005 HSBC Holdings made
        no amendments to its Code of Ethics and granted no waivers from its provisions.
        The Group Business Principles and Values is available on www.hsbc.com/businessprinciplesandvalues.
Under
        NYSE listing rules applicable to US companies, independent directors
      must comprise a majority of the board
        of directors. Currently, over half of HSBC Holdings' Directors are
        independent.
Under
        the Combined Code the HSBC Holdings Board determines whether a director
        is independent in character
        and judgement and whether there are relationships or circumstances which
        are likely to affect, or could appear to affect, the director's
        judgement. Under the NYSE rules a director cannot qualify as independent
        unless the board affirmatively determines that the director has no material
        relationship with the listed company; in addition the NYSE rules prescribe
        a list of circumstances in which a director cannot be independent. The
        Combined Code requires a company's
board to
assess
director independence by affirmatively
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concluding that the director is independent of management and
    free from any business or other relationship that could materially interfere
    with the exercise of independent judgement.
Lastly,
      a chief executive officer of a US company listed on the NYSE must annually
      certify that he or she is
      not aware of any violation by the company of NYSE corporate governance
      standards. In accordance with NYSE listing rules applicable to foreign
      private issuers,
      HSBC Holdings' Group Chairman is not required to provide the NYSE
      with this annual compliance certification. However, in accordance with
      rules applicable
      to both US companies and foreign private issuers, the Group Chairman is
      required promptly to notify the NYSE in writing after any executive officer
      becomes
      aware of any material non-compliance with the NYSE corporate governance
      standards applicable to HSBC Holdings.
Since July 2005 HSBC Holdings has been required to submit annual and interim written affirmations of compliance with applicable NYSE corporate governance standards, similar to the affirmations required of NYSE listed US companies. The first annual affirmation was submitted to the NYSE in August 2005.
Internal
            control
The Directors are responsible for internal control in HSBC and for reviewing its effectiveness.
Procedures
have been designed for safeguarding assets against unauthorised use or disposition;
for maintaining proper accounting records;
      and for the reliability of financial information used within the business
      or for publication. Such procedures are designed to manage rather than
    eliminate the risk of failure to achieve business objectives and can only
    provide reasonable
      and not absolute assurance against material misstatement, errors, losses
      or
      fraud. The procedures also enable HSBC Holdings to discharge its obligations
      under the Handbook of Rules and Guidance issued by the Financial Services
      Authority, HSBC's lead regulator.
The
      key procedures that the Directors have established are designed to provide
      effective internal control within HSBC and accord with the Internal Control:
      Revised Guidance for Directors on the Combined Code issued by the Financial
      Reporting Council. Such procedures for the ongoing identification, evaluation
      and management of the significant risks faced by HSBC have been in place
      throughout the year and up to 6 March 2006, the date of approval of the
Annual
      Report and Accounts
2005
.
In the case of companies acquired during the
year,
      including Metris Companies Inc., the internal controls
      in place are being reviewed against HSBC's benchmarks and integrated
      into HSBC's
        systems.
HSBC's
key internal control procedures include the following:
•
Authority
        to operate the various subsidiaries is delegated to their respective
        chief executive officers within limits set by the Board of Directors
        of HSBC Holdings or by the Group Management Board under powers delegated
        by the Board. Sub-delegation of authority from the Group Management Board
        to individuals requires these individuals, within their respective delegation,
        to maintain a clear and appropriate apportionment of significant responsibilities
        and to oversee the establishment and maintenance of systems of controls
        appropriate to the business. The appointment of executives to the most
        senior positions within HSBC requires the approval of the Board of Directors
    of HSBC Holdings.
•
Functional,
        operating, financial reporting and certain management reporting standards
        are established by Group Head Office management for application across
        the whole of HSBC. These are supplemented by operating standards set
        by functional and local management as required for the type of business
    and geographical location of each subsidiary.
•
Systems
        and procedures are in place in HSBC to identify, control and report on
        the major risks including credit, changes in the market prices of financial
        instruments, liquidity, operational error, breaches of law or regulations,
        unauthorised activities and fraud. Exposure to these risks is monitored
        by asset and liability committees and executive committees in subsidiaries
        and by the Group Management Board for HSBC as a whole. A Risk Management
        meeting, chaired by the Group Finance Director, is held each month. The
        Risk Management meeting addresses asset and liability management issues.
        Minutes of the Risk Management meeting are submitted to the Group Management
    Board and the Group Audit Committee.
•
Processes
        are in place to identify new risks from changes in market practices or
        customer behaviours which could expose HSBC to heightened risk of loss
        or reputational damage. During 2005 additional attention was directed
        towards evolving best practice in the areas of internet fraud, counterparty
    risk management
policy
    following the publication of the Corrigan
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report
            in July 2005 and responding to new public policy initiatives governing
    sales practices.
•
Periodic
        strategic plans are prepared for customer groups, global product groups,
        key support functions and certain geographies within the framework of
        the Group Strategic Plan. Operating plans are prepared and adopted by
        all HSBC companies annually, setting out the key business initiatives
    and the likely financial effects of those initiatives.
•
Centralised
        functional control is exercised over all computer system developments
        and operations. Common systems are employed for similar business processes
        where practicable. Credit and market risks are measured and reported
        on in subsidiaries and aggregated for review of risk concentrations on
    a Group-wide basis.
•
Responsibilities
        for financial performance against plans and for capital expenditure,
        credit exposures and market risk exposures are delegated with limits
        to line management in the subsidiaries. In addition, functional management
        in Group Head Office is responsible for setting policies, procedures
        and standards in the following areas of risk: credit risk; market risk;
        liquidity risk; operational risk; IT risk; insurance risk; accounting
        risk; tax risk; legal and regulatory compliance risk; human resources
        risk; reputational risk and purchasing risk; and for certain global product
    lines.
•
Policies
        to guide subsidiary companies and management at all levels in the conduct
        of business to safeguard the Group's reputation are established
        by the Board of HSBC Holdings and the Group Management Board, subsidiary
        company boards, board committees or senior management. Reputational risks
        can arise from social, ethical or environmental issues, or as a consequence
        of operational risk events. As a banking group, HSBC's good reputation
        depends upon the way in which it conducts its business but it can also
        be affected by the way in which clients, to which it provides financial
    services, conduct their business.
•
The internal
        audit function, which is centrally controlled, monitors the effectiveness
        of internal control structures across the whole of HSBC. The work of
        the internal audit function is focused on areas of greatest risk to HSBC
        as determined by a risk-based approach. The head of this function reports
    to the Group Chairman
and
    the Group Audit Committee.
•
Management
        is responsible for ensuring that recommendations made by the internal
        audit function are implemented within an appropriate and agreed timetable.
        Confirmation to this effect must be provided to internal audit. Management
        must also confirm annually to internal audit that offices under their
        control have taken or are in the process of taking the appropriate actions
        to deal with all significant recommendations made by external auditors
    in management letters or by regulators following regulatory inspections.
The Group Audit Committee has kept under review the effectiveness of this system of internal control and has reported regularly to the Board of Directors. The key processes used by the Committee in carrying out its reviews include: regular reports from the heads of key risk functions; the production annually of reviews of the internal control framework applied at Group Head Office and major operating subsidiary level measured against HSBC benchmarks, which cover all internal controls, both financial and non-financial; semi-annual confirmations from chief executives of principal subsidiary companies that there have been no material losses, contingencies or uncertainties caused by weaknesses in internal controls; internal audit reports; external audit reports; prudential reviews; and regulatory reports.
The
      Directors, through the Group Audit Committee, have conducted an annual
      review of the effectiveness of HSBC's system of internal control covering all material controls, including financial, operational and compliance controls and risk management systems. The Group Audit Committee has received confirmation that management has taken or is taking the necessary action to remedy any failings or weaknesses identified through the operation of HSBC's
      framework of controls.
Reputational and operational risks
HSBC regularly
      updates its policies and procedures for safeguarding against reputational
      and operational risks. This is an evolutionary process which
takes account of The Association of British Insurers' guidance on best practice when responding to social, ethical and environmental ('SEE')
risks.
The
      safeguarding of HSBC's reputation is of paramount importance to its
      continued prosperity and is the responsibility of every member of staff.
      HSBC has always aspired to the highest standards of conduct and, as a matter
      of routine, takes account of reputational risks to its business. The training
      of
Directors
on appointment includes reputational matters.
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H S B C   H
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Report
        of the Directors
(
continued
)
Reputational
          risks, including SEE matters, are considered and assessed by the Board,
          the Group Management
          Board, subsidiary company boards, board committees and/or senior management
          during the formulation of policy and the establishment of HSBC standards.
          Standards on all major aspects of business are set for HSBC and for
          individual subsidiary companies, businesses and functions. These policies,
          which
            form an integral part of the internal control systems, are communicated
            through
          manuals and statements of policy and are promulgated through internal
            communications and training. The policies cover SEE issues and set
            out operational procedures
          in all areas of reputational risk, including money laundering deterrence,
          environmental impact, anti-corruption measures and employee relations.
          The policy manuals address risk issues in detail and co-operation between
          head
          office departments and businesses is required to ensure a strong adherence
          to HSBC's risk management system and its corporate social responsibility
          practices.
Internal
      controls are an integral part of how HSBC conducts its business. HSBC's manuals and statements of policy are the foundation of these internal controls. There is a strong process in place to ensure controls operate effectively. Any significant failings are reported through the control mechanisms, internal audit and compliance functions to subsidiary company audit committees and to the Group Audit Committee, which keeps under review the effectiveness of the system of internal controls and reports regularly to HSBC Holdings' Board.
      In addition, all HSBC businesses and major functions are required to review
      their control procedures and to make regular reports about any losses arising
      from operational risks.
HSBC
      provides information in its Corporate Social Responsibility Report and
      website (www.hsbc.com/csr) on
      the extent to which it has complied with its social, ethical and environmental
      risk management policies. Aspects covered include: how HSBC is implementing
      and applying the Equator Principles to manage the environmental and social
      risks in project finance; employee diversity; environmental management;
      and health and safety. HSBC is using the guidelines of the Global Reporting
      Initiative
      in producing its 2005 Corporate Social Responsibility Report. Third party
      scrutiny of the assertions made in the report is provided through an assurance
      process conducted by URS Verification Limited, including a commentary in
      the report and on the HSBC website. HSBC's direct environmental
performance
data is verified by Den Norske Veritas. HSBC also participates in the Dow Jones
Sustainability
  Index, FTSE4Good and Business in the Community's Environment Index. HSBC's
Corporate
  Social Responsibility Report 2005
will be available at
  www.hsbc.com/csrreport from late-April 2006.
Financial
                risk management
The financial risk management objectives and policies of HSBC Holdings and its subsidiary undertakings included in the consolidation, in relation to the use of financial instruments, together with an analysis of the exposure to price, credit, liquidity and cash flow risks, as required under the Companies Act and International Financial Reporting Standards are set out in the risk management section of the Financial Review on pages 115 to 172 and in Note 17 and part of Note 47 on the Financial Statements on pages 285 and 375 respectively.
Health
                and safety
The maintenance
      of appropriate health and safety standards throughout HSBC remains a key
      responsibility of all managers and HSBC is committed
    to actively managing all health and safety risks associated with its business.
      HSBC's objectives are to identify, remove, reduce or control material
      risks of fires and of accidents or injuries to employees and visitors.
Health and Safety Policies, Group standards and procedures are set by Group Fire and Safety and are implemented by Health, Safety and Fire Coordinators based in each country in which HSBC operates.
HSBC
      faces a range of threats from terrorists and criminals across the world.
      In particular, over recent
      years the threat from international terrorism has become significant in
      a number of areas where HSBC operates. This threat has mainly manifested
      itself
      in bomb attacks such as the one in Istanbul in 2003 in which HSBC's
      Turkish headquarters building was attacked. Despite suffering tragic loss
      of life and major damage, existing security measures and well-managed contingency
      procedures ensured the business was able to return to normal operations
      the following day.
Group Security provides regular risk assessments in areas of increased risk to assist management in judging the level of terrorist threat. In addition, Regional Security functions conduct regular security reviews to ensure measures to
protect
    HSBC staff, buildings, assets and information are appropriate for the level
  of threat.
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Communication
                    with shareholders
Communication
      with shareholders is given high priority. Extensive information about HSBC's
      activities is provided in the
Annual Report and Accounts
,
Annual
      Review
and the
Interim Report
which are sent to shareholders
      and are available on www.hsbc.com. There is regular dialogue with institutional
      investors and enquiries from individuals on matters relating to their shareholdings
      and the business of HSBC are welcomed and are dealt with in an informative
      and timely manner. All
shareholders
are encouraged to attend the Annual General Meeting or the informal meeting of
shareholders
  held in Hong Kong to discuss the progress of HSBC.
Directors' interests
According
      to the registers of Directors' interests maintained
      by HSBC Holdings pursuant to section 325 of the Companies Act 1985 and
    section 352 of the Securities and Futures Ordinance of Hong Kong, the Directors
    of
      HSBC Holdings at the year-end had the following interests, all beneficial
      unless otherwise stated, in the shares and loan capital of HSBC and its
associated corporations:
HSBC Holdings ordinary shares of US$0.50
At 31 December 2005
Jointly
Percentage
At
Child
with
of ordinary
1 January
Beneficial
under 18
another
Total
shares
2005
owner
or spouse
Trustee
person
Other
Interests
1
in issue
Sir John Bond
451,531
389,897
3,743
–
121,160
–
514,800
0.00
R K F Ch'ien
47,796
49,835
–
–
–
–
49,835
0.00
J D Coombe
40,659
2
6,000
–
36,195
3
–
–
42,195
0.00
Baroness Dunn
164,411
141,560
–
28,650
3
–
–
170,210
0.00
D J Flint
81,271
54,726
–
27,000
–
–
81,726
0.00
W K L Fung
328,000
328,000
–
–
–
–
328,000
0.00
M F Geoghegan
37,795
73,536
–
–
–
–
73,536
0.00
S K Green
243,659
233,434
16,359
–
45,355
–
295,148
0.00
S Hintze
2,037
2,037
–
–
–
–
2,037
0.00
J
    W J Hughes-Hallett
3,053,983
2
–
–
2,119,229
3
–
–
2,119,229
0.02
A W Jebson
83,628
108,099
–
–
–
–
108,099
0.00
Sir
    John Kemp-Welch
96,800
127,300
7,000
6,000
3
–
–
140,300
0.00
Sir Brian Moffat
11,157
–
–
–
11,632
–
11,632
0.00
Sir
    Mark Moody-Stuart
10,840
5,000
840
5,000
3
–
–
10,840
0.00
S W Newton
5,170
5,391
–
–
–
–
5,391
0.00
H Sohmen
3,270,147
–
1,302,274
–
–
2,067,873
4
3,370,147
0.03
Sir
    Brian Williamson
15,865
16,543
–
–
–
–
16,543
0.00
1
Details
           of executive Directors' other interests in HSBC Holdings ordinary shares of US$0.50 arising from share option plans, The HSBC Share Plan and the HSBC Holdings Restricted Share Plan 2000 are set out in the Directors' Remuneration
    Report on pages 215 to 232.
2
Interests
    at 1 March 2005 – date of appointment.
3
Non-beneficial.
4
Interests held by private investment companies.
Sir
      John Bond has an interest as beneficial owner in £290,000 of HSBC
      Capital Funding (Sterling 1) L.P. 8.208 per cent Non-cumulative Step-up
      Perpetual Preferred Securities, which he held throughout the year.
S
      K Green has an interest as beneficial owner in €75,000 of HSBC Holdings plc 5½ per cent Subordinated Notes 2009 which he held throughout the year. During the year he ceased to have an interest in £100,000
      of HSBC Bank plc 9 per cent
Subordinated Notes 2005.
J
      W J Hughes-Hallett has a non-beneficial interest as Trustee in £4,700,000
      of HSBC Capital Funding (Sterling 1) L.P. 8.208 per cent Non-cumulative
      Step-up Perpetual Preferred Securities, which he acquired during the year.
During
      the year, H Sohmen ceased to have a corporate interest in £1,200,000
      of HSBC Bank plc 9 per cent Subordinated Notes 2005.
As
          Directors of HSBC France, S K Green and M F Geoghegan each have an
interest as beneficial
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H S B C   H
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Report
        of the Directors
(
continued
)
owner
          in one share of €5 in that company, which they held throughout
          the year. The Directors have waived their rights to receive dividends
          on these shares
          and
          have undertaken to transfer these shares to HSBC on ceasing to be Directors
          of HSBC France.
As Directors of HSBC Private Banking Holdings (Suisse), S K Green and M F Geoghegan each have an interest as beneficial owner in one share of CHF1,000, which they held during the year. The Directors have waived their rights to receive dividends on these shares and have undertaken to transfer these shares to HSBC on ceasing to be Directors of HSBC Private Banking Holdings (Suisse).
At
      31 December 2005, the aggregate interests under the Securities and Futures
      Ordinance of Hong Kong of the executive Directors in HSBC Holdings ordinary
      shares of US$0.50 (each of which represents less than 0.01 per cent of
      the shares in
issue,
unless otherwise stated), including interests
arising
      through share option plans, the Restricted Share Plan and The HSBC Share
        Plan are:
        Sir John Bond – 1,663,088 (0.01 per cent of shares in issue); D J
        Flint – 668,647; M F Geoghegan – 549,492; S K Green – 1,097,718
        (0.01 per cent of shares in issue); and A W Jebson –709,751.
No
      directors held any short positions as defined in the Securities and Futures
      Ordinance of Hong Kong. Save as
      stated above and in the Directors' Remuneration Report, none of the
      Directors had an interest in any shares or debentures of any HSBC or associated
      corporation at the beginning or at the end of the year, and none of the
      Directors or members of their immediate family was awarded or exercised
      any right to
      subscribe for any shares or debentures during the year.
Since the end of the year, the interests of each of the following Directors have increased by the number of HSBC Holdings ordinary shares shown against their name:
HSBC
Holdings ordinary shares of US$
0.50
Child
Beneficial
under 18
Jointly with
Beneficiary
owner
or spouse
another person
of a trust
Sir John Bond
67
1
28
2
–
10,846
3
R K F Ch'ien
429
4
–
–
–
Baroness Dunn
1,222
4
–
–
–
D J Flint
492
5
–
–
5,045
6
M F Geoghegan
533
7
–
–
4,106
6
S K Green
2,040
8
141
4
–
6,903
6
A W Jebson
933
4
–
–
5,192
6
Sir Brian Moffat
–
–
100
4
–
S W Newton
46
4
–
–
–
Sir Brian Williamson
143
4
–
–
–
1
Comprises the automatic reinvestment of dividend income by an Individual Savings Account and Personal Equity Plan manager (35 shares), the acquisition of shares in the HSBC Holdings UK Share Ownership Plan through regular monthly contributions (25 shares) and the automatic reinvestment of dividend income on shares held in the plan (7 shares).
2
The automatic reinvestment of dividend income by an Individual Savings Account and Personal Equity Plan manager.
3
Comprises scrip dividend on awards held under The HSBC Share Plan and the HSBC Holdings Restricted Share Plan 2000 (9,915 shares) and on shares held in a Trust (931 shares).
4
Scrip dividend.
5
Comprises scrip dividend on shares held as beneficial owner (425 shares), the acquisition of shares in the HSBC Holdings UK Share Ownership Plan through regular monthly contributions (25 shares), the automatic reinvestment of dividend income on shares held in the plan (7 shares) and by the automatic reinvestment of dividend income by an Individual Savings Account and Personal Equity Plan manager (35 shares).
6
Scrip dividend on awards held under The HSBC Share Plan and the HSBC Holdings Restricted Share Plan 2000.
7
Exercise of an option awarded in 2000 under the HSBC Savings-Related Share Option Plan: International; options over 26 shares lapsed.
8
Comprises scrip dividend on shares held as beneficial owner (2,008 shares), the acquisition of shares in the HSBC Holdings UK Share Ownership Plan through normal monthly contributions (25 shares) and the automatic reinvestment of dividend income on shares held in the plan (7 shares).
S M Robertson held, on his appointment as a Director on 3 January 2006, a non-beneficial interest as Trustee in 36,195 HSBC Holdings ordinary shares.
Since the end of the year, the non-beneficial interests of J W J Hughes-Hallett as Trustee of two
Trusts have decreased by a net 44,194 HSBC Holdings ordinary shares.
There
have been no other changes in Directors' interests from 31 December 2005 to the date of this Report. Any subsequent changes up to the last practicable date before the publication of the 'Notice
212
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of Annual General Meeting' will be set out in the notes
      to that Notice.
At 31 December 2005, Directors and Senior Management held, in aggregate, beneficial interests in 26,043,491 HSBC Holdings ordinary shares (0.2 per cent of the issued ordinary shares).
Employee
    involvement
HSBC Holdings
      continues to regard communication with its employees as a key aspect of
      its policies. Information is given to employees about
      employment matters and about the financial and economic factors affecting
      HSBC's performance through management channels, an intranet site accessible to all HSBC's
      employees worldwide, in-house magazines and by way of attendance at internal
      seminars and training programmes. Employees are encouraged to discuss operational
      and strategic issues with their line management and to make suggestions
      aimed at improving performance. The involvement of employees in the performance
      of HSBC is further encouraged through participation in bonus and share
      plans
      as
      appropriate.
About
        half of all HSBC employees now participate in one or more of HSBC's
        employee share plans.
Employment
    of disabled persons
HSBC Holdings continues to be committed to providing equal opportunities to employees. The employment of disabled persons is included in this commitment and the recruitment, training, career development and promotion of disabled persons is based on the aptitudes and abilities of the individual. Should employees become disabled during employment, every effort is made to continue their employment and, if necessary, appropriate training is provided.
Supplier
    payment policy
HSBC Holdings subscribes to the Better Payment Practice Code for all suppliers, the four principles of which are: to agree payment terms at the outset and stick to them; to explain payment procedures to suppliers; to pay bills in accordance with any contract agreed with the supplier or as required by law; and to tell suppliers without delay when an invoice is contested and settle disputes quickly.
Copies of, and information about, the Code are available from: The Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET; and the internet at www.dti.gov.uk/publications.
It
        is HSBC Holdings' practice to organise payment to its suppliers through a central accounts function operated by its subsidiary, HSBC Bank. Included in the balance with HSBC Bank is the amount due to trade creditors which, at 31 December 2005, represented 22 days' average
        daily purchases of goods and services received from such creditors, calculated
        in accordance with the Companies Act 1985, as amended by Statutory Instrument
        1997/571.
Notifiable
    interests in share capital
According to the register maintained by HSBC Holdings under section 211 of the Companies Act 1985:
•
Legal and
        General Investment Management Limited gave notice on 11 June 2002 that
        it had an interest in 284,604,788 HSBC Holdings ordinary shares, representing
      3.01 per cent of the ordinary shares in issue at that date;
•
Barclays
        PLC gave notice on 2 June 2005 that it had an interest in 351,871,399
        HSBC Holdings ordinary shares representing 3.14 per cent of the ordinary
      shares in issue on that date; and
•
Credit
        Suisse First Boston gave notice on
30
        November 2005 that it had an interest in 553,491,660 HSBC Holdings ordinary
        shares, representing 4.89 per cent of the ordinary shares in issue at
      that date.
There are no notifiable interests in the equity share capital recorded in the register maintained under section 336 of the Securities and Futures Ordinance of Hong Kong.
In compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited at least 25 per cent of the total issued share capital of HSBC Holdings has been held by the public at all times during 2005 and up to the date of this Report.
Dealings
    in HSBC Holdings shares
Except for dealings as intermediaries by HSBC Bank, HSBC Financial Products (France) and The Hongkong and Shanghai Banking Corporation, which are members of a European Economic Area exchange, neither HSBC Holdings nor any subsidiary undertaking has bought, sold or redeemed any securities of HSBC Holdings during the year ended 31 December 2005.
Donations
During the year, HSBC made charitable donations totalling US$81.4 million. Of this amount,
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H S B C   H
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Report
        of the Directors
(
continued
)
US$28.9 million was given for charitable purposes in the United Kingdom.
No political donations were made during the year.
At
      the Annual General Meeting in 2003 shareholders gave authority for HSBC
      Holdings and HSBC Bank to make
      EU political donations and incur EU political expenditure up to a maximum
      aggregate sum of £250,000 and £50,000 respectively over a four-year
      period as a precautionary measure in light of the wide definitions in The
      Political Parties, Elections and Referendums Act 2000. These authorities
      have not been used.
Annual
      General Meeting
The Annual General Meeting of HSBC Holdings will be held at the Barbican Hall, Barbican Centre, London EC2 on Friday 26 May 2006 at 11.00am.
An informal meeting of shareholders will be held at Level 28,
      1 Queen's Road Central, Hong Kong on Tuesday 23 May 2006 at 4.30pm.
A live webcast of the Annual General Meeting will be available on www.hsbc.com. From shortly after the conclusion of the Meeting until 30 June 2006 a recording of the proceedings will be available on www.hsbc.com.
Auditor
KPMG Audit Plc has expressed its willingness to continue in office. The Group Audit Committee and the Board recommend that it be reappointed. A resolution proposing the reappointment of KPMG Audit Plc as auditor of HSBC Holdings and giving authority to the Group Audit Committee to determine its remuneration will be submitted to the forthcoming Annual General Meeting.
On
    behalf of the Board
R
    G Barber,
Secretary
6
    March 2006
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H S B C   H O L D
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Directors' Remuneration
  Report
Remuneration
      Committee
The Remuneration Committee meets regularly to consider human resource issues, particularly terms and conditions of employment, remuneration, retirement benefits, development of high
potential employees and key succession planning. The Remuneration Committee seeks to respond to the variety of environments and circumstances which are faced by different businesses in different markets at different times and has in place
appropriate policies and procedures to monitor the size of the potential remuneration awards and resulting company liabilities. The Remuneration Committee reviews the incentive plans on an ongoing basis to ensure that they remain effective and
appropriate to HSBC's circumstances and prospects.
The members of the Remuneration Committee throughout 2005 were Sir Mark Moody-Stuart (Chairman), W K L Fung, S Hintze and Sir John Kemp-Welch. J D Coombe has
been appointed a member of the Committee with effect from 1 June 2006.
There were seven meetings of the Remuneration Committee during 2005. S Hintze, Sir Mark Moody-Stuart and Sir John Kemp-Welch attended all of these meetings
and W K L Fung attended six meetings. Following each meeting the Committee reports to the Board on its activities. The terms of reference of the Committee are available at www.hsbc.com/committeer.
Towers
  Perrin, a firm of specialist human resources consultants, has been appointed
  by the Committee to provide independent advice on executive remuneration issues.
  As a global firm, Towers Perrin also provides other remuneration, actuarial
  and retirement consulting services to various parts of HSBC. Other than the
  provision of expert advice in these areas to the Remuneration Committee and
  to HSBC, Towers Perrin have no connection with HSBC. Other consultants are used
  from time to time to validate their findings. The Remuneration Committee also
  receives advice from the Group General Manager, Human Resources, J C S Rankin
  until 31 December 2005 and P W Boyles since 1 January 2006, and the Senior Executive,
  Group Reward Management, P M Wood.
General
      Policy on Employees
As with most businesses, HSBC's performance depends on the quality and commitment of its people. Accordingly, the Board's stated strategy is to attract, retain and motivate the
very best people.
In a business that is based on trust and relationships, HSBC's broad policy is to look for people who want to make a long-term career with the
organisation since trust and relationships are built over time.
Remuneration is an important component in people's decisions on which company to join, but it is not the only one; it is HSBC's experience that
people are attracted to an organisation with good values, fairness, the potential for success and the scope to develop a broad, interesting career.
Within the authority delegated by the Board of Directors, the Remuneration Committee is responsible for determining the remuneration policy of HSBC including
the terms of bonus plans, share plans and other long-term incentive plans, and for agreeing the individual remuneration packages of executive Directors and other senior Group employees. No Directors are involved in deciding their own
remuneration.
The
  Remuneration Committee applies the following key principles:
•
to ensure
      that the total remuneration package
(salary,
      bonus, long-term incentive awards and
other benefits) is competitive
      in relation to
comparable
      organisations in each of the
countries or regions in which HSBC operates;
•
to offer
      fair and realistic salaries with an
important
      element of variable pay, differentiated
by performance;
•
through
      awards of shares (and in limited
circumstances,
      share options) to recognise high
performance and retain key talent;
      and
•
since 1996,
      to follow a policy of moving
progressively
      from defined benefit to defined
contribution Group pension schemes
      for new
employees
      only.
In line
      with these principles:
•
employees'
      salaries are reviewed annually in the
context
      of individual and business performance,
market practice, internal
      relativities and
competitive
      market pressures. Allowances and
benefits are largely determined
      by local market
practice;
•
employees
      participate in various bonus
arrangements.
      The level of performance-related
variable pay depends upon the
      performance of
constituent
      businesses and the individual
concerned. Variable bonus plans
      emphasise
revenue
      growth whilst retaining a strong link to
expense control; other key measures
      taken into
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H S B C   H O L
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Directors' Remuneration
  Report
(continued)
account
      in determining individual bonus levels
include
      customer relationships; full utilisation of
professional skills; and adherence
      to HSBC's
ethical
      standards, internal controls and
procedures. Bonus ranges are
      reviewed in the
context
      of prevailing market practice; and
•
HSBC has
      a long history of paying close
attention
      to its customers in order to provide
value for shareholders. This
      has been achieved
by
      ensuring that the interests of HSBC and its
employees are aligned with those
      of its
shareholders
      and that HSBC's approach to risk
management serves the interests
      of all.
Accordingly,
      employees are encouraged to
participate
      in the success they help to create,
through participating in the
      HSBC Holdings
savings-related
      share option plans and in local
share ownership and profit sharing
arrangements.
Following a comprehensive review of share-based remuneration arrangements, The HSBC Share Plan was approved at the 2005 Annual General Meeting. The
arrangements for the most senior executives of HSBC are described under 'Long-term incentive plan' on page 219.
Below
     the senior executive level and in the context of an employee's total
     remuneration  package, the practice of awarding share options at all levels
     within HSBC has
  been reviewed.
Commencing
   with awards made in 2005, restricted shares will be granted to a substantially

  smaller number of executives than those who previously received share options,
   with awards focused on those individuals who bring key talents and high levels

  of performance to the Group. These awards will normally vest after three years,
   subject to the individual remaining in employment. Awards of share options
  will
  only be granted in limited circumstances. For those who will normally no longer
   be eligible to receive awards of shares or share options, variable bonus arrangements

  have been reviewed and enhanced, as appropriate, taking account of local markets.
   Such changes may include an element of deferral.
In 2003, under the HSBC Holdings Group Share Option Plan, share option awards were made to some 35,000 high performing employees (approximately the top 20
per cent of performers) below senior management who are still with HSBC. The awards included those at the most junior levels in the organisation. Of the awards of share options, over 95 per cent were granted subject to the achievement of the same
performance conditions as apply to awards of shares under the HSBC Holdings
Restricted Share Plan 2000 (as described under 'Arrangements from 2000-2004' on pages 221 to 223, below). In addition, in some areas, performance was rewarded by bonuses rather
than share options. Awards of share options with performance conditions were relatively modest, but form an important part of performance motivation of frontline staff. The range of awards was up to 10,000 shares under option with an average award
of 1,100. With a recent share price of £9.50 and an option price of £6.91 this would translate to an average gain of £2,850. Some 60 per cent of those granted awards in 2003 received awards of 1,000 shares under option or
fewer.
The Total Shareholder Return (TSR) comparison with the defined Benchmark is not due to be made until 31 March 2006. As at 28 February 2006 HSBC's TSR,
while showing growth of 67 per cent since the beginning of the measurement period in March 2003, is lower than the Benchmark TSR. A performance condition based on a single TSR test against a comparator group is very sensitive to the relative
position at the start of the measurement period. HSBC's share price at the start of the measurement period for the 2003 awards under the HSBC Holdings Group Share Option Plan was at an unusually high level compared to historical relationships
within the comparator group. Several companies in the comparator group have subsequently recovered from the historically low ratings they experienced in 2003, thereby affecting HSBC's relative TSR performance over the measurement
period.
While not currently meeting the TSR performance condition for the 2003 awards under the HSBC Holdings Group Share Option Plan, HSBC Holdings has delivered
impressive and sustained performance and shareholder returns over the same period. EPS for 2002 (which was calculated on a UK GAAP basis, excluding goodwill amortisation) was US$0.76 and for 2005 (now prepared under IFRSs) it was US$1.36,
representing an increase of 79 per cent. Dividends per share have grown by 38 per cent over the same period. The cash return on cash invested has improved from 12.9 per cent in 2002 to 15.7 per cent in 2005.
In
     light of the above, the Committee has decided that if the performance condition

  is not satisfied at the end of March 2006, the Committee will exercise its
    discretion  to waive the performance condition in respect of the 2003 awards
    under the HSBC Holdings
     Group Share Option Plan. This waiver will not apply to awards with performance

  conditions which were granted to senior executives under the
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French sub-plan of the HSBC Holdings Group Share Option Plan.
To encourage greater participation in the HSBC Holdings Savings-Related Share Option Plan: International, two amendments were approved at the 2005 Annual
General Meeting. The first was the introduction of the facility to save and have option prices expressed in US dollars, Hong Kong dollars and euros as well as in pounds sterling. The maximum savings limit of £250 per month will continue to
apply but be converted to the other currencies on a consistent and appropriate date. The second amendment gives individuals the choice of options over one year in addition to three and five year terms. This change carries tax advantages in certain
jurisdictions.
The impact on earnings per share of granting share options which are to be satisfied by the issue of new shares is shown in diluted earnings per share on the
face of the consolidated income statement, with further details disclosed in Note 12 on the Financial Statements on page 276. The effect on basic earnings per share of exercising all outstanding share options would be to dilute it by 0.42 per
cent.
Employee share plans are subject to the following limits on the number of HSBC Holdings ordinary shares that may be subscribed for. In any 10-year period not
more than 10 per cent of the HSBC Holdings ordinary shares in issue from time to time (approximately 1,137 million at 6 March 2006) may in aggregate become issuable pursuant to the grant of options or be issued other than pursuant to options under
all-employee share plans. In any 10-year period not more than 5 per cent of the HSBC Holdings ordinary shares in issue from time to time (approximately 568 million ordinary shares at 6 March 2006) may in aggregate be put under option under The HSBC
Share Plan or be issuable pursuant to the HSBC Holdings Group Share Option Plan, the HSBC Executive Share Option Scheme, The HSBC Holdings Restricted Share Plan 2000 or The HSBC Share Plan. The number of HSBC Holdings ordinary shares that may be
issued on exercise of all options granted on or after 27 May 2005 under The HSBC Share Plan and any other plans must not exceed 1,119,000,000 HSBC Holdings ordinary shares. In the 10-year period to 31 December 2005, less than 600,000,000 HSBC
Holdings ordinary shares had been issued or could become issuable under all-employee share plans and less than 350 million HSBC Holdings ordinary shares had been issued or could become issuable under discretionary employee share plans, including the
HSBC Holdings Group Share Option Plan, the HSBC Holdings Restricted Share Plan 2000 and The HSBC Share Plan.
The new UK pensions tax regime introduced by the Finance Act 2004 means that the current pension arrangements may cease to be tax effective for some
employees. The changes become effective from 6 April 2006. In anticipation of these changes, the Remuneration Committee established some principles when formulating its policy response:
1.
the cost
      of executive pension provision should not increase;
2.
HSBC should
      not compensate individuals for changes in the tax regime; and
3.
HSBC should
      make available an effective alternative form of reward where current pension
      provision is no longer tax effective for senior executives.
After taking advice and considering market data, all UK employees whose pension arrangements may cease to be a tax effective reward mechanism with defined
benefit pension provision will be offered the following choices:
1.
retain
      their current pension plan membership; or
2.
opt-out
      of the current pension plan to receive either (i) a salary supplement, paid
      monthly, in lieu of pension provision; or (ii) a pension promise from HSBC
      that will pay the same benefit as if the executive had continued in the
      current plan (provided on an unfunded basis).
UK employees whose pension arrangements may cease to be a tax effective reward mechanism with defined contribution pension provision will be offered the
following choices:
1.
retain
      their current pension plan membership; or
2.
a salary
      supplement, paid monthly, in lieu of pension provision of the same amount
      as the current employer pension contribution.
Directors
      and Senior Management
HSBC's operations are substantial, diverse and international; for example, over 79 per cent of profit before tax is derived from outside the United Kingdom.
The HSBC Holdings' Board comprises 15 non-executive Directors and five executive Directors. With businesses in 76 countries and territories, HSBC aims
to attract Directors with a variety of experience, both in its key areas of activity and internationally. The Board currently includes nationals of four different countries. The five executive Directors, seven Group Managing Directors and 29 Group
General Managers have in total more than 945 years of service with HSBC.
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Directors' Remuneration
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(continued)
Directors' fees
Directors' fees are regularly reviewed and compared with other large international companies. The current fee, which was approved by shareholders in 2004, is £55,000 per annum.
With effect from 1 January 2005, all executive Directors waived their rights to receive a Director's fee from HSBC Holdings. Having considered comprehensive data it is clear that the current Director's fee is below the level paid in other
major UK companies. The approval of shareholders will therefore be sought at the 2006 Annual General Meeting for the fee for non-executive Directors to be increased to £65,000 per annum with effect from 1 January 2006.
In addition, non-executive Directors receive, from 1 January 2006, the following fees:
Chairman,
      Audit Committee
£50,000
        p.a.
Member,
      Audit Committee
£20,000
      p.a.
During 2005, seven Audit Committee meetings were held. A Director's commitment to each meeting, including preparatory reading and review, can be 15 hours or
more.
Chairman,
      Remuneration Committee
£40,000
        p.a.
Member,
      Remuneration Committee
£20,000
      p.a.
During
  2005, seven meetings of the Remuneration Committee were held.
Chairman,
        Nomination Committee
£30,000
        p.a.
Member,
        Nomination Committee
£20,000
        p.a.
During
  2005, three meetings of the Nomination Committee were held.
Chairman,
      Corporate Social
Responsibility
      Committee
£30,000
      p.a.
Member,
      Corporate Social
Responsibility
      Committee
£20,000
      p.a.
During 2005, four meetings of the Corporate Social Responsibility Committee were held.
Executive
Directors
The executive Directors are experienced executives with detailed knowledge of the financial services business in various countries. In most cases there has been a need to attract them
from abroad to work in the United Kingdom.
Consistent
  with the principles applied by the Committee to employees generally, there are
  four key components to the executive Directors' remuneration:
•
salary;
•
annual cash
      bonus;
•
long-term
      incentives; and
•
pension.
To
      ensure that the executive Directors'
remuneration packages are competitive having regard to the broad international nature of the Group, each year the Remuneration Committee considers market data on senior executive
remuneration arrangements within organisations that are considered key competitors.
In
  2005, a review of the competitive peer groups was undertaken to ascertain their
  continued relevance to roles at HSBC Holdings. The review resulted in a slight
  change in the composition and emphasis of the peer groups so that for the 2006
  review they consisted primarily of:
•
FTSE30 companies
      with significant
international
      operations in the US and/or in
Asia-Pacific. This peer group
      comprised 22
companies
      and representative companies
include: Anglo American plc, AstraZeneca plc,
Barclays
      PLC, BP p.l.c., Diageo plc,
GlaxoSmithKline plc, Prudential plc, Reckitt
Benckiser
      plc, Rio Tinto plc, The Royal Bank of
Scotland Group plc, Royal Dutch Shell plc,
Standard
      Chartered PLC, Unilever PLC and
Vodafone
      Group plc.
•
European
      banks with significant domestic and/or
global
      operations/influences. These banks
include ABN AMRO Holding N.V.,
      Banco
Bilbao
      Vizcaya Argentaria S.A., Banco
Santander Central Hispano S.A., Credit Suisse
Group
      and Deutsche Bank AG.
Although not used for setting remuneration benchmarks, the Remuneration Committee also considers it important to be mindful of trends in the level and
structure of executive reward in the United States banking sector. Market information is monitored for major US institutions of a comparable size and complexity to HSBC Holdings, including: Bank of America Corporation, Citigroup Inc. and JPMorgan
Chase & Co.
The level of awards available to the executive Directors under the annual cash bonus scheme and as Performance Shares is entirely dependent on performance.
Remuneration policy for executive Directors is intended to provide competitive rates of base salary but with the potential for the majority of the value of the remuneration package to be delivered in the form of both short and long-term incentives.
This typically results in base salary comprising around 30 per cent of total direct pay and the remaining 70 per cent split between annual bonus and the expected value of Performance Share awards.
Each component of executive Directors' remuneration is explained in detail below as it
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applies to 2006 and, as far as possible, for subsequent years. Any changes in policy for subsequent years will be described in future reports on Directors' remuneration.
Salary
The Committee reviews salary levels for executive Directors each year in the same context as other employees. With reference to market practice and taking account of the international
nature of the Group, the Committee benchmarks the salary of each Director and member of Senior Management against those of comparable executives in large, diverse companies.
Base salaries with effect from March 2006 will be:
Sir
      John Bond
£
1,400,000
D
      J Flint
£
575,000
M
      F Geoghegan
£
1,000,000
S
      K Green
£
1,250,000
A
      W Jebson
£
550,000
To assist with a smooth transition to the revised organisation structure announced in November 2005 and with the aim of having only one salary adjustment per
year, the salary increases for S K Green and M F Geoghegan incorporate adjustments for their new appointments as Group Chairman and Group Chief Executive respectively.
Annual cash bonus
Cash bonuses for executive Directors are based on two key factors: individual performance, taking into account, as appropriate, results against plan of the business unit or performance of
the support function for which the individual is responsible; and Group performance, measured by comparing operating profit before tax with plan. The Remuneration Committee has discretion to eliminate extraordinary items when assessing bonuses, if
the main cause did not arise during the current bonus year.
Measurement against these key performance factors may result in discretionary cash bonuses of up to 250 per cent of basic salary for executive
Directors.
Long-term incentive plan
Long-term incentive plans are designed to reward the delivery of sustained financial growth of HSBC. So as to align the interests of the Directors and senior employees more closely with
those of shareholders, the vesting of Performance Share awards is subject to the attainment of predetermined performance criteria.
As part of the comprehensive review of share-based remuneration in 2004-2005, the Remuneration Committee considered whether the continued use of Performance
Shares was appropriate. The Committee considered several other types of arrangement but concluded that Performance Shares remain the most appropriate vehicle for HSBC's executive Directors and Senior Management.
Following approval at the 2005 Annual General Meeting, The HSBC Share Plan has replaced the HSBC Holdings Restricted Share Plan 2000 and the HSBC Holdings
Group Share Option Plan as the plan under which long-term incentive awards are made.
The vesting of Performance Share awards under The HSBC Share Plan is more challenging and highly geared to performance than under the previous arrangements.
Vesting is now based on two independent measures, relative TSR and growth in earnings per share, both of which are considered by the Remuneration Committee to be key measures of the Group's overall business success.
Awards under The HSBC Share Plan can be up to a maximum of seven times salary. Whilst having flexibility to make awards at this level in certain exceptional
circumstances, the Remuneration Committee does not intend seven times salary to be the normal level of award. The average face value of the awards proposed for executive Directors is 2.3 times base salary; proposed individual awards are set out in
the table below. The average face value of awards proposed for 2006 for Group Managing Directors and Group General Managers is 1.6 times salary; no award is higher than four times salary.
Further details of the performance conditions and vesting arrangements for The HSBC Share Plan are set out below. A summary of the arrangements relevant to
previous awards of Performance Shares under The HSBC Holdings Restricted Share Plan 2000 is also given.
2006 awards
The Remuneration Committee is proposing that the conditional awards shown in the table below should be made to executive Directors in 2006. The table shows the face value of the full
conditional awards and their approximate expected value.
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Directors' Remuneration
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(continued)
Face
Expected
value
value
£000
£000
D
        J Flint
1,600
704
M
        F Geoghegan
2,000
880
S
        K Green
2,500
1,100
Total
6,100
2,684
The higher face value of these awards reflects the significantly more challenging vesting schedule of The HSBC Share Plan where maximum value will only be
released to the individual if Group performance is at a very high level.
The Trustee to the Plan will be provided with funds to acquire HSBC Holdings ordinary shares at an appropriate time after the announcement of the annual
results.
Sir John Bond and A W Jebson, who are to retire at the conclusion of the forthcoming Annual General Meeting, will not receive long-term incentive awards in
2006.
Performance
  conditions
Awards of
    Performance Shares under The HSBC Share Plan are divided into two equal parts
    subject to separate performance conditions measured over a three-year performance
    period ('the performance period'):
•
the Total
        Shareholder Return award ('TSR
award'):
        one half of the award of Performance
Shares will be subject to a relative
        TSR
measure.
        TSR is defined as the growth in share
value and declared dividend income,
        measured
in
        sterling, during the relevant period. In
calculating TSR, dividend income
        is assumed to
be
        reinvested in the underlying shares. As the
comparator group includes companies
        listed on
overseas
        markets, a common currency is used to
ensure that TSR is measured on
        a consistent
basis;
        and
•
the earnings
        per ordinary share award ('EPS
award'):
        the other half of the Performance Share
award will be based upon
        the absolute growth in
EPS
        achieved by HSBC Holdings. For this
purpose, EPS means the profit
        attributable to the
shareholders
        (expressed in US dollars), divided
by the weighted average number
        of ordinary
shares
        in issue and held outside the Group
during the year in question.
The TSR award is based on HSBC's ranking against a comparator group of 28 major banks. The comparator group will generally comprise the largest banks in
the world measured in terms of market capitalisation, having regard to the geographic
spread and the nature of the activities of each bank. The Remuneration Committee will use these criteria in selecting any replacements to the comparator group that may be necessary during
the performance period, for example because a bank ceases to exist or to be quoted or if its relevance to HSBC as a comparator significantly diminishes.
The TSR comparator group at 6 March 2006 comprises ABN AMRO Holding N.V., Banco Bilbao Vizcaya Argentaria S.A, Banco Santander Central Hispano S.A., Bank of
America Corporation, The Bank of New York Company, Inc., Barclays PLC, BNP PARIBAS S.A., Citigroup Inc., Crédit Agricole S.A., Credit Suisse Group, Deutsche Bank AG, HBOS plc, JPMorgan Chase & Co., Lloyds TSB Group plc, Mitsubishi Tokyo
Financial Group, Inc., Mizuho Financial Group, Inc., Morgan Stanley, National Australia Bank Limited, Royal Bank of Canada, The Royal Bank of Scotland Group plc, Société Générale, Standard Chartered PLC, UBS AG,
UniCredito Italiano S.p.A., US Bancorp, Wachovia Corporation, Wells Fargo & Company and Westpac Banking Corporation.
The extent to which the TSR award will vest will be determined on a sliding scale based on HSBC Holdings' relative TSR ranking against the comparator
group. The opening calculation of the share price component within HSBC Holdings' TSR will be the average market price over the 20 trading days commencing on the day when the annual results are announced, which in 2006 is 6 March. The starting
point will be, therefore, the average over the period 6 March to 31 March 2006 inclusive. The end point will be the average market price over the 20 trading days commencing on the day on which the annual results are announced three years later. TSR
for comparator group constituents will be calculated over the same two periods.
For TSR performance in line with the bank ranked 14th, only 30 per cent of the conditional TSR award will vest; if HSBC's performance is in line with or
above the bank ranked 7th in the ranked list all of the TSR award shares will vest.
Vesting between the 14th and 7th ranked banks will be based on HSBC's position against the ranked list. In simple terms, the percentage vesting will
start at 30 per cent and will rise in 10 per cent increments for each position that HSBC achieves higher than the 14th bank in the ranked list until full vesting is achieved for TSR performance equal to or greater than the 7th bank in the ranked
list. Where HSBC's performance falls between these incremental steps, account will be taken of HSBC's TSR performance
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relative to the banks immediately above and below it.
For example, if HSBC's TSR falls half way between the bank ranked 12th (where, a release of 50 per cent of the TSR award would occur) and the bank
ranked 13th (where a release of 40 per cent of the TSR award would occur), then the actual proportion of the TSR award released would be 45 per cent, i.e. half way between 40 per cent and 50 per cent.
For the EPS award, the base measure shall be EPS for the financial year preceding that in which the award is made ('the base year'). EPS will then
be compared with the base year over three consecutive financial years commencing with the year in which the award is made. Incremental EPS shall be calculated by expressing as a percentage of the EPS of the base year the difference each year of the
three-year performance period between the EPS of that year and the EPS of the base year (with a negative percentage for any year in which the EPS is less than the EPS of the base year). These percentages will then be aggregated to arrive at the
total incremental EPS for the performance period. In the event that the published EPS for the base year is restated during the performance period to adjust for changes in accounting standards, that restated EPS will be used for the purposes of the
EPS performance condition.
The percentage of the conditional EPS award vesting will depend upon the absolute growth in EPS achieved over the three years. 30 per cent of the EPS award
will vest if the incremental EPS over the performance period is 24 per cent or more.
The percentage of shares vesting will rise on a straight line proportionate basis to 100 per cent if HSBC's incremental EPS over the performance period
is 52 per cent or more.
No element of the TSR award will vest if over the three-year performance period HSBC's TSR is below that of the bank ranked 14th in the comparator group
list and no element of the EPS award will vest if HSBC's incremental EPS over the performance period is less than 24 per cent.
To the extent that the performance conditions have not been met at the third anniversary, the shares awarded will be forfeited.
In addition, awards will not vest unless the Remuneration Committee is satisfied that HSBC Holdings' financial performance has shown a sustained
improvement in the period since the award date.
In determining whether HSBC has achieved a sustained improvement in performance the Remuneration Committee will take account of all relevant factors but in
particular the historical comparison against the comparator group in the following areas:
1.
revenue
        growth;
2.
revenue
        mix;
3.
cost
        efficiency;
4.
credit
        performance as measured by risk-adjusted revenues; and
5.
cash
        return on cash invested, dividend performance and total shareholder return.
Following the three-year performance period, the conditions applying to awards of Performance Shares under The HSBC Share Plan will be tested and vesting
will take place shortly afterwards. Shares released will include additional shares equivalent to the value of the dividends payable on the vested shares over the performance period, where permitted by the laws of the relevant
jurisdiction.
If events occur which cause the Remuneration Committee to consider that a performance condition has become unfair or impractical, the right is reserved to
the Remuneration Committee, if it considers it appropriate to do so, to amend, relax or waive the condition.
Awards will vest in full immediately in cases of death. In the event of redundancy, retirement on grounds of injury or ill health, early retirement by
agreement, normal retirement and where a participant ceases to be employed by HSBC, awards will normally vest at the end of the vesting period on a time-apportioned basis to the extent that the performance conditions have been satisfied. In the
event of a change of control, awards will normally vest immediately and on a time-apportioned basis to the extent that the TSR performance condition has been satisfied. Awards will normally be forfeited if the participant is dismissed or resigns
from HSBC. In all these circumstances the Committee retains discretion to ensure fair and reasonable treatment.
Arrangements from 2000-2004
For awards made from 2000 to 2004, vesting was linked to the attainment of predetermined TSR targets over a three-year period from date of award as set out below.
The TSR performance condition for awards of Performance Shares remained the same from 1999 to 2003. For awards made in 2004, changes were made
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(continued)
to the peer group and re-testing provisions were eliminated such that awards will lapse if the performance condition is not satisfied after the initial three-year performance
period.
A benchmark for HSBC Holdings' TSR, weighted by market capitalisation, was established which takes account of the TSR performance of:
1.
a
        peer group of nine banks weighted by market capitalisation which were
        considered most relevant to HSBC in terms of size and international scope.
        For performance periods up to and including the one beginning in 2003,
        this group comprised ABN AMRO Holding N.V., The Bank of East Asia, Limited,
        Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., Lloyds TSB
        Group plc, Mitsubishi Tokyo Financial Group Inc., Oversea-Chinese Banking
        Corporation Limited and Standard Chartered PLC. To be more relevant to
        HSBC in terms of size and international scope, this peer group was amended
        for conditional awards made in 2004 by the replacement of Lloyds TSB Group
        plc, Oversea-Chinese Banking Corporation Ltd., Mitsubishi Tokyo Financial
        Group Inc. and The Bank of East Asia, Limited with Bank of America Corporation,
        The Royal Bank of Scotland Group plc, Banco Santander Central Hispano
        S.A. and UBS AG;
2.
the
        five largest banks from each of the US, the UK, continental Europe and
        the Far East, other than any within paragraph 1 above, weighted by market
        capitalisation; and
3.
the
        banking sector of the Morgan Stanley Capital International World Index,
        excluding any within paragraph 1 or paragraph 2 above, weighted by market
        capitalisation.
By combining the weighted average TSR for each of the above three groups and weighting that average so that 50 per cent is applied to paragraph 1, 25 per
cent is applied to paragraph 2 and 25 per cent is applied to paragraph 3, a single TSR benchmark for market comparison was determined.
The extent to which each award will vest will be determined by reference to HSBC Holdings' TSR measured against the TSR benchmark. For each award the
opening calculation of the share price component within HSBC Holdings' TSR was the average market price over the 20 trading days commencing on the day when the annual results were announced. TSR for the benchmark constituents was based on their
published share prices on the 20th trading day after the annual results were announced. If HSBC Holdings' TSR over the
performance
    period exceeds the benchmark TSR, awards with a value, at the date of grant,
    of up to 100 per cent of the individual's earnings (base salary and bonus
    in respect of the previous performance year), will vest. For higher value
    awards, the greater of 50 per cent of the award or the number of shares equating
    at the date of grant to 100 per cent of the individual's earnings, will
    vest at this level of performance. If HSBC Holdings' TSR over the performance
    period places it within the upper quartile of the ranked list of the banks
    comprising the benchmark, these higher value awards will vest in full. For
    performance between the median and the upper quartile, vesting will be on
    a straight-line basis.
The Performance Shares awarded in 2000 passed their three-year TSR performance condition in March 2003 and vested on the fifth anniversary of the award, 10
March 2005. The Performance Shares awarded in 2001 and 2002 have passed their three-year TSR performance conditions and will vest on the fifth anniversaries of the awards, 13 March 2006 and 8 March 2007 respectively.
For awards made in 2003 the initial performance period is three years. If the upper quartile performance target is achieved at the third anniversary of the
date of award then an additional award equal to 20 per cent of the initial Performance Share award will be made and will vest at the same time as the original award to which it relates. However, regardless of whether the upper quartile is achieved,
full vesting and transfer of the shares will not generally occur until the fifth anniversary of the date of grant. For awards made in 2004 the conditions are the same but, if the performance test is not passed at the third anniversary, the shares
will be forfeited.
In addition to these performance conditions, none of the outstanding awards will vest unless the Remuneration Committee is satisfied that, during the
performance period, HSBC has achieved sustained growth. The Remuneration Committee retains discretion to recommend early release of shares awarded in certain circumstances, for example, retirement, redundancy or ill health.
Where events occur which cause the Remuneration Committee to consider that the performance conditions have become unfair or impractical the right is reserved
for the Committee to amend or substitute the performance conditions. The Committee believes that the continued use of a single TSR measure in the awards made in 2003 and 2004 may give rise to unfairness given that EPS for 2002 (which was calculated
on a UK GAAP basis,
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excluding goodwill amortisation) was US$0.76 and for 2005 (now prepared under IFRSs) it was US$1.36, representing an increase of 79 per cent. Dividends per share have grown by 38
per cent over the same period and the share price has risen by 51.3 per cent from 31 March 2003 to 28 February 2006. The cash return on cash invested has improved from 12.9 per cent in 2002 to 15.7 per cent in 2005. The Committee intends to
undertake a review of the appropriateness of the single TSR performance measure for Performance Share awards made in 2003 and 2004. As part of this review the Committee will ensure appropriate consultation is undertaken with shareholders and their
representatives.
Total Shareholder Return
The graphs below show HSBC Holdings' TSR performance against the benchmark TSR for Performance Shares awarded in March 2002 (graph 1), the Financial Times-Stock Exchange
('FTSE') 100 Index (graph 2), the Morgan Stanley Capital International ('MSCI') World Index (graph 3) and MSCI Financials Index (graph 4) over the three-year period to March 2005. These measures have been chosen as they are the
main published indices against which HSBC monitors its performance.
Graph 1: HSBC TSR and Benchmark TSR
Graph 2: HSBC TSR and FTSE 100 Index
Graph 3: HSBC TSR and MSCI World Index
Graph 4: HSBC TSR and MSCI Financials Index
Pursuant to the Directors' Remuneration Report Regulations 2002, graph 5 below shows HSBC Holdings' TSR performance against the FTSE 100 Index, for
the five-year period ended 31 December 2005. The FTSE 100 has been chosen as this is a recognised broad equity market index of which HSBC Holdings is a member.
Graph 5: HSBC TSR and FTSE 100 Index
Source: Datastream
Pensions
The pension entitlements earned by the executive Directors during the year are set out on pages 228 and 229.
Service contracts and terms of appointment
HSBC's
    policy is to employ executive Directors on one-year rolling contracts although,
    on recruitment, longer initial terms may be approved by the Remuneration Committee.
    The Remuneration Committee will, consistent with the best interests of
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the Group, seek to minimise termination payments.
No current executive
    Director has a service contract with HSBC Holdings or any of its subsidiaries
    with a notice period in excess of one year or with provisions for predetermined
    compensation on termination which exceeds one year's salary and benefits in kind. There are no provisions for compensation upon early termination of any current executive Directors' service
  contracts.
In the case of W F Aldinger, who retired as a Director on 29 April 2005, there was an exception to the general policy on Directors' service contracts.
Details of the arrangements relating to W F Aldinger, which were also set out in the 2004 Directors' Remuneration Report, are set out below. W F Aldinger entered into a new employment agreement with HSBC Finance on 14 November 2002 ('the
2002 employment agreement') for a term of three years, such term to commence on the effective date of the acquisition of HSBC Finance by HSBC. The three-year term, and certain other terms, of the 2002 employment agreement represented an
exception to HSBC's normal policy for executive Directors' service contracts, but the details of the terms, background and reasons for this were set out in the Discloseable Transaction Circular relating to the acquisition of HSBC Finance
sent to shareholders on 26 February 2003 in advance of the Extraordinary General Meeting to approve the acquisition. The terms of the 2002 employment agreement were consistent with practice in the United States. The effective date of the
acquisition, and commencement date of the 2002 employment agreement, was 28 March 2003. In connection with W F Aldinger's retirement on 29 April 2005, the terms of the 2002 employment agreement, were amended by an agreement ('amendment
agreement') entered into between HSBC Finance and Mr Aldinger, as referred to below. The Remuneration Committee reviewed the financial and other terms which were reflected in the amendment agreement. Having reviewed the relevant factors and
circumstances, the Committee considered that these financial and other terms were appropriate and in order and in the best interests of the Group.
During
    the term of the 2002 employment agreement Mr Aldinger was entitled to be paid
    an annual base salary equal to his annual base salary as at the date of the
    merger agreement between HSBC Finance and HSBC (US$1 million) and an annual
    bonus in an amount at least equal to the annual average of Mr Aldinger's
    bonuses earned with respect to the three-year period ended 2001, pro rated
    for any partial year (US$4 million). Within 30 days of the effective date
    of the acquisition,
Mr Aldinger received a one-time special retention grant of HSBC Holdings ordinary shares under the HSBC Holdings Restricted Share Plan 2000 with a value equal to US$10 million on
terms that these Restricted Shares would vest in three equal instalments on each of the first three anniversaries of the effective date, as set out on page 231. After each of the first and second anniversaries of the effective date, subject to the
approval of the Trustee of the HSBC Holdings Restricted Share Plan 2000, Mr Aldinger was entitled to receive an additional grant of HSBC Holdings ordinary shares with a value equal to at least US$5.5 million. The purpose of these arrangements
was to retain the services of Mr Aldinger through the initial integration of HSBC Finance. HSBC considered it essential that the experience, knowledge and skills of Mr Aldinger be retained for the benefit of HSBC shareholders.
Under the 2002 employment agreement, if Mr Aldinger's employment was terminated by him during its term for 'good reason', or by HSBC Finance
for reasons other than 'cause' or disability, he was entitled to: a
pro rata
target
annual bonus for the financial year of the date of termination; a payment equal to his annual base salary, plus the average of his annual bonuses with respect to the three-year period ended 2001, times the number of full and partial months from the
date of termination until the third anniversary of the effective date, divided by 12; the immediate vesting and exercisability of each stock option, restricted stock award and other equity-based award or performance award (or cash equivalent) that
is outstanding as at the date of termination and treatment as retirement eligible for purposes of exercising any such award; for the remainder of his life and that of his current spouse, continued medical and dental benefits at HSBC Finance's
cost; and his retirement benefits (as set out on page 228) in a lump sum.
Following discussion with Mr Aldinger, it was agreed that Mr Aldinger would retire as Chairman and Chief Executive of HSBC Finance and HSBC North America
Holdings Inc on 29 April 2005 and would retire as a director of HSBC Holdings on the same date and resign from his directorships and other appointments with Group companies. As indicated above, the original purpose of the 2002 employment agreement
was to retain the services of Mr Aldinger through the initial integration of HSBC Finance with the Group's other North American businesses. The discussions with Mr Aldinger about his retirement before the expiry of the three-year term took into
account that the integration process had been completed successfully and faster than expected.
224
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Under
  the amendment agreement, Mr Aldinger was entitled to receive, on termination
  of the 2002 employment agreement on 29 April 2005, the same terms and benefits
  (summarised above) as if his employment had been terminated by him for 'good
  reason' or by HSBC Finance for reasons other than 'cause' or
  disability, except that he would not be entitled to receive the 2005 restricted
  share award (or cash equivalent) with a value to at least US$5.5 million
  that he would have been entitled to receive on or before 28 April 2005. Mr Aldinger
  did, however, receive a payment of US$4.6 million in lieu of salary and
  bonus in respect of the remainder of the three-year period. The amendment agreement
  also provided that the 'non-competition' provision in the 2002 employment
  agreement for a period of one year after termination of his employment, and
  certain other restrictions, will continue to apply. Under this provision he
  may not become associated with certain competitive entities that are actively
  engaged in the consumer lending business (including mortgage and credit card
  lending).
Sir
  John Bond is employed on a rolling contract dated 14 July 1994 which requires
  12 months' notice to be given by either party.
D
  G Eldon, who retired as a Director on 27 May 2005, was employed on a rolling
  contract dated 1 January 1968 which required three months' notice to be
  given by either party.
D
  J Flint is employed on a rolling contract dated 29 September 1995 which requires
  12 months' notice to be given by the Company and nine months' notice
  to be given by Mr Flint.
M
  F Geoghegan, who is to stand for re-election at the forthcoming Annual General
  Meeting, is employed on a rolling contract dated 25 May 2004 which requires
  12 months' notice to be given by either party.
S
  K Green, who is to stand for re-election at the forthcoming Annual General Meeting,
  is employed on a rolling contract dated 9 March 1998 which requires 12 months'
  notice to be given by either party.
A
  W Jebson is employed on a rolling contract dated 14 January 2000 which requires
  12 months' notice to be given by either party.
Members
    of Senior Management are employed on service contracts which generally provide
    for a term of service expiring at the end of a period of up to two years,
    or the individual's sixtieth birthday, whichever is earlier.
Non-executive
  Directors are appointed for fixed terms not exceeding three years, subject to
  their re-election by shareholders at subsequent Annual General Meetings. Non-executive
  Directors have no service contract and are not eligible to participate in HSBC's
  share plans. Non-executive Directors' terms of appointment will expire
  as follows: in 2006, Sir John Kemp-Welch; in 2007, Lord Butler, R K F Ch'ien,
  Baroness Dunn, R A Fairhead, W K L Fung, S Hintze, Sir Brian Moffat, Sir Mark
  Moody-Stuart and H Sohmen; in 2008, J D Coombe and J W J Hughes-Hallett; and
  in 2009, S W Newton, S M Robertson and Sir Brian Williamson.
Other
directorships
Executive Directors,
  if so authorised by either the Nomination Committee or the Board, may accept
  appointments as non-executive Directors of suitable companies which are not
  part of HSBC. Approval will not be given for executive Directors to accept a
  non-executive directorship of more than one FTSE 100 company. When considering
  a non-executive appointment, the Nomination Committee or Board will take into
  account the expected time commitment of such appointment. The time commitment
  for executive Directors' external appointments will be reviewed as part
  of the annual Board review. Any remuneration receivable in respect of an external
  appointment is normally paid to the HSBC company by which the executive Director
  is employed, unless otherwise approved by the Remuneration Committee.
Sir
  John Bond retains his fees as a non-executive Director of the Ford Motor Company,
  which are provided partly in the form of restricted shares, which become unrestricted
  over a period of five years. During 2005 the fees received were US$80,000
  in cash and US$120,000 deferred into Ford common stock units. In addition,
  Ford provides US$200,000 of life assurance and US$500,000 of accidental
  death or dismemberment insurance. The life assurance can be continued after
  retirement from the Board or Sir John Bond could elect to have it reduced to
  US$100,000 and receive US$15,000 a year for life. The accidental death
  or dismemberment insurance ends upon retirement from the Board.
W
  F Aldinger retained his fees as a non-executive Director of Illinois Tool Works,
  Inc. and as a non-executive Director of AT&T Corp. During the period to
  his retirement as a Director of HSBC Holdings on 29 April 2005, the fee received
  from Illinois Tool Works, Inc. was US$53,000 in the form of deferred stock
  and the fee received from AT&T Corp. was US$52,803. In addition, AT&T
  Corp.
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H S B C   H O L D
  I N G S   P L C
Directors'
  Remuneration Report
(continued)
provide travel
  accident insurance when on AT&T Corp. company business and US$100,000
  of life assurance.
Employees' emoluments
Set out below is information in respect of the five individuals who are not Directors of HSBC Holdings whose emoluments (excluding commissions or bonuses related to the revenue or profits
generated by employees individually or collectively with others engaged in similar activities) were the highest in HSBC for the year ended 31 December 2005.
£000
Basic
      salaries, allowances and benefits in  kind
2,248
Pension
      contributions
698
Bonuses
      paid or receivable
32,272
Inducements
      to join paid or receivable
–
Compensation
      for loss of office:
–
      contractual
–
–
      other
–
Total
35,218
Total
      (US$000)
63,980
Their emoluments
  are within the following bands:
Number
        of
Employees
£
4,900,001
–
          £5,000,000
1
£
5,100,001
–
          £5,200,000
1
£
6,800,001
–
          £6,900,000
1
£
8,000,001
–
          £8,100,000
1
£
10,200,001
–
          £10,300,000
1
The
      basic salaries of Group Managing Directors and Group General Managers are
      within the following bands:
Number
      of
Group
      Managing
Directors
      and Group
General
      Managers
£
150,001
– £250,000
4
£
250,001
– £350,000
20
£
350,001
– £450,000
9
£
450,001
– £550,000
3
The aggregate remuneration of Directors and Senior Management for the year ended 31 December 2005 was US$124,431,000.
The aggregate amount set aside or accrued to provide pension, retirement or similar benefits for Directors and Senior Management for the year ended 31
December 2005 was US$9,869,000.
At
  31 December 2005, executive Directors and Senior Management held, in aggregate,
  options to subscribe for 6,169,982 HSBC Holdings ordinary shares under the HSBC
  Holdings Executive Share Option Scheme, HSBC Holdings Group Share Option Plan
  and HSBC Holdings savings-related share option plans. These options are exercisable
  between 2006 and 2014 at prices ranging from £3.3334 to £9.1350.
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Directors' emoluments
The emoluments of the Directors of HSBC Holdings for 2005 were as follows:
Salary
      and
other
Benefits
Total
Total
Fees
1
remuneration
in
      kind
2
Bonuses
2005
2004
£000
£000
£000
£
000
£000
£000
Executive
      Directors
W
      F Aldinger
3
–
2,609
4
34
716
5
3,359
2,822
Sir
      John Bond
–
1,286
2
3,191
6
4,479
3,649
D
      G Eldon
7
–
286
180
144
6
610
1,317
D
      J Flint
–
679
8
11
500
6
1,190
1,166
M
      F Geoghegan
–
658
13
–
9
671
546
S
      K Green
–
778
1
1,750
6
2,529
1,757
AW
      Jebson
–
545
2
1,000
6
1,547
1,026
Non-executive
      Directors
Lord
      Butler
90
–
–
–
90
90
R
      K F Ch'ien
187
10
–
–
–
187
186
J
      D Coombe
11
53
–
–
–
53
–
Baroness
      Dunn
70
–
–
–
70
70
R
      A Fairhead
70
–
–
–
70
58
W
      K L Fung
117
12
–
–
–
117
117
S
      Hintze
85
–
–
–
85
85
J
      W J Hughes-Hallett
11
46
–
–
–
46
–
Sir
      John Kemp-Welch
85
–
–
–
85
85
Sir
      Brian Moffat
115
–
–
–
115
115
Sir
      Mark Moody-Stuart
85
–
–
–
85
75
S
      W Newton
55
–
–
–
55
55
H
      Sohmen
16
13
–
–
–
16
39
C
      S Taylor
14
12
–
–
–
12
95
Sir
      Brian Williamson
70
–
–
–
70
59
Total
1,156
6,841
243
7,301
15,541
16,226
15
Total
      (US$000)
2,100
12,428
441
13,264
28,233
29,722
1
With
      effect from 1 January 2005, Sir John Bond, D J Flint, M F Geoghegan, S K
      Green and A W Jebson waived their rights to receive a Director's fee
      from HSBC Holdings (2005: £55,000, 2004: £55,000). W F Aldinger
      (2005: £18,333) and D G Eldon (2005: £22,917) had previously elected
      to waive any fees payable by HSBC Holdings (2004: £55,000).
2
Benefits
      in kind for executive Directors include provision of company car, medical
      insurance, other insurance cover and travel assistance.
3
Retired
      as a Director on 29 April 2005.
4
Includes
      a payment of US$4.6 million in lieu of salary and bonus under the terms
      of the amendment agreement.
5
Determined
      under the terms of the amendment agreement.
6
These
      discretionary bonuses are in respect of 2005 and were paid in 2006.
7
Retired
      as a Director on 27 May 2005. The emoluments of D G Eldon include a fee
      from The Hongkong and Shanghai Banking Corporation and housing and other
      expatriate benefits in kind that are normal within the location in which
      he is employed.
8
Includes
      an executive allowance of £154,269 (2004: £137,100) paid to fund
      personal pension arrangements.
9
In
      return for the prior waiver of bonus, an employer contribution has been
      made into a pension arrangement for M F Geoghegan equal to the amount of
      £1,818,750 which would otherwise have been paid. The bonus waived in
      respect of 2005 when added to the bonus waived in respect of 2004 (£1,200,000)
      equals 250 per cent of salary earned during 2004 and 2005.
10
Includes
      fees as non-executive Chairman of HSBC Private Equity (Asia) Limited and
      as a non-executive Director of The Hongkong and Shanghai Banking Corporation.
11
Appointed
      a Director on 1 March 2005
12
Includes
      fee as a non-executive Director of The Hongkong and Shanghai Banking Corporation.
13
Fees
      as a non-executive Director and member of the Audit Committee of The Hongkong
      and Shanghai Banking Corporation. H Sohmen has elected to waive any fees
      payable to him by HSBC Holdings (2005: £55,000; 2004: £55,000).
14
Retired
      as a Director on 14 March 2005.
15
Includes
      the emoluments of Directors who retired in 2004.
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H S B C   H O L D
  I N G S   P L C
Directors'
  Remuneration Report
(continued)
Pensions
There are separate
    schemes for UK-based and overseas-based employees: the UK scheme has a normal
    retirement age of 60; retirement ages for overseas schemes vary in accordance
    with local legislation and practice. Save as stated below no other Director
    participated in any HSBC pension schemes, none of the Directors participating
    in HSBC's UK 'approved' pension schemes is subject to the earnings
    cap introduced by the 1989 Finance Act and only basic salary is pensionable.
    With one exception (see paragraphs below on D J Flint), the current executive
    Directors are members of defined benefit pension schemes, having joined HSBC
    at a time when these were the norm.
Before commencement of the 2002 employment agreement on 28 March 2003, W F Aldinger participated in HSBC Finance Corporation's 'qualified' and
'non-qualified' defined benefit pension plans. The annual pension benefit under these arrangements was a function of service and a percentage of final average earnings (which included bonus). The 'non-qualified plans' were
enhanced before commencement of the 2002 employment agreement. The benefits under the 'qualified' and 'non-qualified' defined benefit pension plans were then frozen and became payable in a lump sum on Mr Aldinger's
retirement on 29 April 2005. No further benefits accrued under these arrangements after 28 March 2003.
Up to his retirement on 29 April 2005, Mr Aldinger participated in the HSBC North America (U.S.) Tax Reduction Investment Plan (TRIP). Employer contributions
of US$10,500 were made to this plan on behalf of Mr Aldinger in 2005 (2004: US$10,250).
Mr
    Aldinger also participated in the Supplemental
  TRIP (a 'non-qualified' plan), which is an unfunded arrangement under
   which additional employer provision of US$606,423 was made during 2005
   (2004:  US$289,749).
The pension arrangements for Sir John Bond, S K Green and A W Jebson to contractual retirement age of 60 are provided under the HSBC Bank (UK) Pension
Scheme. The pensions accrue at a rate of one-thirtieth of pensionable salary for each year of pensionable service in the UK.
The
    existing pension arrangements for D J Flint to contractual retirement age
    of 60 are provided
through an
    executive allowance set at 30 per cent of basic salary which is paid to fund
    personal pension arrangements. In addition he participates in the HSBC Holdings
    plc Funded Unapproved Retirement Benefits Scheme on a defined contribution
    basis with an employer contribution during 2005 of £92,500 (2004: £86,013).
    The intention of these arrangements is to provide benefits broadly comparable
    to an accrual rate of one-thirtieth of pensionable salary for each year of
    pensionable service. From 5 April 2006, this Funded Unapproved Retirement
    Benefits Scheme will be closed. So as to ensure that pension arrangements
    for Mr Flint remain broadly comparable to the existing arrangements, the executive
    allowance will increase to 55 per cent of annual basic salary.
The pension arrangements for D G Eldon are provided under the HSBC International Staff Retirement Benefits Scheme with a normal accrual rate of one
twenty-seventh of pensionable salary per year of pensionable service. These arrangements are part of a remuneration package which includes a number of expatriate benefits.
Since his appointment as an executive Director in 2004, M F Geoghegan has remained a member of the HSBC International Staff Retirement Benefits Scheme whilst
no longer in receipt of expatriate benefits. A full review of Mr Geoghegan's remuneration identified, in particular, that his pensionable pay of £252,000 was not aligned to his actual 2005 gross salary of £632,500. To bring his
pension arrangements to a level more appropriate both to his actual gross salary and his more than 30 years of service, Mr Geoghegan's pension provision will be adjusted to reflect his actual gross salary. The transfer value will be placed into
a defined contribution arrangement in Mr Geoghegan's name with no further funding from HSBC after 31 March 2006. Thereafter, he will receive an annual executive allowance of 50 per cent of annual salary to fund personal pension
arrangements.
In addition, Mr Geoghegan participates in the HSBC Asia Holdings Pension Plan, on a defined contribution basis, with an employer contribution in respect of
2005 of £1,818,750 (2004: £1,200,000), arising entirely from a bonus sacrifice. There were no other employer contributions made to this plan.
228
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Transfer
      value
(less
      personal
contributions)
at
31
      December
2005
      relating
Increase
      in
Increase
      of
to
      increase
accrued
Transfer
Transfer
transfer
      value
in
      accrued
Accrued
Increase
      in
pension
      during
value
value
of
      accrued
pensions
annual
accrued
2005,
of
      accrued
of
      accrued
pension
      (less
during
      2005,
pension
      at
pension
excluding
pension
      at
pension
      at
personal
excluding
      any
31
      December
during
any
      increase
1
      January
31
      December
contributions
)
increase
      for
2005
2005
for
      inflation
2005
2005
in
      2005
inflation
£000
£000
£
000
£
000
1
£
000
1
£
000
1
£
000
1
Sir
      John Bond
2
546
34
20
9,230
10,667
1,438
395
D
      G Eldon
3,4
290
12
10
5,275
5,596
313
179
M
      F Geoghegan
5,6
.
557
372
367
4,042
12,495
8,436
8,230
S
      K Green
335
47
40
4,401
5,758
1,357
682
A
      W Jebson
200
19
14
2,612
3,231
619
225
1
The
      transfer value represents a liability of HSBC's pension funds and not
      a sum paid or due to the individual; it cannot therefore meaningfully be
      added to annual remuneration
.
2
On
      attaining age 60, Sir John Bond has been able, under the terms of the scheme,
      to retire at any time with an immediate pension equal to his accrued pension
      which, at 31 December 2005, is shown above
.
3
Retired
      as a Director on 27 May 2005. On attaining age 53, D G Eldon was able, under
      the terms of the scheme, to retire at any time with an immediate pension
      equal to his accrued pension which, at 31 December 2005, is shown above.
4
D
      G Eldon retired from the Group with effect from 30 May 2005. He elected
      to commute all of his pension entitlement of £290,000 per annum for
      a lump sum of £3,770,000. The HSBC International Staff Retirement Benefits
      Scheme retains a liability to pay a contingent spouse's pension equal
      to 50 per cent of the commuted pension. The accrued pensions and transfer
      values stated in the above table do not reflect the commutation of the pension
      entitlement on retirement. As required by the rules of the HSBC International
      Staff Retirement Benefits Scheme, D G Eldon made personal contributions
      towards his pension of £8,119 in respect of 2005.
5
As
      required by the rules of the HSBC International Staff Retirement Benefits
      Scheme, M F Geoghegan made personal contributions towards his pension of
      £16,797 in respect of 2005.
6
As
      at 31 March 2006, under the revised pension arrangements described above,
      M F Geoghegan's accrued pension will amount to £571,000 per annum
      and it is estimated that the transfer value of that accrued pension, at
      that date, will amount to £12,919,000.
The following unfunded pension payments, in respect of which provision has been made, were made during 2005 to five former Directors of HSBC
Holdings:
2005
2004
£
£
B
      H Asher
90,465
85,443
C
      F W de Croisset
178,344
–
R
      Delbridge
130,120
122,891
Sir
      Brian Pearse
54,261
51,246
Sir
      William Purves
95,767
90,453
548,957
350,033
The payments
    in respect of R Delbridge and Sir Brian Pearse were made by HSBC Bank plc
    as former Directors of that bank. The payment in respect of C F W de Croisset
    was made by HSBC France as a former Director of that bank.
Share options
At 31 December 2005, the undernamed Directors held options to acquire the number of HSBC
Holdings ordinary shares set against their respective names. The options were awarded for nil consideration at exercise prices equivalent to the market value at the date of award, except
that options awarded under the HSBC Holdings savings-related share option plans before 2001 are exercisable at a 15 per cent discount to the market value at the date of award and those awarded since 2001 at a 20 per cent discount. Under the
Securities and Futures Ordinance of Hong Kong the options are categorised as unlisted physically settled equity derivatives.
Except as otherwise
    indicated, no options were exercised or lapsed during the year and there are
    no remaining performance criteria conditional upon which the outstanding options
    are exercisable. The market value of the ordinary shares at 31 December 2005
    was £9.33. The highest and lowest market values during the year were
    £9.49 and £8.25. Market value is the mid-market price derived from
    the London Stock Exchange Daily Official List on the relevant date.
229
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H S B C   H O L D
  I N G S   P L C
Directors'
  Remuneration Report
(continued)
HSBC
      Holdings Savings-Related Share Option Plan
HSBC
    Holdings ordinary shares of US$0.50
Options
Options
Options
Options
held
      at
awarded
exercised
held
      at 31
1
      January
during
during
December
Exercise
Date
      of
Exercisable
Exercisable
2005
year
year
2005
price
      (£)
award
from
1
until
Sir
      John Bond
2,798
4
–
2,798
2
–
6.0299
10
      Apr 2000
1
      Aug 2005
31
      Jan 2006
D
      J Flint
2,617
4
–
–
2,617
6.3224
2
      May 2002
1
      Aug 2007
31
      Jan 2008
M
      F Geoghegan
559
–
–
559
3
6.0299
10
      Apr 2000
1
      Aug 2005
31
      Jan 2006
S
      K Green
3,070
4
–
–
3,070
5.3496
23
      Apr 2003
1
      Aug 2008
31
      Jan 2009
1
May
      be advanced to an earlier date in certain circumstances, e.g. retirement.
2
At
      the date of exercise, 2 August 2005, the market value per share was £9.32.
3
Options
      over 533 shares were exercised on 31 January 2006 and options over 26 shares
      lapsed on that date. At the date of exercise, the market value per share
      was £9.34.
At 29 April 2005, the date he retired as a Director, W F Aldinger held options to acquire HSBC Holdings ordinary shares as set out in the table below. These options arise from options he
held over shares of Household International (now HSBC Finance Corporation) before its acquisition, which were converted into options over HSBC Holdings ordinary shares in the same ratio as the offer for HSBC Finance Corporation (2.675
HSBC
Holdings ordinary shares for each HSBC Finance Corporation common share) and the exercise prices per share adjusted accordingly. The HSBC Finance Corporation options were granted at nil
consideration.
No
    options over HSBC Holdings ordinary shares were awarded to or exercised by
    Mr Aldinger during 2005.
HSBC
      Finance 1996 Long-Term Executive Incentive Compensation Plan
HSBC
      Holdings ordinary shares of US$0.50
Options
      held
Exercise
      price
Options
      held
Date
      of
Exercisable
Exercisable
at
      1 January 2005
per
      share (US$)
at
      29 April 2005
award
from
until
1,203,750
14.60
1,203,750
10
      Nov 1997
10
      Nov 1998
10
      Nov 2007
1,337,500
13.71
1,337,500
9
      Nov 1998
9
      Nov 1999
9
      Nov 2008
1,230,500
16.96
1,230,500
8
      Nov 1999
8
      Nov 2000
8
      Nov 2009
1,605,000
18.40
1,605,000
13
      Nov 2000
13
      Nov 2001
13
      Nov 2010
2,140,000
21.37
2,140,000
12
      Nov 2001
12
      Nov 2002
12
      Nov 2011
2,140,000
10.66
2,140,000
20
      Nov 2002
20
      Nov 2003
1
20
      Nov 2012
1
535,000
      options were exercisable on each of the first, second, third and fourth
      anniversaries of the date of award. These options could be advanced, under
      the terms of the HSBC Finance Corporation stock option plan, to an earlier
      date in certain circumstances, for example retirement. 1,070,000 options
      remaining unvested therefore vested on Mr Aldinger's retirement as
      a Director on 29 April 2005. Based
      on the market price of HSBC Holdings shares on 29 April 2005 and after
      deduction of the option subscription price these options had a value of
      approximately
      £2,973,000.
230
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HSBC Holdings Restricted Share Plan 2000
HSBC
Holdings ordinary shares of US$0.50
Monetary
value
      of
awards
Awards
Awards
vested
Awards
Year
      in
held
      at
vested
during
held
      at
which
1
      January
during
the
      year
31
      December
Date
      of
awards
2005
the
      year
1
£000
2005
1
award
may
      vest
W
      F Aldinger
670,821
687,435
2
5,749
–
15
      Apr 2003
2005
      to 2006
2
379,232
388,623
3
3,249
–
10
      May 2004
2005
      to 2007
3
Sir
      John Bond
93,405
94,119
4
798
–
10
      Mar 2000
2005
87,535
–
–
91,276
12
      Mar 2001
2006
131,077
–
–
136,679
8
      Mar 2002
2007
174,929
–
–
182,406
5
      Mar 2003
2008
252,771
–
–
263,574
4
      Mar 2004
2009
D
      G Eldon
42,458
42,781
4
363
–
10
      Mar 2000
2005
50,021
51,712
5
449
–
12
      Mar 2001
2006
55,191
57,056
5
495
–
8
      Mar 2002
2007
10,220
10,472
6
87
–
15
      May 2002
2005
79,513
61,651
5
535
20,729
7
5
      Mar 2003
2008
13,892
–
–
14,486
8
12
      May 2003
2006
90,276
38,886
5
338
54,913
7
4
      Mar 2004
2009
D
      J Flint
38,211
38,502
4
326
–
10
      Mar 2000
2005
62,525
–
–
65,198
12
      Mar 2001
2006
82,786
–
–
86,324
8
      Mar 2002
2007
119,270
–
–
124,367
5
      Mar 2003
2008
125,182
–
–
130,532
4
      Mar 2004
2009
M
      F Geoghegan
33,965
34,224
4
290
–
10
      Mar 2000
2005
37,515
–
–
39,119
12
      Mar 2001
2006
41,393
–
–
43,162
8
      Mar 2002
2007
55,661
–
–
58,040
5
      Mar 2003
2008
93,887
–
–
97,899
4
      Mar 2004
2009
S
      K Green
42,458
42,781
4
363
–
10
      Mar 2000
2005
87,535
–
–
91,276
12
      Mar 2001
2006
103,482
–
–
107,905
8
      Mar 2002
2007
119,270
–
–
124,367
5
      Mar 2003
2008
172,125
–
–
179,481
4
      Mar 2004
2009
A
      W Jebson
33,965
34,224
4
290
–
10
      Mar 2000
2005
75,030
–
–
78,237
12
      Mar 2001
2006
96,584
–
–
100,712
8
      Mar 2002
2007
119,270
–
–
124,368
5
      Mar 2003
2008
125,182
–
–
130,532
4
      Mar 2004
2009
Unless
      otherwise indicated, these awards are subject to the performance tests set
      out in the section headed 'Arrangements from 2000-2004' on pages
      221 to 223. The awards made on 12 March 2001 and 8 March 2002 have passed
      their TSR performance conditions. Under the Securities and Futures Ordinance
      of Hong Kong, interests held through the HSBC Holdings Restricted Share
      Plan 2000 are categorised as the interests of a beneficiary of a Trust.
1
Includes
      additional shares arising from scrip dividends.
2
Under
           the terms of this award the shares vested in three instalments on
          each of
      the first three anniversaries of 31 March 2003 so long as Mr Aldinger remained
           employed on the relevant vesting date, subject to accelerated vesting
          upon
      a termination of cause, or by Mr Aldinger for good reason or due to his
           death or disability. 341,463 shares therefore vested on 31 March 2005
          when
      the market price was £8.37. Pursuant to the amendment agreement referred
       to above, the remaining 345,972 shares vested on Mr Aldinger's retirement
        as a Director on 29 April 2005 when the market price was £8.355.
        At  the date of the award, 15 April 2003, the market value per share
        was £6.81.
3
Under
      the terms of this award the shares vested in three instalments on each of
      31 March 2005, 2006 and 2007 so long as Mr Aldinger remained employed on
      the relevant vesting date, subject to accelerated vesting upon a termination
      of cause, or by Mr Aldinger for good reason or due to his death or disability.
      128,245 shares therefore vested on 31 March 2005 when the market price was
      £8.37. Pursuant to the amendment agreement referred to above, the remaining
      260,378 shares vested on Mr Aldinger's retirement as a Director on
29
April
      2005 when the market price was £8.355. At the date of the award, 10
      May 2004, the market value per share was £7.94.
4
The
            performance tests described in the 'Report of the Directors' in
            the
Annual
             Report and Accounts 2000
and
      set out in the section headed 'Arrangements from 2000-2004' on
      pages 221 to 223 of the
Annual
      Report and Accounts 2005
have been met and
      the shares have vested. At the date of
      vesting,
10
March
      2005, the market value per share was £8.48. The market value per share
       at the date of the award, 10 March 2000, was £7.09.
231
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H S B C   H O L D
  I N G S   P L C
Directors'
  Remuneration Report
(continued)
5
Retired
      as a Director on 27 May 2005. At the date of vesting, 31 May 2005 the market
      value per share was £8.68. The market values per share at the dates
      of the awards, 12 March 2001, 8 March 2002, 5 March 2003 and 4 March 2004
      were £8.62, £8.34, £6.70 and £8.515 respectively.
6
50
      per cent of D G Eldon's discretionary bonus in respect of 2001 was
      awarded in Restricted Shares with a three year restricted period. At the
      date of vesting, 29 April 2005, the market value per share was £8.355.
      The market value per share at the date of the award, 15 May 2002, was £8.635.
7
Interests
      at date of retirement as a Director (27 May 2005).
8
Interests
      at date of retirement as a Director (27 May 2005). 50 per cent of D G Eldon's
      discretionary bonus in respect of 2002 was awarded in Restricted Shares
      with a three-year restricted period.
The HSBC Share
  Plan
HSBC
  Holdings ordinary shares of US$0.50
Monetary
value
      of
Awards
Awards
awards
Awards
Year
      in
held
      at
made
made
held
      at
which
1
      January
during
during
31
      December
Date
      of
awards
2005
period
1
period
2005
2
award
may
      vest
£000
Sir
      John Bond
–
458,389
4,000
474,353
27
      May 2005
2008
D
      J Flint
–
171,896
1,500
177,883
27
      May 2005
2008
M
      F Geoghegan
–
229,195
2,000
237,177
27
      May 2005
2008
S
      K Green
–
286,493
2,500
296,471
27
      May 2005
2008
A
      W Jebson
–
162,155
1,415
167,803
27
      May 2005
2008
Unless
        otherwise indicated, vesting of these shares is subject to the performance
        conditions described on page 220 being satisfied. Under the Securities
        and Futures Ordinance of Hong Kong, interests in The HSBC Share Plan are
        categorised as the interests of a beneficiary of a Trust.
1
At
      the date of the award, 27 May 2005, the market value per share was £8.68.
      The shares acquired by the Trustee of the Plan were purchased at an average
      price of £8.726.
2
Includes
      additional shares arising from scrip dividends.
On
      behalf of the Board
6
      March 2006
Sir
      Mark Moody-Stuart,
Chairman
      of Remuneration Committee
232
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H S B C   H O L
D I N G S   P L C
Statement
      of Directors' Responsibilities in Respect of the
Annual
      Report and Accounts
2005
and
the Financial Statements
The following statement, which should be read in conjunction with the Auditor's statement of their responsibilities set out in their report on pages 234 and 235, is made with a view
to distinguishing for shareholders the respective responsibilities of the Directors and of the Auditor in relation to the financial statements.
The Directors are responsible for preparing the Annual Report and Accounts 2005, the consolidated financial statements of HSBC Holdings and its subsidiaries
(the 'Group') and holding company financial statements for HSBC Holdings (the 'parent company') in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent company financial statements for each financial year. The Directors are required to prepare
the Group financial statements in accordance with IFRSs as adopted by the EU and have elected to prepare the parent company financial statements on the same basis.
The Directors are also required to present additional information for US shareholders. Accordingly these financial statements are framed to meet both UK and
US requirements to give a consistent view to all shareholders.
The Group and parent company financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position of the Group
and the parent company and the performance of the Group for that period; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
In preparing each of the Group and parent company financial statements, the Directors are required to:
•
select
    suitable accounting policies and then apply them consistently;
•
make judgements
    and estimates that are reasonable and prudent; and
•
state whether
    they have been prepared in accordance with IFRSs as adopted by the EU.
The Directors are required to prepare the financial statements on the going concern basis unless it is not appropriate. Since the Directors are satisfied that the Group has the resources to continue in business for the foreseeable future, the financial statements continue to be prepared on the
going concern basis.
The Directors have responsibility for ensuring that sufficient accounting records are kept that disclose with reasonable accuracy at any time the financial
position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 1985.
The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the Directors also have responsibility for preparing a Directors' Report, Directors' Remuneration Report and
the Corporate Governance statement on page 206 that comply with that law and those regulations.
The Directors have responsibility for the maintenance and integrity of the Annual Report and Accounts 2005 as they appear on the company's website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On
        behalf of the Board
6
    March 2006
R G Barber,
Secretary
233
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H S B C   H O L D
  I N G S   P L C
Report of Independent
registered public accounting firm to the Board of Directors and
shareholders of
HSBC Holdings plc
We have audited the accompanying consolidated financial statements of HSBC Holdings plc and its subsidiary undertakings (together 'HSBC') on pages 236 to 402 which comprise the
consolidated balance sheets as at 31 December 2005 and 2004, the related consolidated income statements, consolidated cash flow statements and consolidated statements of recognised income and expense, for the years ended 31 December 2005 and 2004.
These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HSBC as at 31
December 2005 and 2004, and the results of its operations and its cash flows for the years ended 31 December 2005 and 2004 in conformity with IFRSs as adopted by the EU.
IFRSs
as adopted by the EU vary in certain significant respects from accounting principles
generally accepted in the United States. Information relating to  the nature
and effect of such differences is presented in Note 47 to the consolidated financial
statements. As permitted by IFRS 1 and disclosed in Note 1 to the financial statements,
HSBC has applied certain IFRSs from 1 January 2005, in particular IAS 32, IAS
39 and IFRS 4.
KPMG Audit Plc
London, England
6 March 2006
234
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235
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H
        S B C   H O L D I N G S   P L C
Financial
    Statements
Consolidated
      income statement for the year ended 31 December 2005
2005
2004
Notes
US$m
US$m
Interest income
60,094
50,471
Interest expense
(28,760
)
(19,372
)
Net interest income
31,334
31,099
Fee income
17,486
15,902
Fee expense
(3,030
)
(2,954
)
Net fee income
14,456
12,948
Trading income excluding net interest income
3,656
2,786
Net interest income on trading activities
2,208
–
Net trading income
5,864
2,786
Net income from financial instruments designated at fair value
3
1,034
–
Net investment income
on assets backing policyholders' liabilities
–
1,012
Gains less losses from financial investments
692
540
Dividend income
155
622
Net earned insurance premiums
4
5,436
5,368
Other operating income
2,733
1,613
Total operating income
61,704
55,988
Net insurance claims incurred
and movement in policyholders' liabilities
5
(4,067
)
(4,635
)
Net
                operating income before loan impairment charges and other credit risk
provisions
57,637
51,353
Loan impairment charges and other credit risk provisions
(7,801
)
(6,191
)
Net operating income
6
49,836
45,162
Employee compensation and benefits
7
(16,145
)
(14,523
)
General and administrative expenses
8
(11,183
)
(9,739
)
Depreciation of property, plant and equipment
23
(1,632
)
(1,731
)
Amortisation of intangible assets
(554
)
(494
)
Total operating expenses
(29,514
)
(26,487
)
Operating profit
20,322
18,675
Share of profit in associates and joint ventures
20
644
268
Profit before tax
20,966
18,943
Tax expense
10
(5,093
)
(4,685
)
Profit for the year
15,873
14,258
Profit attributable to shareholders of the parent company
15,081
12,918
Profit attributable to minority interests
792
1,340
US$
US$
Basic earnings per ordinary share
12
1.36
1.18
Diluted earnings per ordinary share
12
1.35
1.17
Dividends per ordinary share
11
0.69
0.63
236
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Consolidated
       balance sheet at 31 December 2005
2005
2004
Notes
US$m
US$m
ASSETS
Cash and balances at central banks
13,712
9,944
Items in the course of collection from other banks
11,300
6,338
Hong Kong Government certificates of indebtedness
12,554
11,878
Trading assets
15
190,257
122,160
Trading assets which may be repledged or resold by counterparties
15
42,652
–
Financial assets designated at fair value
16
15,046
–
Derivatives
17
73,928
32,190
Loans and advances to banks
32
125,965
143,449
Loans and advances to customers
32
740,002
672,891
Financial investments
18
176,301
185,332
Financial investments which may be repledged or resold by counterparties
18
6,041
–
Interests in associates and joint ventures
20
7,249
3,441
Goodwill and intangible assets
21
33,200
34,495
Property, plant and equipment
23
15,206
15,624
Other assets
25
26,596
23,077
Prepayments and accrued income
11,961
19,155
Total assets
1,501,970
1,279,974
LIABILITIES AND EQUITY
Liabilities
Hong Kong currency notes in circulation
12,554
11,878
Deposits by banks
32
69,727
84,055
Customer accounts
32
739,419
693,072
Items in the course of transmission to other banks
7,022
5,301
Trading liabilities
174,365
46,460
Financial liabilities designated at fair value
26
61,829
–
Derivatives
17
74,036
34,988
Debt securities in issue
27
188,072
211,721
Retirement benefit liabilities
7
4,869
6,475
Other liabilities
28
26,515
20,581
Liabilities under insurance contracts issued
29
14,144
–
Liabilities to policyholders under long-term assurance business
–
19,190
Accruals and deferred income
12,689
16,499
Provisions
30
1,966
4,071
Subordinated liabilities
31
16,537
26,486
Total liabilities
1,403,744
1,180,777
Equity
Called up share capital
37
5,667
5,587
Share premium account
38
6,896
4,881
Other reserves
38
23,646
25,622
Retained earnings
38
56,223
49,432
Total shareholders' equity
92,432
85,522
Minority interests
36
5,794
13,675
Total equity
98,226
99,197
Total equity and liabilities
1,501,970
1,279,974
Sir John
      Bond,
Group
    Chairman
237
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H
        S B C   H O L D I N G S   P L C
Financial
            Statements
(continued)
Consolidated statement of recognised income and expense for the year ended 31 December 2005
2005
2004
US$m
US$m
Available-for-sale investments:
– fair
              value changes taken to equity
(400
)
–
– fair
              value changes transferred to income statement on disposal or impairment
(240
)
–
Cash flow hedges:
– fair
              value changes taken to equity
(92
)
–
– fair
              value changes transferred to income statement
(106
)
–
Share of changes in equity of associates and joint ventures
161
–
Exchange differences
(4,257
)
3,720
Actuarial losses on post-employment benefits
(812
)
(731
)
(5,746
)
2,989
Net deferred tax on items taken directly to equity
437
319
Total income and expense taken to equity during the year
(5,309
)
3,308
Profit for the year
15,873
14,258
Total recognised income and expense for the year
10,564
17,566
Effect of change in accounting policy
IFRSs transition adjustment at 1 January 2005
– available-for-sale
              fair value reserve
1,919
–
– cash
              flow hedging reserve
410
–
– foreign
              exchange reserve
686
–
– retained
              earnings
(1,762
)
–
– minority
              interests
(10,077
)
–
1,740
17,566
Total recognised income and expense for the year attributable to:
– shareholders
              of the parent company
9,912
15,743
– minority
              interests
652
1,823
10,564
17,566
238
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Consolidated
cash flow statement for the year ended 31 December 2005
2005
2004
Notes
US$m
US$m
Cash flows from operating activities
Profit before tax
20,966
18,943
Adjustments for:
– non-cash
              items included in net profit
39
1,358
719
– change
              in operating assets
39
(82,710
)
(124,299
)
– change
              in operating liabilities
39
70,933
178,014
– elimination
              of exchange differences
1
2,315
(9,015
)
– net
              gain from investing activities
(692
)
(540
)
– share
              of profits in associates and joint ventures
(644
)
(268
)
– dividends
              received from associates
114
127
– tax
              paid
(4,619
)
(3,784
)
Net cash from operating activities
7,021
59,897
Cash flows from investing activities
Purchase of financial investments
(378,103
)
(330,917
)
Proceeds from the sale of financial investments
368,696
315,437
Purchase of property, plant and equipment
(2,887
)
(2,830
)
Proceeds from the sale of property, plant and equipment
620
371
Purchase of intangible assets
(849
)
(108
)
Net cash outflow from acquisition of and increase in stake of subsidiaries
(1,662
)
(2,431
)
Net cash inflow from disposal of subsidiaries
705
27
Net cash outflow from acquisition of and increase in stake of associates
(2,569
)
(2,122
)
Proceeds from disposal of associates
422
212
Net cash used in investing activities
(15,627
)
(22,361
)
Cash flows from financing activities
Issue of ordinary share capital
690
581
Issue of preference shares
1,298
–
Net purchases and sales of own shares for market-making purposes
(55
)
98
Purchases of own shares to meet share awards and share option awards
(766
)
(345
)
Own shares released on vesting of share awards and exercise of options
277
159
Increase in non-equity minority interests
–
1,480
Subordinated loan capital issued
2,093
6,021
Subordinated loan capital repaid
(1,121
)
(1,740
)
Dividends paid to shareholders of the parent company
(5,935
)
(4,425
)
Dividends paid to minority interests:
– equity
(508
)
(664
)
– non-equity
–
(548
)
Net cash used in financing activities
(4,027
)
617
Net (decrease)/increase in cash and cash equivalents
(12,633
)
38,153
Cash and cash equivalents at 1 January
160,956
117,558
Exchange differences in respect of cash and cash equivalents
(7,016
)
5,245
Cash and cash equivalents at 31 December
39
141,307
160,956
1
Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without
unreasonable expense.
239
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H
        S B C   H O L D I N G S   P L C
Financial
            Statements
(continued)
HSBC
Holdings balance sheet at 31 December 2005
2005
2004
Notes
US$m
US$m
ASSETS
Cash at bank and in hand:
– balances with HSBC
undertakings
756
246
Derivatives
17
968
1,643
Loans and advances to HSBC undertakings
32
14,092
16,636
Financial investments
18
3,517
1,885
Investments in subsidiaries
24
58,038
55,668
Property, plant and equipment
23
1
2
Other assets
171
632
Prepayments and accrued income
19
5
Total assets
77,562
76,717
LIABILITIES AND EQUITY
Liabilities
Amounts owed to HSBC undertakings
32
4,075
7,352
Financial liabilities designated at fair value
26
13,370
–
Derivatives
17
286
10
Other liabilities
28
1,203
1,198
Accruals and deferred income
95
172
Deferred tax
30
70
64
Subordinated liabilities
31
5,236
17,812
Total liabilities
24,335
26,608
Equity
Called up share capital
37
5,667
5,587
Share premium account
6,896
4,881
Merger reserve and other reserves
28,942
28,942
Other reserves
2,221
1,740
Retained earnings
9,501
8,959
Total equity
53,227
50,109
Total equity and liabilities
77,562
76,717
Sir John
        Bond,
Group
        Chairman
240
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HSBC
      Holdings statement of changes in total equity for the year ended 31 December
2005
2005
2004
US$m
US$m
Called up share capital
At
              1 January
5,587
5,481
Shares issued in connection with the early conversion of HSBC Finance Corporation
8.875 per cent Adjustable Conversion-Rate Equity Security Units
–
1
Shares issued under employee share plans
28
25
Shares issued in lieu of dividends
52
80
At 31 December
5,667
5,587
Share premium account
At 1 January
4,881
4,406
Shares issued under employee share plans
662
555
Shares issued in lieu of dividends and amounts thereon
(52
)
(80
)
New share capital subscribed, net of costs
1,405
–
At 31 December
6,896
4,881
Merger reserve and other reserves
At 1 January and 31 December
28,942
28,942
Other reserves
Available-for-sale fair value reserve
At 1 January
–
–
IFRSs transition adjustments at 1 January 2005
1
464
–
Fair value losses taken to equity
2
(184
)
–
Net deferred tax on items taken directly to equity
2
57
–
At 31 December
337
–
Share-based payment reserve
At 1 January
1,329
1,395
Exercise of HSBC share options
(328
)
(227
)
Charge to the income statement in respect of equity settled share-based
payment transactions
12
11
Shares/options granted to employees of subsidiaries under employee share awards
219
150
Other movements
2
–
At 31 December
1,234
1,329
Other paid-in capital
At 1 January
411
270
Exercise of HSBC share options
239
141
At 31 December
650
411
Total other reserves at 31 December
2,221
1,740
Retained earnings
At 1 January
8,959
8,970
IFRSs transition adjustments at 1 January 2005
1
(317
)
–
Profit for the year attributable to shareholders
6,816
4,612
Dividends to shareholders of the parent company
(7,750
)
(6,932
)
Amounts arising on shares in lieu of dividends
1,811
2,627
Own shares adjustments
87
(110
)
Exchange differences and other movements
2
(105
)
(208
)
At 31 December
3
9,501
8,959
1
See Note 46 for an explanation of the IFRSs transition adjustment at 1 January 2005.
2
The total net expense taken directly to equity during the year was US$232 million (2004: US$208 million).
3
Retained earnings include 130,812,676 (US$701 million) of own shares, held to fund employee share plans (2004:123,108,967, US$749 million).
241
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H
        S B C   H O L D I N G S   P L C
Financial
            Statements
(continued)
HSBC
Holdings cash flow statement for the year ended 31 December 2005
2005
2004
Notes
US$m
US$m
Cash flows from operating activities
Profit before tax
6,541
4,495
Adjustments for:
– non-cash
              items included in net profit
39
–
167
– change
              in operating assets
39
2,511
(2,883
)
– change
              in operating liabilities
39
(3,349
)
1,156
– elimination
              of exchange differences
1
(109
)
(240
)
– tax
              received
158
125
Net cash from operating activities
5,752
2,820
Cash flows from investing activities
Purchase of financial investments
–
(1,119
)
Proceeds from the sale of financial investments
303
365
Purchase of property, plant and equipment
–
(1
)
Net cash outflow from acquisition of and increase in stake of subsidiaries
(4,093
)
(3,696
)
Net cash inflow from disposal of subsidiaries
1,063
–
Net cash used in investing activities
(2,727
)
(4,451
)
Cash flows from financing activities
Issue of ordinary share capital
690
581
Issue of preference shares
1,405
–
Purchases of own shares to meet share awards and share option awards
(39
)
(261
)
Own shares released on vesting of share awards and exercise of options
67
84
Subordinated loan capital issued
1,647
4,997
Subordinated loan capital repaid
(350
)
–
Dividends paid
(5,935
)
(4,425
)
Net cash (used in)/from financing activities
(2,515
)
976
Net increase/(decrease) in cash and cash equivalents
510
(655
)
Cash and cash equivalents at 1 January
246
901
Cash and cash equivalents at 31 December
39
756
246
1
Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without
unreasonable expense.
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        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
1
Basis of preparation
(a)
For all reporting
periods up to and including the year ended 31 December 2004, HSBC prepared its
consolidated financial statements in accordance with UK Generally Accepted Accounting

Principles ('UK GAAP'). From
1
January
2005, HSBC has prepared its consolidated financial statements in accordance with
International
Financial
Reporting
Standards ('IFRSs') as endorsed by the EU and effective for HSBC's
reporting for the year ended 31 December 2005. IFRSs comprise accounting standards
issued by the International Accounting Standards Board ('IASB') and
its predecessor body as well as interpretations issued by the International Financial
Reporting Interpretations Committee ('IFRIC') and its predecessor
body.
In preparing these consolidated financial statements, HSBC has elected to take advantage of certain transitional provisions within IFRS 1 'First-time Adoption of International
Financial Reporting Standards' ('IFRS 1') which offer exemption from presenting comparative information or applying IFRSs retrospectively. The most significant of these provisions is the exemption from presenting comparative
information in accordance with IFRSs in the following areas:
•
IAS
    32 'Financial Instruments: Presentation' ('IAS 32');
•
IAS
    39 'Financial Instruments: Recognition and Measurement' ('IAS
    39'); and
•
IFRS
    4 'Insurance Contracts' ('IFRS 4').
In addition, HSBC has elected not to present comparative information for disclosures required under IFRS 7 'Financial Instruments: Disclosure' ('IFRS 7') as permitted
for entities applying the standard for annual periods beginning before 1 January 2006.
The notes affected by the transition provisions within IFRS 1 that do not contain comparative information are: net income from financial instruments designated at fair value; net earned
insurance premiums; net insurance claims incurred and movement in policyholders' liabilities; net operating income; analysis of financial assets and liabilities by measurement basis; financial assets designated at fair value; hedging
instruments within the derivatives note; securitisation and other structured transactions; financial liabilities designated at fair value and liabilities under insurance contracts issued.
Where comparative information for financial instruments and insurance contracts has been prepared on the basis of HSBC's previous accounting policies, the accounting policies applied
to 2004 are disclosed separately in Note 46g.
In addition to
the Notes on the Financial Statements, disclosures under IFRS 7 relating to the
nature and extent of risks may be found under 'Risk Management' in
the audited
information of the Financial Review on pages
115
to
177 Unless stated otherwise, this information is unaudited.
HSBC has adopted the 'Amendment to IAS 39: The Fair Value Option' (Note 2h), the 'Amendment to IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and
Disclosures' (Note 2s), the 'Amendment to IAS 1 Presentation of Financial Statements: Capital Disclosures', IFRIC 4 'Determining whether an Arrangement contains a Lease' (Note 2q) and IFRS 7 with effect from 1 January 2005,
ahead of their effective dates. IFRSs as endorsed by the EU are identical in all respects to the current IFRSs except for the EU's amendment to IAS 39, under which certain conditions required for the application of hedge accounting were
deleted. HSBC has not taken advantage of the EU amendment to IAS 39, and applies the more restrictive requirements of IAS 39.
The balance sheets and income statements in this document are presented in accordance with IAS 1 'Presentation of Financial Statements'.
On publishing the parent company financial statements here together with Group financial statements HSBC Holdings is taking advantage of the exception in s230 of the Companies Act 1985
not to present its individual income statement and related notes that form a part of these financial statements.
HSBC has taken advantage of the exemption under Regulation 7 of the Partnerships and Unlimited Companies (Accounts) Regulations 1993 from certain partnerships that are consolidated by
HSBC presenting their own individual financial statements under IFRSs.
(b)
The consolidated financial statements of HSBC comprise the financial statements of HSBC Holdings and its subsidiaries made up to 31 December, with the exception of the banking and
insurance subsidiaries of HSBC
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        S B C   H O L D I N G S   P L C
Notes
    on the Financial Statements
(continued)
Bank Argentina,
        whose financial statements are made up to 30 June annually to comply
        with local regulations. Accordingly, HSBC uses their audited interim
        financial statements, drawn up to 31 December annually. Entities that
        are controlled by HSBC are consolidated until the date that control ceases.
        Newly acquired subsidiaries are consolidated from the date that control
    is transferred to HSBC.
The purchase
        method of accounting is used to account for the acquisition of subsidiaries
        by HSBC. The cost of an acquisition is measured at the fair value of
        the consideration given at the date of exchange, together with costs
        directly attributable to that acquisition. The acquired identifiable
        assets, liabilities and contingent liabilities are measured at their
        fair values at the date of acquisition. Any excess of the cost of acquisition
        over the fair value of HSBC's share of the identifiable assets,
        liabilities and contingent liabilities acquired is recorded as goodwill.
        If the cost of acquisition is less than the fair value of HSBC's
        share of the identifiable assets, liabilities and contingent liabilities
        of the business acquired, the difference is recognised immediately in
    the income statement.
In accordance
        with IFRS 1, HSBC has chosen not to restate business combinations that
    took place prior to 1 January 2004, the date of transition to IFRSs.
The premium
        recorded on shares issued in respect of acquisitions that qualified for
        merger relief under section 131 of the Companies Act 1985 prior to the
        transition to IFRS is included
in the merger reserve.
All intra-HSBC
    transactions are eliminated on consolidation.
The consolidated
        financial statements of HSBC also include the attributable share of the
        results and reserves of joint ventures and associates. These are based
        on financial statements made up to 31 December, with the exception of
        the Bank of Communications Limited and Ping An Insurance Company of China
        Limited, which are included on the basis of financial statements made
        up to 30 September. Accordingly, HSBC has taken into account changes
        in the period from 1 October to 31 December that would have materially
        affected its results. These are equity accounted three months in arrears
    in order to meet the requirements of the Group's reporting timetable.
(c)
The preparation
        of financial information requires the use of estimates and assumptions
        about future conditions. Use of available information and application
        of judgement are inherent in the formation of estimates. Actual results
        in the future may differ from those reported. In this regard, management
        believes that the critical accounting policies where judgement is necessarily
        applied are those which relate to loan impairment, goodwill impairment
        and the valuation of financial instruments (see Critical Accounting Policies
    on pages 99 to 102).
Further
        information about key assumptions concerning the future, and other key
        sources of estimation uncertainty, are set out in the notes on these
    financial statements.
(d)
A discussion
        of the significant differences between IFRSs and US GAAP and a reconciliation
        to US GAAP of certain amounts is contained in Note 47. As stated in Note
        45, there are no material differences between IFRSs and Hong Kong Generally
        Accepted Accounting Principles ('Hong Kong GAAP'). The Notes
        on the Financial Statements, taken together with the Financial Review,
        include the aggregate of all disclosures necessary to satisfy IFRSs,
    Hong Kong and US reporting requirements.
2
Summary
    of significant accounting policies
(a)
Interest
    income and expense
Interest
        income and expense for all interest-bearing financial instruments except
        for those classified as held for trading or designated at fair value
        (other than debt issued by HSBC and related derivatives) are recognised
        in 'Interest income' and 'Interest expense' in the
        income statement using the effective interest rates of the financial
    assets or financial liabilities to which they relate.
The effective
        interest rate is the rate that exactly discounts estimated future cash
        receipts or payments earned or paid on a financial asset or financial
        liability through its expected life or, where appropriate, a shorter
        period, to the net carrying amount of the financial asset or financial
        liability. When calculating the effective interest rate, HSBC estimates
        cash flows considering all contractual terms of the financial instrument
        but not future credit losses. The calculation includes all amounts paid
        or received by HSBC that are an integral part of the effective interest
    rate, including transaction costs and all other premiums or discounts.
Interest
        on impaired financial assets is calculated by applying the original effective
    interest rate of the financial
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asset to the
    carrying amount as reduced by any allowance for impairment.
(b)
Non
    interest income
Fee income
HSBC earns
    fee income from a diverse range of services provided to its customers. Fee
    income is accounted for as follows:
–
income earned on the execution of a significant act is recognised as revenue when the act is completed (for example, fees arising from negotiating, or participating in the negotiation of,
a transaction for a third party, such as the arrangement for the acquisition of shares or other securities);
–
income earned from the provision of services is recognised as revenue as the services are provided (for example, asset management, portfolio and other management advisory and service
fees); and
–
income which forms an integral part of the effective interest rate of a financial instrument is recognised as an adjustment to the effective interest rate (for example, loan commitment
fees) and recorded in 'Interest income' (Note 2(a)).
Dividend
    income
Dividend
    income is recognised when the right to receive payment is established. This
    is the ex-dividend date for equity securities.
Net
    income from financial instruments designated at fair value
'Net
    income from financial instruments designated at fair value' includes
    all gains and losses from changes in the fair value of financial assets and
    financial liabilities designated at fair value through profit or loss. Interest
    income and expense and dividend income arising on these financial instruments
    are also included, except for debt securities in issue and derivatives managed
    in conjunction with debt securities in issue. Interest on these instruments
    is shown in 'Interest expense'.
Net
    trading income
Net
    trading income comprises all gains and losses from changes in the fair value
    of financial assets and financial liabilities held for trading, together
    with related interest income,
expense and dividends.
(c)
Segment
    reporting
HSBC
    is organised into five geographical regions, Europe, Hong Kong, Rest of Asia-Pacific,
    North America and South America, and manages its business through four customer
    groups: Personal Financial Services; Commercial Banking; Corporate Investment
    Banking and Markets; and Private Banking. The main items reported in the 'Other' segment
    are the income and expenses of wholesale insurance operations, certain property
    activities, unallocated investment activities including hsbc.com, centrally
    held investment companies and HSBC's holding company and financing operations.
    Segment income and expenses include transfers between geographical regions
    and transfers
between customer groups. These transfers are conducted at arm's length.
(d)
Determination
    of fair value
All
    financial instruments are recognised initially at fair value. The fair value
    of a financial instrument on initial recognition is normally the transaction
    price, i.e. the fair value of the consideration given or received. In certain
    circumstances, however, the initial fair value may be based on other observable
    current market transactions in the same instrument, without modification
    or repackaging, or on a valuation technique whose variables include only
    data from observable markets.
Subsequent
    to initial recognition, the fair values of financial instruments measured
    at fair value that are quoted in active markets are based on bid prices for
    assets held and offer prices for liabilities. When independent prices are
    not available, fair values are determined by using valuation techniques which
    refer to observable market data. These include comparison with similar instruments
    where market observable prices exist, discounted cash flow analysis, option
    pricing models and other valuation techniques commonly used by market participants.
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        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
(continued)
For
        certain derivatives, fair values may be determined in whole or in part
        using valuation techniques based on assumptions that are not supported
        by prices from current market transactions or observable market data.
A
        number of factors such as bid-offer spread, credit profile, servicing
        costs of portfolios and model uncertainty are taken into account, as
    appropriate, when values are calculated using valuation techniques.
If
        the fair value of a financial asset measured at fair value becomes negative,
        it is recorded as a financial liability until its fair value becomes
        positive, at which time it is recorded as a financial asset, or it is
    extinguished.
(e)
Loans
    and advances to banks and customers
Loans
        and advances to banks and customers include loans and advances originated
        by HSBC which are not intended to be sold in the short term and have
        not been classified either as held for trading or designated at fair
        value. Loans and advances are recognised when cash is advanced to borrowers
        and are derecognised when either borrowers repay their obligations, or
        the loans are sold or written off. They are initially recorded at fair
        value plus any directly attributable transaction costs and are subsequently
        measured at amortised cost using the effective interest method, less
    impairment losses.
(f)
Loan
    impairment
Losses
        for impaired loans are recognised promptly when there is objective evidence
        that impairment of a loan or portfolio of loans has occurred. Impairment
        losses are calculated on individual loans and on loans assessed collectively.
    Losses expected from future events, no matter how likely, are not recognised.
Individually
    assessed loans
At
        each balance sheet date, HSBC assesses on a case-by-case basis whether
        there is any objective evidence that a loan is impaired. This procedure
        is applied to all accounts that are considered individually significant.
        In determining impairment losses on these loans, the following factors
    are considered:
–
HSBC's
    aggregate exposure to the customer;
–
the viability
        of the customer's business model and its capability to trade successfully
        out of financial difficulties and generate sufficient cash flow to service
        its debt
obligations;
–
the amount
    and timing of expected receipts and recoveries;
–
the likely
    dividend available on liquidation or bankruptcy;
–
the extent
        of other creditors' commitments ranking ahead of, or
pari
        passu
with, HSBC and the likelihood
    of other creditors continuing to support the company;
–
the complexity
        of determining the aggregate amount and ranking of all creditor claims
    and the extent to which legal and insurance uncertainties are evident;
–
the realisable
        value of security (or other credit mitigants) and likelihood of successful
    repossession;
–
the likely
    deduction of any costs involved in recovery of amounts outstanding;
–
the ability
        of the borrower to obtain, and make payments in, the currency of the
    loan if not local currency; and
–
when available,
    the secondary market price of the debt.
Impairment
        losses are calculated by discounting the expected future cash flows of
        a loan at its original effective interest rate, and comparing the resultant
        present value with the
loan's current carrying amount. Any loss is charged in the income statement.
The carrying amount of impaired loans on the balance sheet is reduced through
the use of an allowance account.
Collectively
    assessed loans
Impairment
    is assessed on a collective basis in two different scenarios:
–
for loans
        subject to individual assessment, to cover losses which have been incurred
    but have not yet been identified; and
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–
for homogeneous
    groups of loans that are not considered individually significant.
Incurred
    but not yet identified impairment
Individually
        assessed loans for which no evidence of loss has been identified are
        grouped together according to their credit risk characteristics for the
        purpose of calculating an estimated collective loss. This arises from
        impairment at the balance sheet date which will only be individually
    identified in the future.
The
    collective impairment allowance is determined after taking into account:
–
historical
        loss experience in portfolios of similar credit risk characteristics
        (for example, by industry sector,
loan
    grade or product);
–
the estimated
        period between impairment occurring and the loss being identified and
        evidenced by the
establishment
        of
an appropriate allowance against the individual loan; and
–
management's
          experienced judgement as to whether current economic and credit conditions
          are such that
the
          actual level of inherent losses is likely to be greater or less than
    that suggested by historical experience.
The
        period between a loss occurring and its identification is estimated by
    local management for each identified portfolio.
Homogeneous
    groups of loans
For
        homogeneous groups of loans that are not considered individually significant,
        two alternative methods are used to calculate allowances on a portfolio
    basis:
–
When appropriate
        empirical information is available, HSBC utilises roll rate methodology.
        This
methodology
        employs a statistical analysis of historical trends of the probability
        of default and the amount
of
        consequential loss, assessed at each time period for which the customer's
        contractual
payments are
overdue.
The estimated loss is the difference between the present value of expected future
cash flows,
discounted at the original effective interest rate of the
portfolio, and the carrying amount of the portfolio.
Other
historical data and current economic conditions are also evaluated when calculating
the
appropriate
level
of allowance required to cover inherent loss. In certain highly developed markets,
sophisticated models
also
take into account behavioural and account management trends as revealed in, for
example, bankruptcy
and
rescheduling statistics.
–
In other
        cases, when the portfolio size is small or when information is insufficient
        or not reliable enough to
adopt
        a roll rate methodology, HSBC adopts a formulaic approach which allocates
        progressively higher
percentage
        loss rates in line with the period of time for which a customer's
        loan
is overdue. Loss rates are
calculated
from the discounted expected future cash flows from a portfolio.
Roll
        rates, loss rates and the expected timing of future recoveries are regularly
    benchmarked against actual outcomes to ensure they remain appropriate.
Loan
    write-offs
Loans
        (and the related impairment allowance accounts) are normally written
        off, either partially or in full, when there is no realistic prospect
        of recovery of these amounts and, for collateralised loans, when the
    proceeds from realising the security have been received.
Reversals
    of impairment
If
        the amount of an impairment loss decreases in a subsequent period, and
        the decrease can be related objectively to an event occurring after the
        impairment was recognised, the excess is written back by reducing the
        loan impairment allowance account accordingly. The reversal is recognised
    in the income statement.
Assets
    acquired in exchange for loans
Non-financial
        assets acquired in exchange for loans in order to achieve an orderly
        realisation are recorded as assets held for sale and reported in 'Other
        assets'. The asset acquired is recorded at the lower of its fair
        value (less costs to sell) and the carrying amount of the loan (net of
        impairment allowance) at the date of exchange. No depreciation is provided
        in respect of assets held for sale. Any subsequent write-down of the
    acquired asset to
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H
        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
(continued)
fair
        value less costs to sell is recorded as an impairment loss and included
        in the income statement. Any subsequent increase in the fair value less
        costs to sell, to the extent this does not exceed the cumulative impairment
    loss, is recognised in the income statement.
Renegotiated
    loans
Retail
        loans, which are generally subject to collective impairment assessment,
        whose terms have been renegotiated, are no longer considered to be past
        due but are treated as new loans only after the minimum required number
    of payments under the new arrangements have been received.
Loans
        subject to individual impairment assessment, whose terms have been renegotiated,
        are subject to ongoing review to determine whether they remain impaired
        or are considered to be past
due.
(g)
Trading
    assets and trading liabilities
Treasury
        bills, debt securities, equity shares and short positions in securities
        are classified as held for trading if they have been acquired principally
        for the purpose of selling or repurchasing in the near term, or they
        form part of a portfolio of identified financial instruments that are
        managed together and for which there is evidence of a recent pattern
        of short-term profit-taking. These financial assets or financial liabilities
        are recognised on trade date, when HSBC enters into contractual arrangements
        with counterparties to purchase or sell securities, and are normally
        derecognised when either sold (assets) or extinguished (liabilities).
        Measurement is initially at fair value, with transaction costs taken
        to the income statement. Subsequently, their fair values are remeasured,
        and all gains and losses from changes therein are recognised in the income
        statement in 'Net trading income' as
they arise.
(h)
Financial
    instruments designated at fair value
Financial
        instruments, other than those held for trading, are classified in this
        category if they meet one or more of the criteria set out below, and
        are so designated by management. HSBC may designate financial instruments
    at fair value when the designation:
–
eliminates
        or significantly reduces valuation or recognition inconsistencies that
        would otherwise arise from measuring financial assets or financial liabilities,
        or recognising gains and losses on them, on different bases. Under this
        criterion, the main classes of financial instruments designated by HSBC
    are:
Long-term
          debt issues
– The
          interest payable on certain fixed rate long-term debt securities in
          issue and subordinated liabilities has been matched with the interest
          on 'receive fixed/pay variable' interest rate swaps as part
          of a documented interest rate risk management strategy. An accounting
          mismatch would arise if the debt securities in issue were accounted
          for at amortised cost, because the related derivatives are measured
          at fair value with changes in the fair value taken through the income
          statement. By designating the long-term debt at fair value, the movement
          in the fair value of the long-term debt will be recorded in the income
    statement.
Financial
          assets and financial liabilities under investment contracts
– These
          are managed on a fair value basis and management information is also
          prepared on this basis. Liabilities to customers under linked contracts
          are determined based on the fair value of the assets held in the linked
          funds, with changes shown in the income statement. Liabilities to customers
          under other types of investment contracts would be shown at amortised
          cost. If no designation was made for the assets relating to the customer
          liabilities they would be classified as available-for-sale and the
          changes in
fair value would be recorded directly in equity.
Designation
          at fair value of the financial assets and liabilities under investment
          contracts allows the changes in fair values to be recorded in the income
          statement and presented in the
same line.
–
applies
        to groups of financial assets, financial liabilities or combinations
        thereof that are managed, and their performance evaluated, on a fair
        value basis in accordance with a documented risk management or investment
        strategy, and where information about the groups of financial instruments
        is reported to management on that basis. Under this criterion, certain
        financial assets held to meet liabilities under insurance contracts are
        the main class of financial instrument so designated. HSBC has documented
        risk management and investment strategies designed to manage such assets
        at fair value, taking into consideration the relationship of assets to
        liabilities in a
way that mitigates market risks. Reports are
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provided to management on the fair value of the assets. Fair value measurement is also consistent with the regulatory reporting requirements under the appropriate regulations for these
insurance operations.
–
relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those financial instruments, including certain
debt issues and debt securities held.
The fair value designation, once made, is irrevocable. Designated financial assets and financial liabilities are recognised on trade date, when HSBC enters into contractual arrangements
with counterparties to purchase or sell securities, and are normally derecognised when sold (assets) or extinguished (liabilities). Measurement is initially at fair value, with transaction costs taken directly to the income statement. Subsequently,
the fair values are remeasured, and gains and losses from changes therein are recognised in 'Net income from financial instruments designated at fair value'.
Gains and losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are also included in
'Net income from financial instruments designated at fair value'. Interest on these derivatives is also included in this line, except for interest on derivatives managed with debt securities in issue designated at fair value, which is
included in net interest income. The amount of change during the period, and cumulatively, in the fair value of designated financial liabilities and loans and receivables that is attributable to changes in their credit risk is determined as the
amount of change in fair value that is not attributable to changes in market conditions.
(i)
Financial investments
Treasury bills, debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value (Note 2(h)), are classified as
'available-for-sale' or 'held-to-maturity'. Financial investments are recognised on trade date, when HSBC enters into contractual arrangements with counterparties to purchase securities, and are normally derecognised when either
the securities are sold or the borrowers repay their obligations.
(i)
Available-for-sale securities are initially measured at fair value plus direct and incremental transaction costs. They are subsequently remeasured at fair value, and changes therein are
recognised in equity in the 'Available-for-sale reserve' (Note 38) until the securities are either sold or impaired. When available-for- sale securities are sold, cumulative gains or losses previously recognised in equity are recognised in
the income statement as 'Gains less losses from financial investments'.
Interest income is recognised on available-for-sale securities using the effective interest rate method, calculated over the asset's expected life. Premiums and/or discounts arising
on the purchase of dated investment securities are included in the calculation of their effective interest rates. Dividends are recognised in the income statement when the right to receive payment has been established. Financial investments are
recognised using trade date accounting.
At each balance sheet date an assessment is made of whether there is any objective evidence of impairment in the value of a financial asset or group of assets. This usually arises when
circumstances are such that an adverse effect on future cash flows from the asset or group of assets can be reliably estimated. If an available-for-sale security is impaired, the cumulative loss (measured as the difference between the asset's
acquisition cost and its current fair value, less any impairment loss on that asset previously recognised in the income statement) is removed from equity and recognised in the income statement. Reversals of impairment losses are subject to
contrasting treatments depending on the nature of the instrument concerned:
–
if the fair value of a debt instrument classified as available-for-sale increases in a subsequent period, and the increase can be objectively related to an event occurring after the
impairment loss was recognised in the income statement, the impairment loss is reversed through the income statement;
–
impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.
(ii)
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that HSBC positively intends, and is able, to hold until
maturity. Held-to-maturity investments are initially recorded at fair value plus any directly attributable transaction costs, and are subsequently measured at amortised cost using the effective interest rate method, less any impairment
losses.
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        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
(continued)
(j)
Sale and repurchase agreements
    (including stock lending and borrowing)
When securities
    are sold subject to a commitment to repurchase them at a predetermined price
    ('repos'), they remain on the balance sheet and a liability is
    recorded in respect of the consideration received. Securities purchased under
    commitments to sell ('reverse repos') are not recognised on the
    balance sheet and the consideration paid is recorded in 'Loans and advances
    to banks' or 'Loans and
advances to customers' as appropriate. The difference between the sale and
repurchase price is treated as interest and recognised over the life of the agreement.
Securities
    lending and borrowing transactions are generally secured, with collateral
    taking the form of securities or cash advanced or received. The transfer
    of securities to counterparties is not normally reflected on the balance
    sheet. Cash collateral advanced or received is recorded as an asset or a
    liability respectively.
Securities
    borrowed are not recognised on the balance sheet, unless they are sold to
    third parties, in which case the obligation to return the securities is recorded
    as a trading liability and measured at fair value, and any gains or losses
    are included in 'Net trading income'.
For repos
    and security lending, if the counterparty has the right to sell or repledge
    the securities transferred, the securities are presented separately on the
    balance sheet from assets
that may not be repledged or resold by a counterparty.
(k)
Derivatives
    and hedge accounting
Derivatives
    are recognised initially, and are subsequently remeasured, at fair value.
    Fair values of exchange- traded derivatives are obtained from quoted market
    prices. Fair values of OTC derivatives are obtained using valuation techniques,
    including discounted cash flow models and option pricing models.
In the normal
    course of business, the fair value of a derivative on initial recognition
    is the transaction price (that is the fair value of the consideration given
    or received). In certain circumstances, however, the fair value will be based
    on other observable current market transactions in the same instrument, without
    modification or repackaging, or on a valuation technique whose variables
    include only data from observable markets, such as interest rate yield curves,
    option volatilities and currency rates. When such evidence exists, HSBC recognises
    a trading gain or loss on inception of the derivative. When unobservable
    market data have a significant impact on the valuation of derivatives, the
    entire initial change in fair value indicated by the valuation model is not
    recognised immediately in the income statement but is recognised over the
    life of the transaction on an appropriate basis or is recognised in the income
    statement when the inputs become observable, or when the transaction matures
    or is closed out.
Derivatives
    may be embedded in other financial instruments, for example, a convertible
    bond with an embedded conversion option. Embedded derivatives are treated
    as separate derivatives when their economic characteristics and risks are
    not clearly and closely related to those of the host contract; the terms
    of the embedded derivative are the same as those of a stand-alone derivative;
    and the combined contract is not held for trading or designated at fair value.
    These embedded derivatives are measured at fair value with changes therein
    recognised in the income statement.
Derivatives
    are classified as assets when their fair value is positive, or as liabilities
    when their fair value is negative. Derivative assets and liabilities arising
    from different transactions are only offset if the transactions are with
    the same counterparty, a legal right of offset exists, and the parties intend
    to settle the cash flows on a net basis.
The method
    of recognising fair value gains and losses depends on whether derivatives
    are held for trading or are designated as hedging instruments, and if the
    latter, the nature of the risks being hedged. All gains and losses from changes
    in the fair value of derivatives held for trading are recognised in the income
    statement. When derivatives are designated as hedges, HSBC classifies them
    as either: (i) hedges of the change in fair value of recognised assets or
    liabilities or firm commitments ('fair value hedges'); (ii) hedges
    of the variability in highly probable future cash flows attributable to a
    recognised asset or liability, or a forecast transaction
('cash flow hedges'); or (iii) hedges of net investments in a foreign
operation ('net investment hedges'). Hedge accounting is applied to
derivatives designated as hedging instruments in a fair value, cash flow or net
investment
hedge provided certain criteria are met.
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Hedge accounting
At
        the inception of a hedging relationship, HSBC documents the relationship
        between the hedging instruments and hedged items, its risk management
        objective and its strategy for undertaking the hedge. HSBC also requires
        a documented assessment, both at hedge inception and on an ongoing basis,
        of whether or not the derivatives that are used in hedging transactions
        are highly effective in offsetting the changes attributable to the hedged
        risks in the fair values or cash flows of the hedged items. Interest
    on designated qualifying hedges is included in 'Net interest income'.
Fair
    value hedge
Changes
        in the fair value of derivatives that are designated and qualify as fair
        value hedging instruments are recorded in the income statement, along
        with changes in the fair value of the assets, liabilities or group thereof,
    that are attributable to the hedged risk.
If
        a hedging relationship no longer meets the criteria for hedge accounting,
        the cumulative adjustment to the carrying amount of the hedged item is
        amortised to the income statement based on a recalculated effective interest
        rate over the residual period to maturity, unless the hedged item has
    been derecognised whereby it is released to the income statement immediately.
Cash
    flow hedge
The
        effective portion of changes in the fair value of derivatives that are
        designated and qualify as cash flow hedges is recognised in equity within
        the cash flow hedging reserve. Any gain or loss in fair value relating
    to an ineffective portion is recognised immediately in the income statement.
Amounts
        accumulated in equity are recycled to the income statement in the periods
        in which the hedged item will affect profit or loss. However, when the
        forecast transaction that is hedged results in the recognition of a non-financial
        asset or a non-financial liability, the gains and losses previously deferred
        in equity are transferred from equity and included in the initial measurement
        of the cost of the asset or
liability.
When
        a hedging instrument expires or is sold, or when a hedge no longer meets
        the criteria for hedge accounting, any cumulative gain or loss existing
        in equity at that time remains in equity until the forecast transaction
        is eventually recognised in the income statement. When a forecast transaction
        is no longer expected to occur, the cumulative gain or loss that was
        reported in equity is immediately transferred to the income
statement.
Net
    investment hedge
Hedges
        of net investments in foreign operations are accounted for similarly
        to cash flow hedges. Any gain or loss on the hedging instrument relating
        to the effective portion of the hedge is recognised in equity; the gain
        or loss relating to the ineffective portion is recognised immediately
        in the income statement. Gains and losses accumulated in equity are included
        in the income statement on the disposal of the foreign
operation.
Hedge effectiveness
    testing
To
        qualify for hedge accounting, HSBC requires that at the inception of
        the hedge and throughout its life, each hedge must be expected to be
        highly effective (prospective effectiveness). Actual effectiveness (retrospective
    effectiveness) must also be demonstrated on an ongoing basis.
The
        documentation of each hedging relationship sets out how the effectiveness
        of the hedge is assessed. The method an HSBC entity adopts for assessing
        hedge effectiveness will depend on its risk management strategy. For
        prospective effectiveness, the hedging instrument must be expected to
        be highly effective in achieving offsetting changes in fair value or
        cash flows attributable to the hedged risk during the period for which
        the hedge is designated. For actual effectiveness, the changes in fair
        value or cash flows must offset each other in the range of 80 per cent
    to 125 per cent for the hedge to be deemed effective.
Hedge
        ineffectiveness is recognised in the income statement in 'Net trading
    income'.
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        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
(continued)
Derivatives
    that do not qualify for hedge accounting
All
        gains and losses from changes in the fair values of any derivatives that
        do not qualify for hedge accounting are recognised immediately in the
        income statement. These gains and losses
are reported in 'Net trading income', except where derivatives are
managed in conjunction with financial instruments designated at fair value, (other
than derivatives managed in conjunction with debt securities issued by the Group)
in
which case gains and losses are reported in 'Net income from financial instruments
designated at fair value'. The interest on derivatives managed in conjunction
with debt securities issued by the Group which are designated at fair value is
recognised in 'Interest expense'. All other gains and losses on these
derivatives are reported in 'Net income from financial instruments designated
at fair value'.
(l)
Derecognition of financial
    assets and liabilities
Financial
        assets are derecognised when the right to receive cash flows from the
        assets has expired; or when HSBC has transferred its contractual right
        to receive the cash flows of the financial assets, and substantially
        all the risks and rewards of ownership; or where control is not retained.
        Financial liabilities are derecognised when they are extinguished, that
        is when the obligation is discharged, cancelled or
expires.
(m)
Offsetting financial
    assets and financial liabilities
Financial
        assets and financial liabilities are offset and the net amount reported
        in the balance
sheet when there is
a
legally
enforceable right to offset the recognised amounts and there is an intention
to settle on a net basis, or
realise
the asset
and settle the liability simultaneously.
(n)
Subsidiaries, associates
    and joint ventures
HSBC
        Holdings' investments in subsidiaries are stated at cost less impairment
        losses. Reversals of impairment losses are recognised in the income statement
        if there has been a change in the estimates used to determine the recoverable
    amount of the investment.
Investments
        in associates and interests in joint ventures are recognised using the
        equity method, initially stated at cost, including attributable goodwill,
        and are adjusted thereafter
for the post-acquisition change in HSBC's share of net assets.
Unrealised
        gains on transactions between HSBC and its associates and joint ventures
        are eliminated to the extent of HSBC's interest in the respective
        associates or joint ventures. Unrealised losses are also eliminated to
        the extent of HSBC's interest in the associates or joint ventures
        unless the transaction provides evidence of an impairment of the asset
    transferred.
(o)
Goodwill and intangible
    assets
(i)
Goodwill
        arises on business combinations, including the acquisition of subsidiaries,
        joint ventures
or
associates,
      when the cost of acquisition exceeds the fair value of HSBC's share
      of the identifiable assets, liabilities and contingent liabilities acquired.
      By contrast, if
HSBC's interest in the fair value of the identifiable assets, liabilities
and contingent liabilities of an acquired business is greater than the cost to
acquire, the excess is recognised immediately in the income statement.
Intangible
        assets are recognised separately from goodwill when they are separable
        or arise from contractual or other legal rights, and their fair value
        can be measured
reliably.
Goodwill
        is allocated to cash-generating units for the purpose of impairment testing,
        which is undertaken at the lowest level at which goodwill is monitored
        for internal management purposes. Impairment testing is performed annually
        by comparing the present value of the expected future cash flows from
        a business with the carrying amount of its net assets, including attributable
        goodwill. Goodwill is stated at cost less accumulated impairment losses
    which are charged to the income statement.
Goodwill
        on acquisitions of joint ventures or associates is included in 'Interests
    in associates and joint ventures'.
At the
        date of disposal of a business, attributable goodwill is included in
        HSBC's share of net assets in the calculation of the gain or loss
    on disposal.
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(ii)
Intangible
        assets include the value of in-force long-term assurance business, computer
        software, trade names, mortgage servicing rights, customer lists, core
        deposit relationships, credit card customer relationships and merchant
        or other loan relationships. Intangible assets are subject to impairment
        review if there are events or changes in circumstances that indicate
    that the carrying amount may not be recoverable.
–
Intangible
        assets that have an indefinite useful life, or are not yet ready for
        use, are tested for impairment annually. This impairment test may be
        performed at any time during the year, provided it is performed at the
        same time every year. An intangible asset recognised during the current
    period is tested before the end of the current year.
–
Intangible
        assets that have a finite useful life, except for the value of in-force
        long-term assurance business, are stated at cost less amortisation and
        accumulated impairment losses and are amortised over their estimated
        useful lives. Estimated useful life is the lower of legal duration and
        expected economic life. The amortisation of mortgage servicing rights
    is included within 'Net fee income'.
For
    the accounting policy followed in respect of the value of the in-force long-term
    insurance business see Note 2(w).
(iii)
Intangible
    assets are amortised over their finite useful lives as follows:
Trade names
10 years
Mortgage servicing rights
between 5 and 30 years
Purchased software
5 years
Internally generated software
5 years
Customer/merchant relationships
between 3 and 10 years
Other
10 years
(p)
Property, plant
    and equipment
Land
        and buildings are stated at historical cost, or fair value at the date
        of transition to IFRSs ('deemed cost'), less any impairment
        losses and depreciation calculated to write off the assets over their
    estimated useful lives as follows:
–
freehold
    land is not depreciated; and
–
buildings
        are depreciated on cost at the greater of two per cent per annum on a
        straight-line basis or, if leasehold, over the unexpired terms of the
        leases, or over their remaining
useful lives.
Equipment,
        fixtures and fittings (including equipment on operating leases where
        HSBC is the lessor) are stated at cost less any impairment losses and
        depreciation calculated on a straight-line basis to write off the assets
        over their accumulated useful lives, which run to a maximum of 35 years
    but are generally between five years and 20 years.
HSBC
        holds certain properties as investments to earn rentals or for capital
        appreciation, or both. Investment properties are included in the balance
        sheet at fair value with changes therein recognised in the income statement
        in the period of change. Fair values are determined by independent professional
    valuers who apply recognised valuation techniques.
Property,
        plant and equipment is subject to an impairment review if there are events
        or changes
in circumstance
which
indicate
that the carrying amount may not be recoverable.
(q)
Finance and operating
    leases
Agreements
        which transfer to counterparties substantially all the risks and rewards
        incidental to the ownership of assets, but not necessarily legal title,
        are classified as finance leases. When HSBC is a lessor under finance
        leases the amounts due under the leases, after deduction of unearned
        charges, are included in 'Loans and advances to banks' or 'Loans
        and advances to customers' as appropriate. Finance income receivable
        is recognised over the periods of the leases so as to give a constant
    rate of return on the net investment in the leases.
When
        HSBC is a lessee under finance leases the leased assets are capitalised
        and included in 'Property, plant and equipment' and the corresponding
        liability to the lessor is
included in 'Other liabilities'. A finance lease and its corresponding
liability are recognised initially at the fair value of the asset or, if lower,
the present value of the minimum lease payments. Finance charges payable are
recognised over the period of the lease based on the interest rate implicit in
the lease so as to give a constant rate of interest on the remaining balance
of the liability.
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        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
(continued)
All other
        leases are classified as operating leases. When acting as lessor, HSBC
        includes the assets subject to operating leases in 'Property, plant
        and equipment' and accounts for them accordingly. Impairment losses
        are recognised to the extent that residual values are not fully recoverable
        and the carrying value of the equipment is thereby impaired. When HSBC
        is the lessee, leased assets are not recognised on the balance sheet.
        Rentals payable and receivable under operating leases are accounted for
        on a straight-line basis over the periods of the leases and are included
        in 'General and administrative expenses' and 'Other operating
    income' respectively.
(r)
Income tax
Income
        tax on the profit or loss for the year comprises current tax and deferred
        tax. Income tax is recognised in the income statement except to the extent
        that it relates to items
recognised directly in shareholders' equity, in which case it is recognised
in shareholders' equity.
Current
        tax is the tax expected to be payable on the taxable profit for the year,
        calculated using tax rates enacted or substantially enacted by the balance
        sheet date, and any adjustment to tax payable in respect of previous
        years. Current tax assets and liabilities are offset when HSBC intends
    to settle on a net basis and the legal right to offset exists.
Deferred
        tax is recognised on temporary differences between the carrying amounts
        of assets and liabilities in the balance sheet and the amounts attributed
        to such assets and liabilities for tax purposes. Deferred tax liabilities
        are generally recognised for all taxable temporary differences and deferred
        tax assets are recognised to the extent it is probable that future taxable
        profits will be available against which deductible temporary differences
    can be utilised.
Deferred
        tax is calculated using the tax rates expected to apply in the periods
        in which the assets will be realised or the liabilities settled. Deferred
        tax assets and liabilities are offset when they arise in the same tax
        reporting group and relate to income taxes levied by the same taxation
    authority, and when a legal right to offset exists in the entity.
Deferred
        tax relating to actuarial gains and losses on post-employment benefits
        is recognised directly in equity. From 1 January 2005, deferred tax relating
        to fair value remeasurement of available-for-sale investments and cash
        flow hedges which are charged or credited directly to equity, is also
        credited or charged directly to equity and is subsequently recognised
        in the income statement when the deferred fair value gain or loss is
    recognised in the income statement.
(s)
Pension and other post-employment
    benefits
HSBC operates
        a number of pension and other post-employment benefit plans throughout
        the world. These plans include both defined benefit and defined contribution
        plans and various other post-employment benefits such as post-employment
    health-care.
Payments
        to defined contribution plans and state-managed retirement benefit plans,
        when HSBC's obligations under the plans are equivalent to a defined
        contribution plan, are charged
as an expense as they fall due.
The costs
        recognised for funding defined benefit plans are determined using the
        Projected Unit Credit Method, with annual actuarial valuations performed
        on each plan. Actuarial
differences that arise are recognised in shareholders' equity and presented
in the Statement of Recognised Income and Expense in the period in which they
arise. All cumulative actuarial gains and losses on defined benefit plans as
at 1 January 2004 were recognised in equity at the date of transition to IFRSs.
Past service costs are recognised immediately to the extent that the benefits
have vested, and are otherwise recognised on a straight-line basis over the average
period until the benefits vest. Current service costs and any past service costs,
together with the unwinding of the discount on plan liabilities less the expected
return on plan assets, are charged to operating expenses.
The defined
        benefit liability recognised in the balance sheet represents the present
        value of defined benefit obligations adjusted for unrecognised past service
        costs and reduced by the fair value of plan assets. Any net defined benefit
        surplus is limited to unrecognised past service costs plus the present
        value of available refunds and reductions in future contributions to
    the plan.
The costs
        of providing other post-employment benefits such as post-employment health-care
    are accounted for on the same basis as defined benefit pension plans.
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(t)
Equity compensation plans
Shares awarded to an employee on joining HSBC that are made available immediately, with no vesting period attached to the award, are expensed immediately. When an inducement is awarded to
an employee on commencement of employment with HSBC, and the employee must complete a specified period of service before the inducement vests, the expense is spread over the period to vesting.
The compensation expense of share options is recognised over the vesting period. Compensation expense is determined by reference to the fair value of the options on grant date, and the
effect of any non-market vesting conditions such as option lapses. An option may lapse if, for example, an employee ceases to be employed by HSBC before the end of the vesting period. Estimates of future such employee departures are taken into
account when accruing the cost during the service period.
The cost of bonuses awarded in respect of past service, by which an employee is required to complete a specified period of future service to be entitled to the award, is spread over the
period of service rendered to the vesting date.
The compensation expense charged to the income statement is credited to the share-based payment reserve over the vesting period of the shares and options. If awards of shares and options
lapse during the vesting period due to an employee leaving employment with HSBC, the charge to date is reversed to the income statement. If an award lapses due to an employee leaving a plan but not employment with HSBC or due to HSBC cancelling or
modifying a plan, this is accounted for as an acceleration of vesting with full immediate recognition of the outstanding charge in the income statement. If awards of shares or options lapse after they have fully vested, the amount in respect of the
award charged to the share-based payment reserve is transferred to retained earnings.
(u)
Foreign currencies
Items included in the financial statements of each of HSBC's entities are measured using the currency of the primary economic environment in which the entity operates ('the
functional currency'). The consolidated financial statements of HSBC are presented in US dollars, which is the Group's presentation currency.
Transactions in foreign currencies are recorded in the functional currency at the rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated into the functional currency at the rate of exchange ruling at the balance sheet date. Any resulting exchange differences are included in the income statement. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are translated into the functional currency using the rate of exchange at the date of the initial transaction, except for goodwill arising on consolidation, which is translated into the
functional currency using the rate of exchange ruling at the balance sheet date. Non-monetary assets and liabilities measured at fair value in a foreign currency are translated into the functional currency using the rate of exchange at the date the
fair value was determined.
The results of branches, subsidiaries, joint ventures and associates not reporting in US dollars are translated into US dollars at the average rates of exchange for the reporting period.
Exchange differences arising from the retranslation of opening foreign currency net investments, and exchange differences arising from retranslation of the result for the reporting period from the average rate to the exchange rate prevailing at the
period end, are accounted for in a separate foreign exchange reserve. Exchange differences on a monetary item that is part of a net investment in a foreign operation are recognised in the income statement of the separate subsidiary financial
statements. In consolidated financial statements these exchange differences are recognised in the foreign exchange reserve in shareholders' equity. In accordance with IFRS 1, HSBC has set the cumulative exchange differences for all foreign
operations to zero at the date of transition to IFRSs. On disposal of a foreign operation, exchange differences relating thereto and previously recognised in reserves are recognised in the income statement.
(v)
Provisions
Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a current legal or constructive obligation as a result of past events, and a
reliable estimate can be made of the amount of the obligation.
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        S B C   H O L D I N G S   P L C
Notes
          on the Financial Statements
(continued)
(w)
Insurance contracts
Through its insurance subsidiaries, HSBC issues contracts to customers that contain insurance risk, financial risk or a combination thereof. A contract under which HSBC accepts
significant insurance risk from another party by agreeing to compensate that party on the occurrence of a specified uncertain future event, is classified as an insurance contract. An insurance contract may also transfer financial risk, but is
accounted for as an insurance contract if the insurance risk is significant.
Insurance contracts are accounted for as follows:
Premiums
Gross insurance premiums for non-life insurance business are reported as income over the term of the insurance contract attributable to the risks borne during the accounting period. The
unearned premium or the proportion of the business underwritten in the accounting year relating to the period of risk after the balance sheet date is calculated on a daily or monthly pro rata basis.
Premiums for life insurance contracts are accounted for when receivable, except in unit-linked insurance contracts where premiums are accounted for when liabilities are
established.
Reinsurance premiums are accounted for in the same accounting period as the premiums for the direct insurance to which they relate.
Claims and reinsurance recoveries
Gross insurance claims for non-life insurance contracts include paid claims and movements in outstanding claims reserves. The outstanding claims reserves are based on the estimated
ultimate cost of all claims incurred but not settled at the balance sheet date, whether reported or not, together with related claim-handling costs and a reduction for the expected value of salvage and other recoveries. Reserves for claims incurred
but not reported are made on an estimated basis, using appropriate statistical techniques.
Gross insurance claims for life insurance contracts reflect the total cost of claims arising during the year, including claim handling costs and any policyholder bonuses allocated in
anticipation of a bonus declaration. The liabilities under non-linked life insurance contracts (long-term business provision) are calculated by each life insurance operation based on local actuarial principles. The liabilities under unit-linked life
insurance contracts are at least equivalent to the surrender or transfer value which is calculated by reference to the value of the relevant underlying funds or indices.
Reinsurance recoveries are accounted for in the same period as the related claim.
Present value of in-force long-term insurance business
A value is placed on insurance contracts that are classified as long-term insurance business and are in force at the balance sheet date.
The present value of in-force long-term insurance business is determined by discounting future earnings expected to emerge from business currently in force using appropriate assumptions
in assessing factors such as recent experience and general economic conditions. Movements in the present value of in-force long-term insurance business are included in 'Other operating income' on a gross of tax basis.
(x)
Investment contracts
Customer liabilities under non-linked and unit-linked investment contracts and the linked financial assets are measured at fair value, and the movements in fair value are recognised in
the income statement in 'Net income from financial investments designated at fair value'. Premiums receivable and amounts withdrawn are accounted for as increases or decreases in the liability recorded in respect of investment
contracts.
Investment management fees receivable are recognised in the income statement over the period of the provision of the investment management services.
The incremental costs directly related to the acquisition of new investment contracts or renewing existing investment contracts are capitalised and amortised over the period during which
the investment management services are provided.
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(y)
Debt
      securities in issue and subordinated liabilities
Debt
      securities in issue are initially measured at fair value, which is normally
      the consideration received net of directly attributable transaction costs
      incurred. Subsequent measurement is at amortised cost, using the effective
      interest rate method to amortise the difference between proceeds net of
      directly attributable transaction costs and the redemption amount over the
      expected life of the debt, unless the securities are designated at fair
      value (Note 2h).
(z)
Share
      capital
Shares
      are classified as equity when there is no contractual obligation to transfer
      cash or other financial assets. Incremental costs directly attributable
      to the issue of equity instruments are shown in equity as a deduction from
      the proceeds, net of tax.
HSBC
      Holdings plc shares held by HSBC are recognised in Total shareholders'
      equity as a deduction from retained earnings until they are cancelled. When
      such shares are subsequently sold, reissued or otherwise disposed of, any
      consideration received is included in Total shareholders' equity, net
      of any directly attributable incremental transaction costs and related income
      tax effects.
(aa)
Cash
      and cash equivalents
For
      the purpose of the cash flow statement, cash and cash equivalents include
      highly liquid investments that are readily convertible to known amounts
      of cash and which are subject to an insignificant risk of change in value.
      Such investments are normally those with less than three months' maturity
      from the date of acquisition, and include cash and balances at central banks,
      treasury bills and other eligible bills, loans and advances to banks, and
      certificates of deposit.
3
Net
      income from financial instruments designated at fair value
Net
      income from financial instruments designated at fair value includes:
•
all
      gains and losses from changes in the fair value of financial assets and
      liabilities designated at fair value, including liabilities under investment
      contracts;
•
all
      gains and losses from changes in the fair value of derivatives that are
      managed in conjunction with financial assets and liabilities designated
      at fair value; and
•
interest
      income, interest expense and dividend income in respect of:
–
financial
      assets and liabilities designated at fair value;
–
derivatives
      managed in conjunction with the above,
except
      for interest expense arising on HSBC's debt securities in issue and
      subordinated liabilities, together with the interest element of derivatives
      managed in conjunction with them, which are recognised in 'Interest
      expense'.
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H S B C  
  H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
2005
US$m
Net
      income/(expense) arising on:
–
      financial assets held to meet liabilities under insurance and investment
      contracts
1,760
–
      other financial assets designated at fair value
90
–
      derivatives managed in conjunction with financial assets designated at fair
      value
17
1,867
–
      liabilities to customers under investment contracts
(1,126
)
–
      HSBC's debt securities in issue and subordinated liabilities
1
1,795
–
      derivatives managed in conjunction with HSBC's debt securities in issue
      and subordinated liabilities
(1,392
)
–
      other financial liabilities designated at fair value
(112
)
–
      derivatives managed in conjunction with other financial liabilities designated
      at fair value
2
(833
)
Net
      income from financial instruments designated at fair value
1,034
1
Gains
          and losses from changes in the fair value of HSBC's debt securities
          in issue and subordinated liabilities may arise from changes in HSBC's
          own credit risk. In 2005, HSBC recognised a US$70 million loss
          on changes in the fair value of these instruments arising from changes
      in HSBC's own credit risk.
4
Net
      earned insurance premiums
2005
Investment
contracts
      with
Life
Life
discretionary
Non-life
insurance
insurance
participation
insurance
(non-linked)
(linked)
features
Total
US$m
US$m
US$m
US$m
US$m
Gross
      written premiums
2,364
3,441
768
12
6,585
Movement
      in unearned premiums
(225
)
2
(210
)
–
(433
)
Gross
      earned premiums
2,139
3,443
558
12
6,152
Gross
        written premiums ceded to reinsurers
(479
)
(277
)
(20
)
–
(776
)
Reinsurers' share of movement in unearned premiums
60
–
–
–
60
Reinsurers'
      share of gross earned premiums
(419
)
(277
)
(20
)
–
(716
)
Net
      earned insurance premiums
1,720
3,166
538
12
5,436
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5
Net
      insurance claims incurred and movement in policyholders' liabilities
2005
Investment
contracts
      with
Life
Life
discretionary
Non-life
insurance
insurance
participation
insurance
(non-linked)
(linked)
features
Total
US$m
US$m
US$m
US$m
US$m
Claims,
      benefits and surrenders paid
966
621
357
–
1,944
Movement
      in liabilities
72
1,683
445
9
2,209
Gross claims incurred and movement in liabilities
1,038
2,304
802
9
4,153
Reinsurers' share of claims, benefits and surrenders paid
(146
)
(111
)
(11
)
–
(268
)
Reinsurers'
      share of movement in liabilities
2
191
(11
)
–
182
Reinsurers'
        share of claims incurred and movement in liabilities
(144
)
80
(22
)
–
(86
)
Net insurance
        claims incurred and movement in policyholders' liabilities
894
2,384
780
9
4,067
6
Net
      operating income
Net
      operating income for the year ended 31 December 2005 is stated after the
      following items of income, expense, gains and losses:
2005
US$m
Income
Interest
      recognised on impaired financial assets
120
Fees
      earned on financial assets or liabilities not held for trading nor designated
      at fair value, other than
fees included in effective interest rate calculations on these types
      of assets and liabilities
9,077
Fees
      earned on trust and other fiduciary activities where HSBC holds or invests
      assets on behalf
of its customers
2,912
Income
      from listed investments
1
6,819
Expense
Interest
      on financial instruments, excluding interest on financial liabilities held
      for trading or designated
at fair value
(26,627
)
Fees
      payable on financial assets or liabilities not held for trading nor designated
      at fair value, other than
fees included in effective interest rate calculations on these types
      of assets and liabilities
(1,357
)
Fees
      payable relating to trust and other fiduciary activities where HSBC holds
      or invests assets on behalf
of its customers
(238
)
Gains/(losses)
Loss
      on disposal or settlement of loans and advances
(12
)
Gain
      on disposal or settlement of financial liabilities, other than those held
      for trading, designated at
fair value or derivatives
22
Net
      impairment loss on loans and advances
(7,860
)
Net
      reversal of impairment allowances in respect of available-for-sale financial
      investments
42
Gains
      on disposal of property, plant and equipment and non-financial investments
703
1
Income
      from listed investments at 31 December 2004 was US$5,166 million
.
259
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H S B C  
  H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
7
Employee
      compensation and benefits
2005
2004
US$m
US$m
Wages
      and salaries
14,008
12,374
Social
      security costs
1,072
973
Post-employment
      benefits
1,065
1,176
16,145
14,523
The
      average number of persons employed by HSBC during the year was as follows:
2005
2004
Europe
82,638
80,930
Hong
      Kong
25,699
25,070
Rest
      of Asia-Pacific
50,605
37,211
North
      America
73,816
70,041
South
      America
32,527
31,475
Total
265,285
244,727
Post-employment
        benefit plans
HSBC
      pension plans
HSBC
      operates some 163 pension plans throughout the world, covering 80 per cent
      of HSBC's employees, with a total pension cost of US$1,007 million
      (2004: US$1,111 million), of which US$546 million (2004: US$485
      million) relates to overseas plans.
Progressively,
      HSBC has been moving to defined contribution plans for all new employees.
      The pension cost for defined contribution plans, which cover 35 per cent
      of HSBC's employees, was US$389 million (2004: US$351 million).
Both
      HSBC and, where relevant and appropriate, the Trustees' long-term investment
      objectives for defined benefit plans are:
•
to limit
      the risk of the assets failing to meet the liability of the plans over the
      long-term; and
•
t
o
      maximise returns consistent with an acceptable level of risk so as to control
      the long-term costs of the defined
benefit
      plans.
Both
      HSBC and, where relevant and appropriate, the Trustees, consider that the
      investment policy should be consistent with meeting their mutual overall
      long-term investment objectives. In pursuit of these long-term objectives,
      an overall benchmark is established for the allocation of the defined benefit
      plan assets between asset classes. In addition, each permitted asset class
      has its own benchmarks, such as stock market or property valuation indices
      and desired levels of out performance where relevant. This is intended to
      be reviewed at least triennially within 18 months of the date at which the
      actual valuation is made, or more frequently if circumstances or local legislation
      so require. The process generally involves an extensive asset and liability
      review.
The
      Group's defined benefit plans, which cover 45 per cent of HSBC's
      employees, are predominantly funded plans with assets, in the case of most
      of the larger plans, held in trust or similar funds separate from HSBC.
      The plans are reviewed at least annually or in accordance with local practice
      and regulations by qualified actuaries. The actuarial assumptions used to
      calculate the defined benefit obligation and related current service cost
      vary according to the economic conditions of the countries in which they
      are situated.
The
      largest plan exists in the United Kingdom, where the HSBC Bank (UK) Pension
      Scheme covers employees of HSBC Bank plc and certain other employees of
      HSBC. This plan comprises a funded defined benefit plan ('the principal
      plan') which is closed and a defined contribution plan which was established
      on 1 July 1996 for new employees. The latest valuation of the principal
      plan was made at 31 December 2002 by C G Singer, Fellow of the Institute
      of Actuaries, of Watson Wyatt LLP. At that date, the market value of the
      principal plan's assets was US$9,302 million. The actuarial value
      of the plan assets represented 88 per cent of the benefits accrued to members,
      after allowing for expected future increases in earnings, and the resulting
      deficit amounted to US$1,270 million. The method adopted for this valuation
      was the projected unit method and the main assumptions used were a long-term
      investment return of 6.85 per cent per annum, salary increases of 3.0 per
      cent per annum, and post-retirement pension
260
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increases
      of 2.5 per cent per annum.
In anticipation
      of the above valuation result, HSBC made a payment into the principal plan
      in February 2003 amounting to US$817 million. In addition, following
      receipt of the valuation results, a further payment of US$137 million
      was made into the principal plan. HSBC decided to continue ongoing contributions
      to the principal plan at the rate of 20 per cent of pensionable salaries
      until completion of the next actuarial valuation, due as at 31 December
      2005. However, in anticipation of the valuation results disclosing a continuing
      deficit, on 22 December 2005 HSBC Bank plc made an additional contribution
      of US$1,746 million to the principal plan in order to reduce the deficit
      of the plan.
In Hong
      Kong, the HSBC Group Hong Kong Local Staff Retirement Benefit Scheme covers
      employees of The Hongkong and Shanghai Banking Corporation and certain other
      employees of HSBC. The plan comprises a funded defined benefit plan (which
      provides a lump sum on retirement but which is now closed to new members)
      and a defined contribution plan. The latter was established on 1 January
      1999 for new employees. The latest valuation of the defined benefit plan
      was made at 31 December 2004 and was performed by E Chiu, Fellow of the
      Society of Actuaries of the United States of America, of HSBC Life (International)
      Limited, a subsidiary of HSBC Holdings. At that date, the market value of
      the defined benefit plan's assets was US$942 million. On an ongoing
      basis, the actuarial value of the plan's assets represented 115 per
      cent of the benefits accrued to members, after allowing for expected future
      increases in salaries, and the resulting surplus amounted to US$121
      million. On a wind-up basis, the actuarial value of the plan's assets
      represents 128 per cent of the members' vested benefits, based on current
      salaries, and the resulting surplus amounted to US$206 million. The
      actuarial method used was the projected unit credit method and the main
      assumptions used in this valuation were a discount rate of 4.0 per cent
      per annum and long-term salary increases of 3.0 per cent per annum (with
      short-term deviation from 2005 to 2008).
The HSBC
      North America (U.S.) Retirement Income Plan was formed with effect from
      the close of business on 31 December 2004 by the merger of the HSBC Bank
      USA Pension Plan and the HSBC Finance Corporation Retirement Income Plan.
      This plan covers employees of HSBC Bank USA, HSBC Finance Corporation, and
      certain other employees of HSBC. It comprises a funded defined benefit plan
      (now closed) and a cash balance plan. All new employees participate in the
      cash balance plan. The first full actuarial valuation of the merged plan
      was made at 1 January 2005 by Pedro Nebres, Fellow of the Society of Actuaries
      and Dan Kutliroff, Enrolled Actuary, of Mercer Human Resource Consulting.
      Both are members of the American Academy of Actuaries. At that date, the
      market value of the merged plan's assets was US$2,305 million.
      The actuarial value of the assets represents 137 per cent of the benefits
      accrued to members, after allowing for expected future increases in earnings.
      The resulting surplus amounted to US$622 million. The method employed
      for this valuation was the projected unit credit method and the main assumptions
      used were a discount rate of 8.0 per cent per annum and average salary increases
      of 3.75 per cent per annum. These results are preliminary until the Inland
      Revenue Service grants formal approval for the merger of pension plans which
      is expected by the end of the second quarter of 2006.
The HSBC
      Bank (UK) Pension Scheme, The HSBC Group Hong Kong Local Staff Retirement
      Benefit Scheme, and the HSBC North America (U.S.) Retirement Income Plan
      cover 38 per cent of HSBC's employees
.
HSBC
      healthcare benefits plans
HSBC also
      provides post-employment healthcare benefits under plans in the United Kingdom,
      the United States, Canada, Mexico, France and Brazil, the majority of which
      are unfunded. Post-employment healthcare benefits plans are accounted for
      in the same manner as defined benefit pension plans. The plans are reviewed
      at least annually or in accordance with local practice and regulations by
      qualified actuaries. The actuarial assumptions used to calculate the defined
      benefit obligation and related current service cost vary according to the
      economic conditions of the countries in which they are situated. Total healthcare
      cost was US$58 million (2004: US$65 million).
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H S B C  
  H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Post-employment
      defined benefit plans' principal actuarial financial assumptions
The principal
      actuarial financial assumptions used to calculate the Group's obligations
      under its defined benefit pension and post-employment healthcare plans at
      31 December 2005, were as follows. These assumptions also formed the basis
      for measuring periodic costs under the plans in 2006:
Rate
      of
increase
      for
pensions
      in
payment
and
Rate
Healthcare
Discount
Inflation
deferred
of
      pay
cost
      trend
rate
rate
pension
increase
rates
%
%
%
%
%
UK
4.75
2.7
2.7
3.2
6.7
Hong
      Kong
4.2
n/a
n/a
5.0
n/a
US
5.7
2.5
n/a
3.75
10.4
Jersey
4.75
2.7
2.7
4.45
n/a
Mexico
8.90
3.75
3.75
4.5
7.3
Brazil
11.75
5.5
5.5
5.5
12.5
France
4.1
2.0
2.0
3.0
6.0
Canada
5.25
2.5
n/a
3.0
7.3
Switzerland
2.25
1.5
n/a
2.25
n/a
Germany
4.0
2.0
2.0
3.0
n/a
HSBC calculates
      that a 25 basis point change in the discount rate used for the HSBC Bank
      (UK) Pension Scheme as at 31 December 2005 would result in a change in the
      plan's defined benefit obligation of approximately 5 per cent or US$1,030
      million.
HSBC determines
      the discount rates to be applied to its obligations in consultation with
      the plans' local actuaries, on the basis of current average yields
      of high quality (AA rated or equivalent) debt instruments, with maturities
      consistent with that of the defined benefit obligations. The expected rate
      of return on plan assets is based on historical market returns adjusted
      for additional factors such as the current rate of inflation and interest
      rates.
The principal
      actuarial financial assumptions used to calculate the Group's obligations
      under its defined benefit pension and post-employment healthcare plans at
      31 December 2004, which formed the basis for measuring the 2005 periodic
      costs, were as follows:
Rate
      of
increase
      for
pensions
      in
payment
Rate
Healthcare
Discount
Inflation
and
      deferred
of
      pay
cost
      trend
rate
rate
pension
increase
rates
%
%
%
%
%
UK
5.3
2.7
2.7
3.2
7.7
Hong
      Kong
4.0
n/a
n/a
5.0
n/a
US
6.0
2.5
n/a
3.75
9.0
Jersey
5.3
2.7
2.7
4.45
n/a
Mexico
10.75
5.0
5.0
6.50
8.68
Brazil
11.75
5.0
5.0
5.0
10.5
France
4.5
2.0
2.0
3.5
6.0
Canada
6.0
2.5
n/a
3.0
7.7
Switzerland
3.25
1.5
n/a
2.25
n/a
Germany
4.5
1.5
1.5
2.5
n/a
The
      principal actuarial financial assumptions used to calculate the Group's
      obligations under its defined benefit pension and post-employment healthcare
      plans at 31 December 2003, which formed the basis for measuring the 2004
      periodic costs, were as follows:
262
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Rate
      of
increase
      for
pensions
      in
payment
Rate
Healthcare
Discount
Inflation
and
      deferred
of
      pay
cost
      trend
rate
rate
pension
increase
rates
%
%
%
%
%
UK
5.5
2.5
2.5
3.0
7.5
Hong
      Kong
5.5
n/a
n/a
4.5
n/a
US
6.25
2.5
n/a
3.75
12.9
Jersey
5.5
2.5
2.5
4.25
n/a
Mexico
10.75
5.0
5.0
7.5
8.68
Brazil
11.3
5.0
5.0
5.11
8.15
France
5.25
2.0
2.0
3.5
6.0
Canada
6.25
2.0
n/a
3.0
8.2
Switzerland
3.5
1.5
n/a
2.5
n/a
Germany
5.25
1.5
1.5
2.5
n/a
Mortality
      assumptions are increasingly significant in measuring the Group's obligations
      under its defined benefit pension and post-employment healthcare plans,
      particularly given the maturity of the plans. HSBC calculates that each
      additional year of longevity assumed in calculating its defined benefit
      obligation for the HSBC Bank (UK) Pension Scheme increases its obligation
      by approximately US$600 million. The mortality tables and average life
      expectancy at 65 used at 31 December 2005 were as follows:
Life
      expectancy at
Life
      expectancy at
age
      65 for a male
age
      65 for a female
Mortality
      table
member
      currently:
member
      currently:
Aged
      65
Aged
      45
Aged
      65
Aged
      45
UK
PA92U2005
19.53
20.89
22.57
23.86
Hong
      Kong
n/a
n/a
n/a
n/a
n/a
US
RP
      2000 imp 2005
17.90
17.90
20.25
20.25
Jersey
PA92C2036
20.83
20.83
23.75
23.75
Mexico
GAM83M
16.56
16.56
16.56
16.56
Brazil
AT83
18.51
18.51
21.89
21.89
France
TPG93
23.02
25.32
23.02
25.32
Canada
      pension plans
UP94
      C2012 and
18.65
18.65
21.37
21.37
UP94
      C2027
and
      19.84
and
      19.84
and
      22.00
and
      22.00
Canada
      healthcare plan
GAM94M/F
17.88
17.88
21.32
21.32
Switzerland
EVK2000
      (3% loading)
18.30
18.30
21.21
21.21
Germany
Heubeck
      2005 G
18.06
20.84
22.20
24.85
The
      mortality tables and average life expectancy at 65 used at 31 December 2004
      were as follows:
Life
      expectancy at
Life
      expectancy at
age
      65 for a male
age
      65 for a female
Mortality
      table
member
      currently:
member
      currently:
Aged
      65
Aged
      45
Aged
      65
Aged
      45
UK
PA92U2002
19.26
20.72
22.31
23.71
Hong
      Kong
n/a
n/a
n/a
n/a
n/a
US
GAM83M/F
16.56
16.56
21.21
21.21
Jersey
PA92C2036
20.83
20.83
23.75
23.75
Mexico
UP84
15.17
15.17
15.17
15.17
Brazil
AT83
18.51
18.51
21.89
21.89
France
TPG93
23.02
25.32
23.02
25.32
Canada
      pension plans
UP94
      C2012 and
18.65
18.65
21.37
21.37
UP94
      C2027
and
      19.84
and
      19.84
and
      22.00
and
      22.00
Canada
      healthcare plan
GAM94M/F
17.88
17.88
21.32
21.32
Switzerland
EVK2000
      (3% loading)
18.30
18.30
21.21
21.21
Germany
Heubeck
      Richttafeln
17.67
17.67
21.19
21.19
263
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H S B C  
  H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Defined
      benefit pension plans
The
      calculation of the net liability under the Group's defined benefit
      pension plans is set out below together with the expected rates of return
      and plan assets used to measure the net defined benefit pension costs in
      each subsequent year:
At
      31 December 2005
HSBC
      Bank (UK) Pension
Scheme
Other
      plans
Expected
Expected
rates
      of
rates
      of
return
Value
return
Value
%
US$m
%
US$m
Equities
8.0
8,181
8.6
2,749
Bonds
4.3
5,234
5.2
2,539
Property
6.5
1,540
6.5
97
Other
3.6
2,441
4.6
971
Fair
      value of plan assets
17,396
6,356
Present
      value of funded obligations
(20,587
)
(6,687
)
Present
      value of unfunded obligations
–
(415
)
Defined
      benefit obligation
(20,587
)
(7,102
)
Effect
      of limit on plan surpluses
–
(7
)
Unrecognised
      past service cost
–
3
Net
      liability
(3,191
)
(750
)
At
      31 December 2004
HSBC
      Bank (UK) Pension
Scheme
Other
      plans
Expected
rates
Expected
      rates
of
      return
Value
of
      return
Value
%
US$m
%
US$m
Equities
8.1
8,718
9.5
2,649
Bonds
4.7
4,100
5.5
2,044
Property
6.5
1,536
6.5
68
Other
3.6
751
4.5
1,062
Fair
      value of plan assets
15,105
5,823
Present
      value of funded obligations
(19,988
)
(5,739
)
Present
      value of unfunded obligations
–
(762
)
Defined
      benefit obligation
(19,988
)
(6,501
)
Effect
      of limit on plan surpluses
–
(11
)
Unrecognised
      past service cost
–
–
Net
      liability
(4,883
)
(689
)
Plan
      assets included US$80 million (2004: US$76 million) of equities
      and US$53 million (2004: US$nil) of other assets issued by HSBC.
264
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Changes
        in the present value of defined benefit obligations
2005
2004
HSBC
      Bank
HSBC
      Bank
(UK)
      Pension
Other
(UK)
      Pension
Other
Scheme
plans
Scheme
plans
US$m
US$m
US$m
US$m
At
      1 January
19,988
6,501
16,619
5,651
Current
      service cost
383
283
348
257
Interest
      cost
981
333
921
326
Contributions
      by employees
–
14
–
11
Actuarial
      losses
1,968
506
956
285
Benefits
      paid
(540
)
(338
)
(586
)
(276
)
Past
      service cost – vested immediately
–
(3
)
–
(8
)
Past
      service cost – unvested benefits
–
3
–
–
Acquisitions
84
–
–
51
(Gains)/losses
      on curtailments
–
(4
)
242
(17
)
Liabilities
      extinguished on settlements
–
(6
)
–
(10
)
Exchange
      differences
(2,277
)
(187
)
1,488
231
At
      31 December
20,587
7,102
19,988
6,501
Changes
      in the fair value of plan assets
2005
2004
HSBC
      Bank
HSBC
      Bank
(UK)
      Pension
Other
(UK)
      Pension
Other
Scheme
plans
Scheme
plans
US$m
US$m
US$m
US$m
At
      1 January
15,105
5,823
12,837
5,275
Expected
      return on plan assets
954
401
927
382
Contributions
      by HSBC
1,986
448
289
171
–
        normal
240
156
289
171
–
        special
1,746
292
–
–
Contributions
      by employees
–
14
–
11
Experience
      gains
1,623
78
506
3
Benefits
      paid
(540
)
(287
)
(586
)
(224
)
Acquisitions
58
–
–
41
Assets
      distributed on settlements
–
(3
)
–
(4
)
Exchange
      differences
(1,790
)
(118
)
1,132
168
At
      31 December
17,396
6,356
15,105
5,823
The
         actual return on plan assets for the year ended 31 December 2005 was
        US$3,056
      million (2004: US$1,818 million). Following the US$1,746 million
      special contribution to the HSBC Bank (UK) Pension Scheme in 2005, HSBC
      expects to make US$390 million of contributions to defined benefit
      pension plans during 2006. Benefits expected to be paid from the plans
      to retirees over each of the next five years, and in aggregate for the
      five years thereafter, are:
2006
2007
2008
2009
2010
2011-2016
US$m
US$m
US$m
US$m
US$m
US$m
HSBC
      Bank (UK) Pension Scheme
577
592
608
625
642
4,231
Other
      significant plans
285
295
313
322
361
2,256
265
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H S B C  
  H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Total
          expense recognised in the income statement in 'Employee compensation
      and benefits'
2005
2004
HSBC
      Bank
HSBC
      Bank
(UK)
      Pension
Other
(UK)
      Pension
Other
Scheme
plans
Scheme
plans
US$m
US$m
US$m
US$m
Current
      service cost
383
283
348
257
Interest
      cost
981
333
921
326
Expected
      return on plan assets
(954
)
(401
)
(927
)
(382
)
Past
      service cost
–
(3
)
–
(8
)
(Gains)/losses
      on curtailments
–
(4
)
242
(17
)
Total
      expense
410
208
584
176
Summary
2005
2004
HSBC
      Bank
HSBC
      Bank
(UK)
      Pension
Other
(UK)
      Pension
Other
Scheme
plans
Scheme
plans
US$m
US$m
US$m
US$m
Defined
      benefit obligation
(20,587
)
(7,102
)
(19,988
)
(6,501
)
Fair
      value of plan assets
17,396
6,356
15,105
5,823
Net
      deficit
(3,191
)
(746
)
(4,883
)
(678
)
Experience
      gains/(losses) on plan liabilities
70
(113
)
401
(42
)
Experience
      gains on plan assets
1,623
78
506
3
Losses
      from changes in actuarial assumptions
(2,038
)
(393
)
(1,357
)
(243
)
Total
      net actuarial losses
(345
)
(428
)
(450
)
(282
)
Actuarial
      gains and losses represent experience adjustments on plan assets and liabilities
      as well as adjustments arising from changes in actuarial assumptions. Total
      net actuarial losses recognised in equity at 31 December 2005 were US$1,505
      million.
The
      total effect of the limit on plan surpluses recognised in equity together
      with net actuarial losses in 2005 was a US$4 million gain (2004: US$4
      million loss).
Post-employment
      healthcare benefits plans
2005
2004
Expected
      rates
Expected
      rates
of
      return
Value
of
      return
Value
%
US$m
%
US$m
Equities
12.0
32
13.5
62
Bonds
8.5
75
9.25
17
Fair
      value of plan assets
107
79
Present
      value of funded obligations
(178
)
(143
)
Present
      value of unfunded obligations
(826
)
(839
)
Defined
      benefit obligation
(1,004
)
(982
)
Unrecognised
      past service cost
(31
)
–
Net
      liability
(928
)
(903
)
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Changes
      in the present value of defined benefit obligations
2005
2004
US$m
US$m
At
      1 January
982
886
Current
      service cost
18
17
Interest
      cost
63
58
Contributions
      by employees
6
1
Actuarial
      losses/(gains)
44
(5
)
Benefits
      paid
(50
)
(43
)
Past
      service cost:
– vested immediately
(13
)
(2
)
– unvested benefits
(29
)
–
Acquisitions
–
36
Exchange
      differences
(17
)
34
At
      31 December
1,004
982
Changes
      in the fair value of plan assets
2005
2004
US$m
US$m
At
      1 January
79
62
Expected
      return on plan assets
10
8
Contributions
      by HSBC
19
14
Experience
      gains
1
–
Benefits
      paid
(7
)
(5
)
Exchange
      differences
5
–
At
      31 December
107
79
The
      actual return on plan assets for the year ended 31 December 2005 was US$11
      million (2004: US$8 million). HSBC expects to make US$19 million
      of contributions to post-employment healthcare benefit plans during 2006.
      Benefits expected to be paid from the plans to retirees over each of the
      next five years, and in aggregate for the five years thereafter, are:
2006
2007
2008
2009
2010
2011-2016
US$m
US$m
US$m
US$m
US$m
US$m
Significant
      plans
48
50
52
55
58
359
Total
      expense recognised in the income statement in 'Employee compensation
      and benefits'
2005
2004
US$m
US$m
Current
      service cost
18
17
Interest
      cost
63
58
Expected
      return on plan assets
(10
)
(8
)
Past
      service cost
(13
)
(2
)
Total
      expense
58
65
267
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H S B C  
  H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Summary
2005
2004
US$m
US$m
Defined
      benefit obligation
(1,004
)
(982
)
Fair
      value of plan assets
107
79
Net
      deficit
(897
)
(903
)
Experience
      gains/(losses) on plan liabilities
19
(15
)
Experience
      gains on plan assets
1
–
(Losses)/gains
      from changes in actuarial assumptions
(63
)
20
Total
      net actuarial (losses)/gains
(43
)
5
Actuarial
      gains and losses represent experience adjustments on plan assets and liabilities
      as well as adjustments arising from changes in actuarial assumptions. Total
      net actuarial losses recognised in equity at 31 December 2005 were US$38
      million.
The actuarial
      assumptions of the healthcare cost trend rates have a significant effect
      on the amounts recognised. A one percentage point change in assumed healthcare
      cost trend rates would have the following effects on amounts recognised
      in 2005:
1%
      increase
1%
      decrease
US$m
US$m
Increase/(decrease)
      on the aggregate of the current service cost and interest cost
8
(6
)
Increase/(decrease)
      on defined benefit obligation
108
(86
)
HSBC Holdings
Employee
      compensation and benefit expense in respect of HSBC Holdings' employees
      in 2005 amounted to US$166 million (2004: US$106 million). The average
      number of persons employed by HSBC Holdings during 2005 was 433 (2004: 421).
Employees
      of HSBC Holdings who are members of defined benefit pension plans are principally
      members of either the HSBC Bank (UK) Pension Scheme or the HSBC International
      Staff Retirement Benefit Scheme. There is no contractual or stated policy
      for charging the net defined benefit cost to HSBC Holdings, which is recognised
      in the consolidated accounts of HSBC in the note above. HSBC Holdings pays
      contributions to plans in accordance with schedules determined by the Trustees
      following consultation with qualified actuaries.
Directors'
      emoluments
The aggregate
      emoluments of the Directors of HSBC Holdings, computed in accordance with
      Part I of Schedule 6 of the Companies Act, were:
2005
2004
US$000
US$000
Fees
2,100
2,713
Salaries
      and other emoluments
12,869
9,721
Bonuses
13,264
17,288
28,233
29,722
Gains
      on the exercise of share options
17
14,078
Vesting
      of Restricted Share Plan awards
24,221
9,598
In addition,
      there were payments under retirement benefit agreements with former Directors
      of US$996,098 (2004: US$906,000). The provision at 31 December 2005
      in respect of unfunded pension obligations to former Directors amounted
      to US$16,458,975 (2004: US$17,016,000).
During
      the year, aggregate contributions to pension schemes in respect of Directors
      were US$4,819,759 (2004: US$4,423,122), including US$3,304,081
      (2004: US$2,198,072) arising from a Director's waiver of bonus.
Discretionary
        bonuses for Directors are based on a combination of individual and corporate
        performance and are determined by the Remuneration Committee. The cost
        of the conditional awards under the Restricted Share Plan is recognised
        through an annual charge based on the original cost and the likely level
    of vesting of shares, apportioned
268
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over the
      period of service to which the award relates. Details of Directors'
      remuneration, share options and conditional awards under the Restricted
      Share Plan are included in the 'Directors' Remuneration Report'
      on pages 215 to 232.
8
General
      and administrative expenses
Auditors'
      remuneration
Auditors'
        remuneration in relation to statutory audit amounted to US$47.0 million
        (2004: US$41.7 million).
The following
          fees were paid by HSBC companies to the Group's principal auditor, KPMG Audit Plc and its affiliated
      firms (together 'KPMG'):
2005
2004
US$m
US$m
Audit
      services:
–
statutory
      audit
45.5
39.6
–
audit-related
      regulatory reporting
17.5
9.3
Total
      audit services
63.0
48.9
Further
      assurance services
15.3
7.0
Tax
      services
2.6
6.2
Other
      services
1.7
3.4
Total
      fees paid to KPMG
82.6
65.5
Of fees
      paid to auditors for non-audit work, US$0.1 million were capitalised
      (2004: US$0.4 million).
Included
      in 'Further assurance services' above are fees paid to KPMG in
      respect of work relating to preparation for reporting under section 404
      of the Sarbanes-Oxley Act of US$11.7 million (2004: US$4.1 million).
      Other accounting firms have been paid a total of US$16.7 million (2004:
      US$6.6 million) for work on this project.
The following
        is a description of the type of services included within the categories
      listed above:
–
Audit-related
      regulatory reporting services include services for assurance and other services
      that are reasonably
related
      to the performance of the audit or review of financial statements, including
      comfort letters and interim
reviews.
–
Further
      assurance services include services for advice on accounting matters, reporting
      on internal controls not
connected
      with the financial statements, due diligence work and environmental audits.
–
Tax services
      include tax compliance services and tax advice.
–
Other services
      include other assurance and advisory services such as translation services,
      review of financial
models
      and advice on IT security.
In addition
      to the above, KPMG estimate they have been paid fees of US$4.5 million
      (2004: US$4.0 million) by parties other than HSBC but where HSBC is
      connected with the contracting party and therefore may be involved in appointing
      KPMG. These fees arise from services such as auditing mutual funds managed
      by HSBC and reviewing the financial position of corporate concerns which
      borrow from HSBC.
9
Share-based
      payments
During
      2005, US$540 million was charged to the income statement in respect
      of equity-settled share-based payment transactions (2004: US$450 million).
      This expense was based on the fair value of the share-based payment transactions
      when contracted. All of the expense arose under employee share awards made
      within HSBC's reward structures.
Calculation
      of fair values
Fair values
      of share options/awards, measured at the date of grant of the option/award,
      are calculated using a binomial lattice model methodology that is based
      on the underlying assumptions of the Black-Scholes model. When modelling
      options/awards with vesting dependent on HSBC's Total Shareholder Return
      over a period, these performance targets are incorporated into the model
      using Monte Carlo simulation. The expected life of options depends on the
      behaviour of option holders, which is incorporated into the option model
      consistent with historic
269
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H
      S B C   H O L D I N G S   P L C
Notes
      on the Financial Statements
(continued)
observable
      data. The fair values calculated are inherently subjective and uncertain
      due to the assumptions made and the limitations of the model used.
The
      significant weighted average assumptions used to estimate the fair value
      of the options granted in 2005 were as follows:
3-year
5-year
HSBC
Savings-
Savings-
Holdings
Related
Related
      Share
The
Group
      Share
Share
      Option
Option
HSBC
Option
      Plan
Plans
Plans
Share
      Plan
Risk-free
      interest rate
1
(%)
4.6
4.3
4.3
4.3
Expected
      life
2
(years)
7.8
3
5
5
Expected
      volatility
3
(%)
20
20
20
20
1
The
      risk-free rate was determined from the UK gilts yield curve for the HSBC
      Holdings Group Share Option Plan awards and UK Savings-Related Share Option
      Plans. A similar yield curve was used for the International Savings-Related
      Share Option Plans
.
2
Expected
      life is not a single input parameter but a function of various behavioural
      assumptions.
3
Expected
      volatility is estimated by considering both historic average share price
      volatility and implied volatility derived from traded options over HSBC
      shares of similar maturity to those of the employee options.
Expected
      dividend yield was determined, denominated in US dollars, to be 12 per cent
      for the first year and 8 per cent thereafter, consistent with consensus
      analyst forecasts.
The HSBC
      Share Plan
The HSBC
      Share Plan was adopted by HSBC in 2005. Under this Plan Performance Share
      awards, Restricted Share awards and Share Option awards may be made. The
      aim of The HSBC Share Plan is to align the interests of executives to the
      creation of shareholder value and recognise individual performance and potential.
      Awards are also made under this plan for recruitment and retention purposes.
Performance
      Share awards
Performance
      Share awards are made to Senior Executives taking into account individual
      performance in the prior year. Performance Share awards are divided into
      two equal parts for testing attainment against pre-determined benchmarking.
      One half is subject to a Total Shareholder Return measure, based on HSBC's
      ranking against a comparator group of 28 major banks. The other half of
      the award is subject to an Earnings Per Share target. For each element of
      the award, shares would be released to the employee according to a sliding
      scale from 30 to 100 per cent of the award, dependent upon the scale of
      achievement against the benchmarks and provided that a threshold has been
      passed. If the threshold is not passed, 0 per cent will vest for that part
      of the award. Shares will be released after three years to the extent that
      the performance conditions are satisfied. These awards are forfeited in
      total if HSBC performance fails to meet the minimum criteria.
2005
Number
(000
's)
Additions
      during the year
1
5,077
Forfeited
      in the year
–
Outstanding
      at 31 December
5,077
1
Additions
      during the year include 3,453,884 shares awarded to employees of HSBC Holdings.
The
      weighted average fair value of shares awarded by HSBC for Performance Share
      awards in 2005 was US$9.02.
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Restricted
      Share awards
Restricted
      Share awards are made to eligible employees for recruitment and retention
      purposes or as part of deferral of annual bonus. The awards vest between
      one and three years from date of award.
2005
Number
(000
's)
Additions
      during the year
1
5,285
Released
      in the year
(179
)
Forfeited
      in the year
–
Outstanding
      at 31 December
5,106
1
Additions
      during the year include 823 shares awarded to employees of HSBC Holdings.
The
      weighted average fair value of shares awarded by HSBC for Restricted Share
      Awards in 2005 was US$16.66.
Share
      options
Share
      options were granted under the Rules of The HSBC Share Plan to employees
      in France based on their performance in the previous year. The share options
      are subject to the corporate performance condition, which consists of an
      absolute Earnings Per Share measure and a Total Shareholder Return measure,
      based on HSBC's ranking against a comparator group of 28 major banks.
      The options vest after three years and are exercisable up to the fourth
      anniversary of the date of grant, after which they will lapse.
2005
Weighted
average
exercise
Number
price
(000's)
£
Granted
      in the year
628
8.84
Forfeited
      in the year
–
–
Outstanding
      at 31 December
628
8.84
The fair
      value of options granted in the year as at the date of grant was US$2.29.
      The remaining contractual life of options outstanding at the balance sheet
      date is 4 years. None of these options are exercisable at the balance sheet
      date.
Savings-related
      share option plans
The savings-related
      share option plans invite eligible employees to enter into savings contracts
      to save up to £250 per month, with the option to use the savings to
      acquire shares. The aim of the plan is to align the interests of all employees
      to the creation of shareholder value. The options are exercisable within
      six months following either the third or the fifth anniversary of the commencement
      of the savings contract depending on conditions set at grant. The exercise
      price is set at a 20 per cent (2004: 20 per cent) discount to the market
      value at the date of grant.
2005
2004
Weighted
Weighted
average
average
exercise
exercise
Number
price
Number
price
(000's)
£
(000's)
£
Outstanding
      at 1 January
109,722
5.92
123,316
5.75
Granted
      in the year
26,995
6.68
25,040
6.47
Exercised
      in the year
(29,693
)
6.06
(30,068
)
5.76
Forfeited
      in the year
(8,608
)
6.06
(8,566
)
5.67
Outstanding
      at 31 December
1
98,416
6.07
109,722
5.92
1
The
      above includes HSBC Holdings employee options of 599,322 outstanding at
      1 January 2005 (2004: 669,647), 136,100 options granted in the year (2004:
      125,442) and 606,205 options outstanding at 31 December 2005 (2004: 599,322).
271
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H
      S B C   H O L D I N G S   P L C
Notes
      on the Financial Statements
(continued)
The
      weighted average fair value of options granted in the year as at the date
      of grant was US$3.76 (2004: US$3.75) . The exercise price range
      and weighted average remaining contractual life for options outstanding
      at the balance sheet date, were as follows:
2005
2004
Exercise
      price range (£)
£5.35
      - £6.75
£5.35
      - £6.75
Weighted
      average remaining contractual life (years)
1.89
1.82
Of
      which exercisable:
Number (000's)
772
1,341
Weighted average exercise price (£)
6.09
6.20
HSBC
      Holdings Restricted Share Plan 2000
Performance
      Share awards made under the HSBC Holdings Restricted Share Plan 2000
Performance
      Share awards under the Restricted Share Plan were granted to Senior Executives
      from 1996 to 2004. The aim of the plan was to align the interests of executives
      to the creation of shareholder value. This was achieved by setting certain
      Total Shareholder Return targets against a peer group of major banks which
      must normally be attained in order for the awards to vest. No further awards
      will be made under this Plan following adoption of the HSBC Share Plan in
      2005 other than from reinvested scrip dividends.
2005
2004
Number
Number
(000
's)
(000
's)
Outstanding
      at 1 January
17,044
13,669
Additions
      during the year
1
710
5,727
Released
      in the year
(2,455
)
(2,352
)
Forfeited
      in the year
(329
)
–
Outstanding
      at 31 December
14,970
17,044
1
Additions
      during the year include reinvested scrip dividends. Additions during the
      year also include 321,279 shares awarded to employees of HSBC Holdings.
The weighted
      average remaining vesting period as at 31 December 2005 was 2.14 years (2004:
      2.52 years).
Restricted
      share awards made under the HSBC Holdings Restricted Share Plan 2000 ('Achievement
      Shares')
Achievement
      shares are utilised to promote widespread interest in HSBC shares among
      employees and to help foster employee engagement. They are awarded to eligible
      employees after taking into account the employee's performance in the
      prior year. Shares are awarded without corporate performance conditions
      and are released to employees after three years providing the employees
      have remained continuously employed by HSBC for this period. During 2005,
      10,245 employees each received an average award of 1,146 shares under this
      scheme.
Number
      of
shares
000
's
Additions
      during the year
1
11,741
Forfeited
      in the year
–
Outstanding
      at 31 December
11,741
1
Additions
      during the year include reinvested scrip dividends. Additions during the
      year also include 384,797 shares awarded to employees of HSBC Holdings.
The weighted
      average fair value of shares awarded by HSBC for Achievement Share Awards
      in 2005 was US$15.88.
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Other
      awards made under the HSBC Holdings Restricted Share Plan 2000
Other awards
      were made under the HSBC Holdings Restricted Share Plan 2000 as part deferral
      of annual bonus. Awards were also made for recruitment and retention purposes.
      The awards generally vest from one to three years from the date of award.
      Awards made under this plan ceased in May 2005. Awards of restricted shares
      on or after 27 May 2005 were made under the Rules of the HSBC Share Plan.
2005
2004
Number
Number
(000
's)
(000
's)
Outstanding
      at 1 January
46,021
43,153
Additions
      during the year
22,698
–
Released
      in the year
(21,007
)
18,813
Forfeited
      in the year
(1,026
)
(15,945
)
Outstanding
      at 31 December
46,686
46,021
The above
      includes HSBC Holdings employee awards of 864,327 options outstanding at
      1 January 2005 (2004: 1,152,055) and 712,922 options outstanding at 31 December
      2005 (2004: 864,327).
The weighted
      average remaining vesting period as at 31 December 2005 was 1.09 years (2004:
      1.47 years).
HSBC Holdings
      Group Share Option Plan
The HSBC
      Holdings Group Share Option Plan was a long-term incentive plan under which
      certain HSBC employees between 2000 and 2005 were awarded share options.
      The aim of the plan was to align the interests of those higher performing
      employees to the creation of shareholder value. This was achieved by setting
      certain Total Shareholder Return targets which must normally be attained
      in order for the awards to vest. Options were granted at market value and
      are normally exercisable between the third and tenth anniversaries of the
      date of grant, subject to vesting conditions. Any options granted after
      May 2005 will be made under the Rules of the HSBC Share Plan.
2005
2004
Weighted
Weighted
average
average
exercise
exercise
Number
price
Number
price
(000
's)
£
(000
's)
£
Outstanding
      at 1 January
220,670
8.07
163,997
8.00
Granted
      in the year
7,470
8.36
63,682
8.28
Exercised
      in the year
(11,764
)
8.49
(1,460
)
8.59
Forfeited
      in the year
(6,394
)
8.00
(5,549
)
8.00
Outstanding
      at 31 December
1
209,982
8.06
220,670
8.07
1
The
      above includes HSBC Holdings employee awards of 2,624,133 options outstanding
      at 1 January 2005 (2004: 2,672,400), 3,775 options granted in the year (2004:37,280)
      and 2,537,647 options outstanding at 31 December 2005 (2004: 2,624,133).
The
      weighted average fair value of options granted in the year as at the date
      of grant was US$3.09 (2004: US$2.96) . The number of options, weighted
      average exercise price, and the weighted average remaining contractual life
      for options outstanding at the balance sheet date, analysed by exercise
      price range, were as follows:
2005
2004
Exercise
      price range (£)
6.00
      - 8.00
8.01
      - 10.00
6.00
      - 8.00
8.01
      - 10.00
Number
      (000's)
53,242
156,741
55,246
165,424
Weighted
      average exercise price (£)
6.91
8.45
6.91
8.46
Weighted
      average remaining contractual life (years)
5.63
7.05
6.46
7.86
Of
      which exercisable:
Number (000's)
411
84,145
–
45,463
Weighted average exercise price (£)
7.46
8.55
–
8.72
273
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H
      S B C   H O L D I N G S   P L C
Notes
      on the Financial Statements
(continued)
HSBC Holdings
      Executive Share Option Scheme
The HSBC
      Holdings Executive Share Option Scheme was a long-term incentive scheme
      under which certain senior HSBC employees were awarded share options before
      the adoption of the HSBC Holdings Group Share Option Plan in 2000. The aim
      of the plan was to align the interests of those higher performing senior
      employees to the creation of shareholder value. This was achieved by setting
      certain Total Shareholder Return targets to be attained in order for the
      awards to vest. Options were granted at market value and were exercisable
      between the third and tenth anniversaries of the date of grant, subject
      to vesting conditions. No awards have been made under this plan since 2000
      and the remaining unexercised options are summarised below:
2005
2004
Weighted
Weighted
average
average
exercise
exercise
Number
price
Number
price
(000
's)
£
(000
's)
£
Outstanding
      at 1 January
43,977
6.76
59,613
6.73
Exercised
      in the year
(11,206
)
6.67
(14,823
)
6.62
Forfeited
      in the year
(516
)
7.31
(813
)
6.90
Outstanding
      at 31 December
1
32,255
6.78
43,977
6.76
1
The
      above includes HSBC Holdings employee awards of 864,327 options outstanding
      at 1 January 2005 (2004: 1,152,055) and 712,922 options outstanding at 31
      December 2005 (2004: 864,327).
The
      weighted average fair value of options as at the last date of grant during
      2000 was US$5.26.
The
      number of options, weighted average exercise price and the weighted average
      remaining contractual life for options outstanding at the balance sheet
      date, analysed by exercise price range, were as follows:
2005
2004
Exercise
      price range (£)
2.17
      - 6.00
6.01
      - 7.87
2.17
      - 6.00
6.01
      - 7.87
Number
      (000's)
781
31,474
1,233
42,744
Weighted
      average exercise price (£)
4.57
6.83
4.31
6.83
Weighted
      average remaining contractual life (years)
0.97
3.64
1.78
4.63
Of
      which exercisable:
Number (000's)
781
31,474
1,233
42,744
Weighted average exercise price (£)
4.57
6.83
4.31
6.83
HSBC France
      and subsidiary company plans
Before
      its acquisition by HSBC in 2000, HSBC France and certain of its subsidiaries
      operated employee share plans under which share options were granted over
      their respective shares.
Options
      over HSBC France shares granted between 1994 and 1999 vested upon announcement
      of HSBC's intent to acquire HSBC France and were therefore included
      in the valuation of HSBC France.
HSBC France
      granted 909,000 options in 2000 after the public announcement of the acquisition
      and these options did not vest as a result of the change in control. The
      options were subject to continued employment and vested on 1 January 2002.
      The HSBC France shares obtained on exercise of the options are exchangeable
      for HSBC's ordinary shares of US$0.50 each in the same ratio as
      the Exchange Offer for Crédit Commercial de France shares (13 ordinary
      shares of US$0.50 for each HSBC France share). Options were granted
      at market value and are exercisable within 10 years of the date of grant.
2005
2004
Exercise
Exercise
Number
price
Number
price
(000
's)
€
(000
's)
€
Outstanding
      at 1 January
860
142.5
862
142.5
Exercised
      in the year
(94
)
142.5
(2
)
142.5
Outstanding
      at 31 December
766
142.5
860
142.5
The remaining
      contractual life for options outstanding at the balance sheet date was 6
      years.
At the
      date of its acquisition in 2000, certain of HSBC France's subsidiary
      companies also operated employee share
274
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option plans
      under which options could be granted over their respective shares. On exercise
      of certain of these options, the subsidiary shares are exchanged for HSBC
      ordinary shares. The total number of HSBC ordinary shares exchangeable under
      such arrangements was 821,466 shares during the year.
HSBC Finance
      Corporation
Upon acquisition,
      HSBC Finance Corporation share options previously granted were converted
      to share options over HSBC ordinary shares of US$0.50 each at a rate
      of 2.675 HSBC share options (the same ratio as the Exchange Offer for HSBC
      Finance Corporation) for each HSBC Finance Corporation share option. Options
      granted under HSBC Finance's own share option schemes prior to the
      announcement of the acquisition by HSBC in November 2002 vested as options
      over HSBC shares upon acquisition by HSBC. Options granted after the announcement
      of the acquisition in November 2002 but prior to its completion on 28 March
      2003, generally vest equally over 4 years and expire 10 years from the date
      of grant.
Information
      with respect to share options granted under the HSBC Finance Corporation's
      pre-acquisition scheme was as follows:
2005
2004
Exercise
Exercise
Number
price
Number
price
(000
's)
US$
(000
's)
US$
HSBC
      Finance Corporation share options outstanding at 1 January
7,112
10.66
7,316
10.66
Exercised
      in the year
(754
)
10.66
(174
)
10.66
Forfeited
      in the year
–
–
(30
)
10.66
Outstanding
      at 31 December
6,358
10.66
7,112
10.66
Of
      which exercisable
5,520
10.66
4,238
10.66
10
Tax
      expense
2005
2004
US$m
US$m
Current
      tax
United
      Kingdom corporation tax charge – on current year profit
663
848
United
      Kingdom corporation tax charge – adjustments in respect of prior years
29
(132
)
Overseas
      tax – on current year profit
4,103
2,877
Overseas
      tax – adjustments in respect of prior years
(110
)
(21
)
4,685
3,572
Deferred
      tax
Origination
      and reversal of temporary differences
506
1,204
Effect
      of changes in tax rates
8
(15
)
Adjustments
      in respect of prior years
(106
)
(76
)
408
1,113
Tax
      expense
5,093
4,685
HSBC
      Holdings and its subsidiary undertakings in the United Kingdom provided
      for UK corporation tax at 30 per cent (2004: 30 per cent). Overseas tax
      included Hong Kong profits tax of US$639 million (2004: US$539 million).
      Subsidiaries in Hong Kong provided for Hong Kong profits tax at the rate
      of 17.5 per cent (2004: 17.5 per cent) on the profits for the year assessable
      in Hong Kong. Other overseas subsidiaries and overseas branches provided
      for taxation at the appropriate rates in the countries in which they operate.
The
      following table reconciles the overall tax expense which would apply if
      all profits had been taxed at the UK corporation tax rate:
275
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H
      S B C   H O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
2005
2004
US$m
%
US$m
%
Analysis
      of overall tax expense
Taxation
      at UK corporation tax rate of 30 per cent (2004: 30 per cent)
6,290
30.0
5,683
30.0
Impact
      of overseas profits in principal locations taxed at different rates
(342
)
(1.6
)
(347
)
(1.8
)
Tax-free
      gains
(220
)
(1.0
)
(64
)
(0.3
)
Adjustments
      in respect of prior period liabilities
(187
)
(0.9
)
(229
)
(1.2
)
Low
      income housing tax credits
1
(110
)
(0.5
)
(95
)
(0.5
)
Other
      items
(145
)
(0.8
)
9
(0.1
)
Deductible
        innovative tier 1 capital expense presented below profit before
        tax
–
–
(192
)
(1.0
)
Impact
      of profit in associates and joint ventures
(193
)
(0.9
)
(80
)
(0.4
)
Overall
      tax expense
5,093
24.3
4,685
24.7
1
Low
      income housing tax credits arise in the United States and are designed to
      encourage the provision of rental housing for low income households.
In
      addition to the amount charged to the income statement, the aggregate amount
      of current and deferred tax, relating to items that are taken directly to
      equity, was US$437 million (2004: US$319 million).
11
Dividends
Dividends
         to shareholders of the parent company amounted to US$7,750 million
         in  2005 (2004: US$6,932 million). Of
      this, US$7,729 million was dividends paid on ordinary share capital
      (2004: US$6,932 million) and US$21 million was
      paid on preference shares classified as equity.
2005
2004
Settled
      in
Settled
      in
US$
      per
Total
scrip
US$
      per
Total
scrip
share
US$m
US$m
share
US$m
US$m
Fourth
      interim dividend previous year
0.270
3,007
431
–
–
–
First
      interim dividend for current year
0.140
1,563
677
0.130
1,425
747
Second
      interim dividend for current year
0.140
1,574
311
0.130
1,436
746
Third
      interim dividend for current year
0.140
1,585
392
0.130
1,444
255
Third
      interim dividend for previous year
–
–
–
0.240
2,627
346
0.690
7,729
1,811
0.630
6,932
2,094
The Directors
      have declared a fourth interim dividend in respect of the financial year
      ended 31 December 2005 of US$0.31 per ordinary share, a distribution
      of US$3,513 million. The fourth interim dividend will be payable on
      11 May 2006 to shareholders on the Register at the close of business on
      24 March 2006.
12
Earnings
      per share
Basic
        earnings  per ordinary share was calculated by dividing the earnings
        of US$15,060
      million (2004:
      US$12,918 million) by the weighted average number of ordinary shares,
      excluding own shares held, outstanding in 2005 of 11,038 million (2004:
      10,907 million).
2005
2004
US$m
US$m
Profit
      attributable to shareholders of the parent company
15,081
12,918
Dividend
      payable on preference shares classified as equity
(21
)
–
Profit
      attributable to the ordinary shareholders of the parent company
15,060
12,918
Diluted
      earnings per ordinary share was calculated by dividing the basic earnings,
      which require no adjustment for the effects of dilutive potential ordinary
      shares (including share options outstanding not yet exercised), by the weighted
      average number of ordinary shares outstanding, excluding own shares held,
      plus the weighted average number of ordinary shares that would be issued
      on ordinary conversion of dilutive potential ordinary shares in 2005 of
      11,171 million (2004: 11,054 million). The effect of dilutive share options
      and share awards on the weighted average number of ordinary shares in issue
      was as follows:
276
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Number
      of shares (millions)
2005
2004
Average
      number of shares in issue
11,038
10,907
Dilutive
      share options and share awards
133
147
–  Savings-related Share Option Plan
22
38
–  Executive Share Option Scheme
11
12
–  Group Share Option Plan
14
13
–  Restricted Share Plan
70
63
–  HSBC France share options
10
13
–  HSBC Finance share options
6
8
Average
      number of shares in issue assuming dilution
11,171
11,054
Of the total
      number of employee share options and share awards existing at 31 December
      2005, 121 million were anti-dilutive (2004: 70 million).
13
Segment
      analysis
In the following segmental analysis, the benefit
        of shareholders' funds impacts the analysis only to the extent that
        these funds are actually allocated to businesses in the segment by way
    of intra-HSBC capital and funding structures.
.
By geographical
      region
Geographical information is classified by
        the location of the principal operations of the subsidiary undertaking,
        or, for The Hongkong and Shanghai Banking Corporation, HSBC Bank, HSBC
        Bank Middle East, HSBC Finance and HSBC Bank USA, by the location of
        the branch responsible for reporting the results or advancing the funds.
        Due to the nature of HSBC's structure, the analysis of profits shown
        below includes intra-HSBC items between geographical regions with the
        elimination shown in a separate column. The Rest of Asia-Pacific geographical
        segment includes the Middle East, India and Australasia. Shared costs
        are
included in segments on the basis of the actual recharges made.
Total
      assets
At
      31 December 2005
At
      31 December 2004
US$m
%
US$m
%
Europe
636,703
42.7
545,557
43.0
Hong
      Kong
222,822
15.0
213,458
16.8
Rest
      of Asia-Pacific
142,014
9.5
120,530
9.5
North
      America
463,143
31.1
371,183
29.3
South
      America
24,734
1.7
17,368
1.4
1,489,416
100.0
1,268,096
100.0
Hong
      Kong Government certificates of indebtedness
12,554
11,878
1,501,970
1,279,974
Total
      liabilities
At
      31 December 2005
At
      31 December 2004
US$m
%
US$m
%
Europe
594,953
42.8
499,579
42.8
Hong
      Kong
210,539
15.1
194,436
16.6
Rest
      of Asia-Pacific
136,892
9.8
117,208
10.0
North
      America
426,467
30.7
342,008
29.3
South
      America
22,339
1.6
15,668
1.3
1,391,190
100.0
1,168,899
100.0
Hong
      Kong currency notes in circulation
12,554
11,878
1,403,744
1,180,777
277
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H S B C
H
    O L D I N G S
P
L C
Notes
  on the Financial Statements
(continued)
Profit
  before tax
Year
      ended 31 December 2005
Europe
Hong
Rest
      of
North
South
Intra-
Asia-
HSBC
Kong
Pacific
America
America
items
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Interest
      income
21,023
7,419
5,673
24,374
3,927
(2,322
)
60,094
Interest
      expense
(12,802
)
(3,355
)
(3,261
)
(9,487
)
(2,177
)
2,322
(28,760
)
Net
      interest income
8,221
4,064
2,412
14,887
1,750
–
31,334
Fee
      income
8,081
1,967
1,619
5,346
740
(267
)
17,486
Fee
      expense
(1,782
)
(293
)
(279
)
(740
)
(203
)
267
(3,030
)
Net
      fee income
6,299
1,674
1,340
4,606
537
–
14,456
Trading
        income excluding net
interest
        income
1,660
773
753
371
99
–
3,656
Net interest
        income/(expense)
on
        trading activities
1,376
(227
)
107
642
310
–
2,208
Net
      trading income
3,036
546
860
1,013
409
–
5,864
Net
            income/(expense) from
financial
            instruments
designated
        at fair value
362
(6
)
58
434
186
–
1,034
Gains
      less losses from financial
investments
439
108
18
88
39
–
692
Dividend
      income
63
41
5
42
4
–
155
Net
      earned insurance premiums
1,599
2,334
155
602
746
–
5,436
Other
      operating income
1,603
805
335
740
188
(938
)
2,733
Total
      operating income
21,622
9,566
5,183
22,412
3,859
(938
)
61,704
Net insurance
        claims incurred
and
        movement in policy
holders'
        liabilities
(818
)
(2,059
)
(166
)
(333
)
(691
)
–
(4,067
)
Net
        operating income before
loan
        impairment charges
and
        other credit risk
provisions
20,804
7,507
5,017
22,079
3,168
(938
)
57,637
Loan impairment
        charges and
other
        credit risk provisions
(1,929
)
(146
)
(134
)
(5,038
)
(554
)
–
(7,801
)
Net
      operating income
1
18,875
7,361
4,883
17,041
2,614
(938
)
49,836
Total operating
        expenses
(excluding
        depreciation and
amortisation)
(11,493
)
(2,586
)
(2,648
)
(9,670
)
(1,869
)
938
(27,328
)
Depreciation
        of property, plant
and
        equipment
(912
)
(168
)
(107
)
(372
)
(73
)
–
(1,632
)
Amortisation
      of intangible
assets
(234
)
(113
)
(7
)
(175
)
(25
)
–
(554
)
Total
      operating expenses
(12,639
)
(2,867
)
(2,762
)
(10,217
)
(1,967
)
938
(29,514
)
Operating
      profit
6,236
4,494
2,121
6,824
647
–
20,322
Share
      of profit in associates
and
      joint ventures
120
23
453
48
–
–
644
Profit
      before tax
6,356
4,517
2,574
6,872
647
–
20,966
Other
      disclosures:
Capital
      expenditure incurred
2
1,892
249
191
2,028
113
–
4,473
Investment
      in associates and
joint
      ventures
1,733
108
5,362
43
3
–
7,249
1
Net
      operating income
External
18,300
7,001
4,636
17,273
2,626
–
49,836
Inter-segment
575
360
247
(232
)
(12
)
(938
)
–
2
Expenditure
      incurred on property, plant and equipment and intangible assets
.
278
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Year
      ended 31 December 2004
Hong
Rest
      of
North
South
Intra-
Asia-
HSBC
Europe
Kong
Pacific
America
America
items
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Interest
      income
18,360
5,133
4,149
21,281
2,376
(828
)
50,471
Interest
      expense
(9,262
)
(1,495
)
(2,089
)
(6,288
)
(1,066
)
828
(19,372
)
Net
      interest income
9,098
3,638
2,060
14,993
1,310
–
31,099
Fee
      income
7,546
1,964
1,287
4,751
590
(236
)
15,902
Fee
      expense
(1,566
)
(261
)
(246
)
(986
)
(131
)
236
(2,954
)
Net
      fee income
5,980
1,703
1,041
3,765
459
–
12,948
Trading
      income
997
659
494
582
54
–
2,786
Net
            investment income on
assets
    backing
policyholders' liabilities
571
314
32
–
95
–
1,012
Gains
    less losses from financial
investments
154
175
17
160
34
–
540
Dividend
      income
558
27
3
32
2
–
622
Net
      earned insurance premiums
1,875
2,247
97
553
596
–
5,368
Other
      operating income
1,175
536
146
359
28
(631
)
1,613
Total
      operating income
20,408
9,299
3,890
20,444
2,578
(631
)
55,988
Net
            insurance claims incurred
and
    movement in
policyholders' liabilities
(1,628
)
(2,154
)
(82
)
(312
)
(459
)
–
(4,635
)
Net
            operating income before
loan
            impairment charges and
other
    credit risk provisions
18,780
7,145
3,808
20,132
2,119
(631
)
51,353
Loan
            impairment charges and
other
    credit risk provisions
(1,033
)
220
(89
)
(5,022
)
(267
)
–
(6,191
)
Net
      operating income
1
17,747
7,365
3,719
15,110
1,852
(631
)
45,162
Total
            operating expenses
(excluding
    depreciation and
amortisation)
(10,783
)
(2,256
)
(1,984
)
(8,520
)
(1,350
)
631
(24,262
)
Depreciation
            of property, plant
and
    equipment
(1,095
)
(168
)
(99
)
(311
)
(58
)
–
(1,731
)
Amortisation
      of intangible
assets
(150
)
(134
)
(4
)
(201
)
(5
)
–
(494
)
Total
      operating expenses
(12,028
)
(2,558
)
(2,087
)
(9,032
)
(1,413
)
631
(26,487
)
Operating
      profit
5,719
4,807
1,632
6,078
439
–
18,675
Share
            of profit in associates and
joint
    ventures
37
23
215
(8
)
1
–
268
Profit
      before tax
5,756
4,830
1,847
6,070
440
–
18,943
Other
      disclosures:
Capital
      expenditure incurred
2
2,001
234
114
2,046
233
–
4,628
Investment
            in associates and
joint
    ventures
896
97
2,392
46
9
–
3,440
1
Net
      operating income:
External
17,463
7,052
3,569
15,182
1,896
–
45,162
Inter-segment
284
313
150
(72
)
(44
)
(631
)
–
2
Expenditure
    incurred on property, plant and equipment and intangible assets
.
279
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H S B C
H
    O L D I N G S
P
L C
Notes
  on the Financial Statements
(continued)
By customer
      group
HSBC's
      operations include a number of shared support services and head office functions.
      The costs of these functions are allocated to customer groups, where appropriate,
      on a systematic and consistent basis. In addition, a number of income and
      expense items include the effect of financial transactions entered into
      in the ordinary course of business between customer groups co-operating
      within the integrated HSBC Group. The following analysis includes inter-segment
      amounts within each customer group with the elimination shown in a separate
      column.
Total
      assets
At
      31 December 2005
At
      31 December 2004
US$m
%
US$m
%
Personal
      Financial Services
471,760
31.7
441,114
34.8
Commercial
      Banking
175,120
11.7
159,251
12.6
Corporate,
      Investment Banking and Markets
755,056
50.7
584,779
46.1
Private
      Banking
59,827
4.0
56,751
4.5
Other
27,653
1.9
26,201
2.0
Total
      assets
1
1,489,416
100.0
1,268,096
100.0
1  Excluding
      Hong Kong Government certificates of indebtedness.
Profit
      before tax
Year
      ended 31 December 2005
Corporate,
Intra-
Personal
Investment
Financial
Commercial
Banking
Private
HSBC
Services
Banking
&
      Markets
Banking
Other
items
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income
23,351
6,310
3,001
848
(472
)
(1,704
)
31,334
Net
      fee income
7,313
2,876
2,967
1,080
220
–
14,456
Trading
      income excluding net
interest
      income
360
150
2,919
317
(90
)
–
3,656
Net
      interest income/(expense)
on
      trading activities
214
(3
)
306
–
(13
)
1,704
2,208
Net
      trading income/(expense)
574
147
3,225
317
(103
)
1,704
5,864
Net income/(expense)
        from
financial
        instruments
designated
        at fair value
574
(12
)
67
(1
)
406
–
1,034
Gains
      less losses from financial
investments
19
9
475
45
144
–
692
Dividend
      income
16
9
79
9
42
–
155
Net
      earned insurance premiums
4,864
236
76
–
260
–
5,436
Other
      operating income
729
327
1,621
68
2,634
(2,646
)
2,733
Total
      operating income
37,440
9,902
11,511
2,366
3,131
(2,646
)
61,704
Net insurance
        claims incurred
and
        movement in policy
holders'
        liabilities
(3,716
)
(118
)
(54
)
–
(179
)
–
(4,067
)
Net
        operating income before
loan
        impairment charges and
other
        credit risk provisions
33,724
9,784
11,457
2,366
2,952
(2,646
)
57,637
Loan impairment
        charges and
other
        credit risk provisions
(7,537
)
(547
)
272
12
(1
)
–
(7,801
)
Net
      operating income
1
26,187
9,237
11,729
2,378
2,951
(2,646
)
49,836
Operating
      expenses
(16,427
)
(4,453
)
(6,838
)
(1,466
)
(2,976
)
2,646
(29,514
)
Operating
      profit
9,760
4,784
4,891
912
(25
)
–
20,322
Share
      of profit in associates and
joint
      ventures
144
177
272
–
51
–
644
Profit
      before tax
9,904
4,961
5,163
912
26
–
20,966
Capital
      expenditure incurred
2
1,583
411
1,783
102
594
–
4,473
1
Net
           operating income:
External
25,000
8,258
13,998
1,668
912
–
49,836
Inter-segment
1,187
979
(2,269
)
710
2,039
(2,646
)
–
2
Expenditure
      incurred on property, plant and equipment and intangible assets
.
280
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Year
      ended 31 December 2004
Corporate,
Intra-
Personal
Investment
Financial
Commercial
Banking
Private
HSBC
Services
Banking
&
      Markets
Banking
Other
items
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Net
      interest income
21,422
4,875
3,994
718
90
–
31,099
Net
      fee income
6,406
2,645
2,764
962
171
–
12,948
Trading
      income
320
234
1,935
257
40
–
2,786
Net investment
        income on assets
backing
        policyholders'
liabilities
635
324
9
–
44
–
1,012
Gains
      less losses from financial
investments
79
6
197
39
219
–
540
Dividend
      income
16
37
548
5
16
–
622
Net
      earned insurance premiums
3,652
1,072
86
–
558
–
5,368
Other
      operating income
360
513
1,029
24
2,050
(2,363
)
1,613
Total
      operating income
32,890
9,706
10,562
2,005
3,188
(2,363
)
55,988
Net
        insurance claims incurred
and
        movement in
policyholders'
        liabilities
(2,953
)
(1,264
)
(59
)
–
(359
)
–
(4,635
)
Net
        operating income before loan
impairment
        charges and other
credit
        risk provisions
29,937
8,442
10,503
2,005
2,829
(2,363
)
51,353
Loan
        impairment charges and
other
        credit risk provisions
(6,500
)
(200
)
499
11
(1
)
–
(6,191
)
Net
      operating income
1
23,437
8,242
11,002
2,016
2,828
(2,363
)
45,162
Operating
      expenses
(15,009
)
(4,220
)
(5,809
)
(1,319
)
(2,493
)
2,363
(26,487
)
Operating
      profit
8,428
4,022
5,193
697
335
–
18,675
Share
      of profit in associates
and
      joint ventures
69
35
95
–
69
–
268
Profit
      before tax
8,497
4,057
5,288
697
404
–
18,943
Capital
      expenditure incurred
2
1,415
614
1,919
142
538
–
4,628
1
Net
      operating income:
External
22,760
7,419
12,239
1,704
1,040
–
45,162
Inter-segment
677
823
(1,237
)
312
1,788
(2,363
)
–
2
Expenditure
      incurred on property, plant and equipment and intangible assets.
14
Analysis of financial assets and liabilities by measurement basis
Financial
         assets and financial liabilities are measured on an ongoing basis either

      at fair value or at amortised cost. The summary of significant accounting
         policies in Note 2 describes how the classes of financial instruments
        are
      measured, and how income and expenses, including fair value gains and losses,
         are recognised. The following table analyses the financial assets and
        liabilities
      in the balance sheet by the class of financial instrument to which they
         are assigned, and therefore by the measurement basis:
281
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H S B C
H
    O L D I N G S
P
L C
Notes
  on the Financial Statements
(continued)
HSBC
At
      31 December 2005
Financial
Derivatives
Derivatives
assets
      and
designated
designated
Held-to-
Available-
liabilities
      at
as
      fair value
as
      cash flow
Held
      for
Designated
maturity
Loans
      and
for-sale
amortised
hedging
hedging
trading
at
      fair value
securities
receivables
securities
cost
instruments
instruments
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
ASSETS
Cash
      and balances at central banks
–
–
–
–
–
13,712
–
–
13,712
Items
        in the course of collection from other banks
–
–
–
–
–
11,300
–
–
11,300
Hong Kong
        Government certificates of indebtedness
–
–
–
12,554
–
–
–
–
12,554
Trading
      assets
190,257
–
–
–
–
–
–
–
190,257
Trading
        assets which may be repledged or resold by counterparties
42,652
–
–
–
–
–
–
–
42,652
Financial
        assets designated at fair value
–
15,046
–
–
–
–
–
–
15,046
Derivatives
70,251
–
–
–
–
–
149
3,528
73,928
Loans
      and advances to banks
–
–
–
125,965
–
–
–
–
125,965
Loans
      and advances to customers
–
–
–
740,002
–
–
–
–
740,002
Financial
      investments
–
–
8,515
–
167,786
–
–
–
176,301
Financial
        investments which may be repledged or resold by counterparties
–
–
–
–
–
6,041
–
–
6,041
Other
      assets
–
–
–
–
–
26,596
–
–
26,596
Prepayments
      and accrued income
–
–
–
–
–
11,961
–
–
11,961
Total
      financial assets
303,160
15,046
8,515
878,521
167,786
69,610
149
3,528
1,446,315
Total
      non-financial assets
55,655
Total
      assets
1,501,970
LIABILITIES
Hong Kong
        currency notes in circulation
–
–
–
12,554
–
–
–
–
12,554
Deposits
      by banks
–
–
–
–
–
69,727
–
–
69,727
Customer
      accounts
–
–
–
–
–
739,419
–
–
739,419
Items
        in the course of transmission to other banks
–
–
–
–
–
7,022
–
–
7,022
Trading
      liabilities
174,365
–
–
–
–
–
–
–
174,365
Financial
        liabilities designated at fair value
–
61,829
–
–
–
–
–
–
61,829
Derivatives
72,389
–
–
–
–
–
471
1,176
74,036
Debt
      securities in issue
–
–
–
–
–
188,072
–
–
188,072
Other
      liabilities
–
–
–
–
–
26,515
–
–
26,515
Subordinated
      liabilities
–
–
–
–
–
16,537
–
–
16,537
Total
      financial liabilities
246,754
61,829
–
12,554
–
1,047,292
471
1,176
1,370,076
Total
      non-financial liabilities
33,668
Total
      liabilities
1,403,744
.
282
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HSBC
      Holdings
At
      31 December 2005
Financial
assets
      and
Available-
liabilities
      at
Held
      for
Designated
Loans
      and
for-sale
amortised
trading
at
      fair value
receivables
securities
cost
Total
US$m
US$m
US$m
US$m
US$m
US$m
ASSETS
Cash
      at bank and in hand
–
–
–
–
756
756
Derivatives
968
–
–
–
–
968
Loans
      and advances to HSBC undertakings
–
–
14,092
–
–
14,092
Financial
      investments
–
–
–
3,517
–
3,517
Other
      assets
–
–
–
–
25
25
Total
      financial assets
968
–
14,092
3,517
781
19,358
Total
      non-financial assets
58,204
Total
      assets
77,562
LIABILITIES
Amounts
      owed to HSBC undertakings
–
–
–
–
4,075
4,075
Financial
      liabilities designated at fair value
–
13,370
–
–
–
13,370
Derivatives
286
–
–
–
–
286
Subordinated
      liabilities
–
–
–
–
5,236
5,236
Other
      liabilities
–
–
–
–
3
3
Accruals
      and deferred income
–
–
–
–
95
95
Total
      financial liabilities
286
13,370
–
–
9,409
23,065
Total
      non-financial liabilities
1,270
Total
      liabilities
24,335
283
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H S B C   H O L D
  I N G S   P L C
Notes on the
  Financial Statements
(continued)
15
Trading
      assets
2005
2004
US$m
US$m
Trading
      assets:
–
      which may be repledged or resold by counterparties
42,652
–
–
      not subject to repledge or resale by counterparties
190,257
–
232,909
122,160
Treasury
      and other eligible bills
12,746
4,816
Debt
      securities
117,659
95,308
Equity
      securities
20,203
22,036
Loans
      and advances to banks
29,806
–
Loans
      and advances to customers
52,495
–
232,909
122,160
The
      following table provides an analysis of trading securities which are valued
      at fair value and the net unrealised holding gains/(losses) included in
      this value:
2005
2004
Fair
Gains/
Fair
Gains/
value
(losses)
value
(losses)
US$m
US$m
US$m
US$m
US
      Treasury and US Government agencies
12,094
(21
)
8,252
109
UK
      Government
3,225
2
7,170
164
Hong
      Kong Government
6,529
(16
)
5,190
12
Other
      government
49,852
280
29,541
(4
)
Asset-backed
      securities
3,361
(24
)
2,161
2
Corporate
      debt and other securities
1
55,344
324
47,810
(204
)
Equities
20,203
(117
)
22,036
92
150,608
428
122,160
171
1
Included
      within corporate debt and other securities are debt securities issued by
      banks and other financial institutions of US$16,888 million (2004: US$19,516
      million).
Treasury
Debt
Equity
Total
and
      other
eligible
      bills
securities
securities
US$m
US$m
US$m
US$m
Fair
      value at 31 December 2005
Listed
      on a recognised exchange
1
–
95,994
17,728
113,722
Unlisted
12,746
21,665
2,475
36,886
12,746
117,659
20,203
150,608
Fair
      value at 31 December 2004
Listed
      on a recognised exchange
1
–
67,725
20,122
87,847
Unlisted
4,816
27,583
1,914
34,313
4,816
95,308
22,036
122,160
1
Included
      within listed investments are US$2,049 million (2004: US$2,861 million)
      of investments listed in Hong Kong.
16
Financial
      assets designated at fair value
2005
US$m
Treasury
    and other eligible bills
53
Debt
    securities
5,705
Equity
    securities
8,533
Loans
    and advances to banks
124
Loans
    and advances to customers
631
15,046
For
    loans and advances and unquoted debt securities designated at fair value:
–
maximum
      exposure to credit risk at 31 December 2005
958
–
the
      cumulative change in fair value arising from changes in credit risk
28
284
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Treasury
Debt
Total
and
      other
Equity
eligible
      bills
securities
securities
US$m
US$m
US$m
US$m
Fair
      value at 31 December 2005
Listed
      on a recognised exchange
1
–
3,012
7,192
10,204
Unlisted
53
2,693
1,341
4,087
53
5,705
8,533
14,291
1
Included
      within listed investments are US$932 million of investments listed in
      Hong Kong.
The
      following table provides an analysis of securities designated at fair value:
Market
Valuation
2005
US$m
US
      Treasury and US Government agencies
86
UK
      Government
1,164
Hong
      Kong Government
171
Other
      government
1,358
Asset-backed
      securities
193
Corporate
      debt and other securities
1
2,786
Equities
8,533
14,291
1
Included
      within corporate debt and other securities are debt securities issued by
      banks and other financial institutions of US$1,703 million.
17
Derivatives
Fair
      values of derivatives by product contract type held by HSBC
At
      31 December 2005
Assets
Liabilities
Trading
Hedging
Total
Trading
Hedging
Total
US$m
US$m
US$m
US$m
US$m
US$m
Foreign
      exchange
21,082
263
21,345
(20,794
)
(81
)
(20,875
)
Interest
      rate
44,323
3,414
47,737
(46,580
)
(1,566
)
(48,146
)
Equities
4,833
–
4,833
(4,713
)
–
(4,713
)
Credit
      derivatives
3,585
–
3,585
(3,509
)
–
(3,509
)
Commodity
      and other
1,077
–
1,077
(1,442
)
–
(1,442
)
Gross
      total fair values
74,900
3,677
78,577
(77,038
)
(1,647
)
(78,685
)
Netting
(4,649
)
4,649
Total
73,928
(74,036
)
At
      31 December 2004
Total
      assets
Total
      liabilities
US$m
US$m
Foreign
      exchange
32,318
(34,172
)
Interest
      rate
36,041
(36,874
)
Equities
2,784
(2,874
)
Credit
      derivatives
1,341
(1,394
)
Commodity
      and other
1,275
(1,243
)
Gross
      total fair values
73,759
(76,557
)
Netting
(41,569
)
41,569
Total
32,190
(34,988
)
285
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H S B C   H O L D
  I N G S   P L C
Notes on the
  Financial Statements
(continued)
Fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries
Year
      ended 31 December
2005
2004
Trading
Assets
Liabilities
Assets
Liabilities
US$m
US$m
US$m
US$m
Foreign
      exchange
896
144
1,595
10
Interest
      rate
72
142
48
–
Gross
      total fair values
968
286
1,643
10
Derivatives
      are financial instruments that derive their value from the price of underlying
      items such as equities, bonds, interest rates, foreign exchange, credit
      spreads, commodities and equity or other indices. Derivatives enable users
      to increase, reduce or alter exposure to credit or market risks. HSBC makes
      markets in derivatives for its customers and uses derivatives to manage
      its exposure to credit and market risks.
Derivatives
      are carried at fair value and shown in the balance sheet as separate totals
      of assets and liabilities. Asset values represent the cost to HSBC of replacing
      all transactions with a fair value in HSBC's favour assuming which
      all HSBC's relevant counterparties default at the same time, and that
      transactions can be replaced instantaneously. Liability values represent
      the cost to HSBC's counterparties of replacing all their transactions
      with HSBC with a fair value in their favour if HSBC were to default. Derivative
      assets and liabilities on different transactions are only set off if the
      transactions are with the same counterparty, a legal right of set-off exists
      and the cash flows are intended to be settled on a net basis.
Use of derivatives
HSBC transacts
      derivatives for three primary purposes: to create risk management solutions
      for clients, for proprietary trading purposes, and to manage and hedge HSBC's
      own risks. Derivatives (except for derivatives which are designated as effective
      hedging instruments as defined in IAS 39) are held for trading. The held
      for trading classification includes two types of derivatives: those used
      in sales and trading activities, and those used for risk management purposes
      but which for various reasons do not meet the qualifying criteria for hedge
      accounting. The second category includes derivatives managed in conjunction
      with financial instruments designated at fair value. These activities are
      described more fully below.
HSBC's
      derivative activities give rise to significant open positions in portfolios
      of derivatives. These positions are managed constantly to ensure that they
      remain within acceptable risk levels, with matching deals being utilised
      to achieve this where necessary. When entering into derivative transactions,
      HSBC employs the same credit risk management procedures to assess and approve
      potential credit exposures that are used for traditional lending.
Trading derivatives
Most of
      HSBC's derivative transactions relate to sales and trading activities.
      Sales activities include the structuring and marketing of derivative products
      to customers to enable them to take, transfer, modify or reduce current
      or expected risks. Trading activities in derivatives are entered into principally
      for the purpose of generating profits from short-term fluctuations in price
      or margin. Positions may be traded actively or be held over a period of
      time to benefit from expected changes in exchange rates, interest rates,
      equity prices or other market parameters. Trading includes market-making,
      positioning and arbitrage activities. Market-making entails quoting bid
      and offer prices to other market participants for the purpose of generating
      revenues based on spread and volume; positioning means managing market risk
      positions in the expectation of benefiting from favourable movements in
      prices, rates or indices; arbitrage involves identifying and profiting from
      price differentials between markets and products.
As mentioned
      above, other derivatives classified as held for trading include non-qualifying
      hedging derivatives, ineffective hedging derivatives and the components
      of hedging derivatives that are excluded from assessing hedge effectiveness.
      Non-qualifying hedging derivatives are entered into for risk management
      purposes but do not meet the criteria for hedge accounting. These include
      derivatives managed in conjunction with financial instruments designated
      at fair value. Ineffective hedging derivatives were previously designated
      as hedges under UK GAAP, but no longer meet the criteria for hedge accounting.
286
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Gains
        and losses from changes in the fair value of derivatives that do not
        qualify for hedge accounting are reported in 'Net trading income',
        except for derivatives managed in conjunction with financial instruments
        designated at fair value, where gains and losses are reported in 'Net
        income from financial instruments designated at fair value', together
        with the gains and losses on the hedged items. Changes in the fair values
        of trading derivatives are inclusive of contractual interest. Changes
        in the fair value of derivatives managed in conjunction with financial
        instruments designated at fair value are included in 'Net income
        from financial
instruments designated at fair value' inclusive of contractual interest
unless the derivatives are managed with debt securities in issue, in which case
the contractual interest is shown in interest payable with the interest payable
on the
issued debt. Substantially all of HSBC Holdings' derivatives entered into
with HSBC undertakings are managed in conjunction with financial liabilities
designated at fair value.
Contract
    amounts of derivatives held for trading purposes by product type
HSBC
HSBC Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Foreign exchange
1,721,456
1,484,516
10,224
–
Interest rate
6,731,721
3,948,178
5,304
–
Equities
101,364
55,124
–
–
Credit derivatives
511,741
195,603
–
–
Commodity and other
38,458
28,022
–
–
9,104,740
5,711,443
15,528
–
Derivatives
    valued using models with unobservable inputs
The amount
        that has yet to be recognised in the consolidated income statement relating
        to the difference between the fair value at initial recognition (the
        transaction price) and the amount that would have arisen had valuation
        techniques used for subsequent measurement been applied at initial recognition,
    less subsequent releases, is as follows:
2005
US$m
Unamortised balance at 1 January
73
Deferral on new transactions
340
Recognised in the income statement during the period:
–
amortisation
(56
)
–
subsequent
    to observability
(64
)
–
maturity
    or termination
(25
)
–
exchange
    differences
(16
)
Unamortised balance at 31 December
252
Hedging Instruments
HSBC uses
        derivatives (principally interest rate swaps) for hedging purposes in
        the management of its own asset and liability portfolios and structural
        positions. This enables HSBC to optimise the overall cost to the Group
        of accessing debt capital markets, and to mitigate the market risk which
        would otherwise arise from structural imbalances in the maturity and
    other profiles of its assets and liabilities.
The accounting
        treatment of hedge transactions varies according to the nature of the
        instrument hedged and the type of hedge transactions. Derivatives may
        qualify as hedges for accounting purposes if they are fair value hedges,
        cash flow hedges, or investment hedges. These are described under the
    relevant headings below:
287
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H S B C   H O L
D I N G S   P L C
Notes on
        the Financial Statements
(continued)
Contract amounts of derivatives held for hedging purposes by product type
At 31 December 2005
Cash flow
Fair value
hedge
hedge
US$m
US$m
Foreign exchange
16,940
2,699
Interest rate
174,875
19,745
191,815
22,444
With respect
        to exchange rate and interest rate contracts, the notional or contractual
        amounts of these instruments indicate the nominal value of transactions
        outstanding at the balance sheet date; they do not represent amounts
    at risk.
Fair
    value hedges
HSBC's
        fair value hedges principally consist of interest rate swaps that are
        used to protect against changes in the fair value of fixed-rate long-term
        financial instruments due to movements in market interest rates. For
        qualifying fair value hedges, all changes in the fair value of the derivative
        and in the fair value of the item in relation to the risk being hedged
        are recognised in income. If the hedge relationship is terminated, the
        fair value adjustment to the hedged item continues to be reported as
        part of the basis of the item and is amortised to income as a yield adjustment
    over the remainder of the hedging period.
The fair
        values of outstanding derivatives designated as fair value hedges at
        31 December 2005 were assets of US$149 million and liabilities of
    US$471 million.
Gains or losses arising from fair value hedges
2005
US$m
Gains/(losses):
– on
hedging instruments
81
– on
the hedged items attributable to the hedged risk
(67
)
14
Cash
    flow hedges
HSBC is
        exposed to variability in future interest cash flows on non-trading assets
        and liabilities which bear interest at variable rates or which are expected
        to be re-funded or reinvested in the future. The amounts and timing of
        future cash flows, representing both principal and interest flows, are
        projected for each portfolio of financial assets and liabilities on the
        basis of their contractual terms and other relevant factors, including
        estimates of prepayments and defaults. The aggregate principal balances
        and interest cash flows across all portfolios over time form the basis
        for identifying gains and losses on the effective portions of derivatives
        designated as cash flow hedges of forecast transactions. Gains and losses
        are initially recognised directly in equity, in the cash flow hedging
        reserve, and are transferred to the income statement when the forecast
        cash flows affect the income
statement.
At 31
        December 2005, the fair values of outstanding derivatives designated
        as cash flow hedges of forecast transactions were assets of US$3,528
        million and liabilities of US$1,062
million.
The
      schedule of forecast principal balances on which the expected interest
    cash flows arise as at 31 December 2005 is as follows:
At 31 December 2005
More than 3
5 years or less
3 months
months but less
but more than
More than
or less
than 1 year
1 year
5 years
US$m
US$m
US$m
US$m
Cash inflows from assets
91,703
68,985
54,205
3,108
Cash outflows from liabilities
(44,957
)
(32,485
)
(24,955
)
(165
)
Net cash inflows
46,746
36,500
29,250
2,943
288
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Reconciliation of movements in the cash flow hedge reserve
2005
US$m
At 1 January
410
Amounts recognised directly in equity during the year
(63
)
Amounts removed from equity and included in the income statement for the year in:
–
trading
    income
(5
)
–
net
    interest income
(101
)
Deferred tax
(8
)
At 31 December
233
The gains
        and losses on ineffective portions of such derivatives are recognised
        immediately in the income statement. At 31 December 2005, a loss of US$96
    million was recognised due to hedge ineffectiveness.
Hedges
    of net investments in foreign operations
HSBC's
        consolidated balance sheet is affected by exchange differences between
        the US dollar and all the non-US dollar functional currencies of subsidiaries.
        HSBC hedges structural foreign exchange exposures only in limited circumstances.
        Hedging is undertaken using forward foreign exchange contracts which
        are accounted for as hedges of a net investment in a foreign operation,
        or by financing with borrowings in the same currencies as the functional
    currencies involved.
At 31
        December 2005, the fair values of outstanding financial instruments designated
        as hedges of net investments in foreign operations were liabilities of
    US$114 million.
The ineffectiveness
        recognised in 'Net trading income' in the year ended 31 December
    2005 that arose from hedges in foreign operations was US$nil.
Sensitivity
        of fair values to changing significant assumptions to reasonably possible
    alternatives
Fair values
        of certain derivatives recognised in the financial statements may be
        determined in whole or in part using valuation techniques based on assumptions
        that are not supported by prices from current market transactions or
        observable market data. In these instances, the net fair value recorded
    in the financial statements is the sum of three components:
–
the value
        given by application of a valuation model, based upon HSBC's best
    estimate of the most appropriate
model inputs;
–
any fair
        value adjustments to account for market features not included within
        the valuation model (for example,
bid-mid spreads, counterparty credit spreads and/or market
    data uncertainty); and
–
inception
        profit, or an unamortised element thereof, not recognised immediately
        in the income statement in
accordance
    with Note 2(k).
As the
        valuation models are based upon assumptions, changing the assumptions
        changes the resultant estimate of fair value. HSBC performs various sensitivity
        analyses on its valuation assumptions. The potential effect of using
        reasonably possible alternative assumptions in valuation models has been
        quantified as a reduction in assets of approximately US$77 million
        using less favourable assumptions, and an increase in assets of approximately
        US$73 million using more favourable assumptions. The ranges of reasonably
        possible alternative assumptions are established by application of professional
        judgement to an analysis of the data available to support each assumption.
The total
        amount of the change in fair value estimated using a valuation technique
        that was recognised in the year ended 31 December 2005 was a loss of
    US$129 million.
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
18
Financial
    investments
HSBC
2005
2004
US$m
US$m
Financial investments:
– which may
be pledged or resold by counterparties
6,041
–
– not subject
to repledge or resale by counterparties
176,301
–
182,342
185,332
2005
2004
Carrying
Fair value
Carrying
amount
amount
US$m
US$m
US$m
Treasury and other eligible bills
25,042
25,042
25,666
–
available-for-sale
24,834
24,834
–
held-to-maturity
208
208
Debt securities
149,781
149,962
153,103
–
available-for-sale
141,699
141,699
–
held-to-maturity
8,082
8,263
Equity securities
7,519
7,519
6,563
–
available-for-sale
7,519
7,519
Total financial investments
182,342
182,523
185,332
Gross
Gross
unrealised
unrealised
Fair
Cost
gains
losses
value
US$m
US$m
US$m
US$m
At 31 December 2005
US Treasury
9,015
5
(23
)
8,997
US Government agencies
4,173
52
(52
)
4,173
US Government sponsored entities
16,099
82
(292
)
15,889
UK Government
7,658
83
(1
)
7,740
Hong Kong Government
4,429
2
(23
)
4,408
Other government
34,623
317
(87
)
34,853
Asset-backed securities
2,893
8
(12
)
2,889
Corporate debt and other securities
96,018
452
(415
)
96,055
Equities
6,414
1,111
(6
)
7,519
181,322
2,112
(911
)
182,523
At 31 December 2004
US Treasury
7,998
25
(22
)
8,001
US Government agencies
9,657
91
(94
)
9,654
US Government sponsored entities
10,093
133
(48
)
10,178
UK Government
11,510
1
(2
)
11,509
Hong Kong Government
5,274
88
–
5,362
Other government
36,393
543
(290
)
36,646
Asset-backed securities
13,367
28
(6
)
13,389
Corporate debt and other securities
84,477
1,061
(136
)
85,402
Equities
6,563
1,136
(10
)
7,689
185,332
3,106
(608
)
187,830
Included
        within corporate debt and other securities are debt securities issued
        by banks and other financial institutions of US$68,954 million (2004:
        US$60,166 million). The fair value of these was US$68,933 million
    (2004: US$60,655 million).
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Debt
Debt
Treasury
securities
securities
and other
available-
held-to-
Equity
eligible bills
for-sale
maturity
securities
Total
US$m
US$m
US$m
US$m
US$m
Carrying amount at 31 December 2005
Listed on a recognised exchange
–
62,187
4,022
3,394
69,603
Unlisted
25,042
79,512
4,060
4,125
112,739
25,042
141,699
8,082
7,519
182,342
The
      fair value of listed held-to-maturity debt securities as at 31 December
    2005 was US$4,143 million.
Treasury
and other
Equity
eligible bills
Debt securities
securities
Total
US$m
US$m
US$m
US$m
Carrying amount at 31 December 2004
Listed on a recognised exchange
–
77,920
2,506
80,426
Unlisted
25,666
75,183
4,057
104,906
25,666
153,103
6,563
185,332
As at 31
        December 2004, the fair value of listed debt securities was US$83,176
        million, and the fair value of listed equity securities was US$2,546
    million.
Included
        within listed investments are US$1,246 million (2004: US$3,120
    million) of investments listed in Hong Kong.
HSBC Holdings
2005
Carrying
Fair value
amount
US$m
US$m
Available-for-sale debt securities issued by HSBC undertakings
3,256
3,256
Available-for-sale equities
261
261
3,517
3,517
As at
        31 December 2004, the carrying amount of securities issued by HSBC undertakings
    was US$1,885 million.
19
Securitisations and other structured transactions
HSBC enters into transactions in the normal course of business by which it transfers recognised financial assets directly to third parties or to special purpose entities. These transfers
may give rise to the full or partial derecognition of the financial assets concerned.
–
Full derecognition occurs when HSBC transfers its contractual right to receive cash flows from the financial assets and substantially all the risks and rewards of ownership. The risks
include credit, interest rate, currency, prepayment and other price risks.
–
Partial derecognition occurs when HSBC sells or otherwise transfers financial assets in such a way that some but not substantially all of the risks and rewards of ownership are
transferred but control is retained. These financial assets are recognised on the balance sheet to the extent of HSBC's continuing involvement.
The majority of
financial assets that do not qualify for derecognition are (i) debt securities
held by counterparties as collateral under repurchase agreements or (ii) equity
securities  lent under securities lending agreements. The following table analyses
the carrying amount of financial assets at 31 December 2005 that did not qualify
for
derecognition
during
the year, and their associated financial liabilities:
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
Carrying
Carrying
amount of
amount of
transferred
associated
assets
liabilities
US$m
US$m
Nature of transaction
Repurchase agreements
92,989
75,745
Securities lending agreements
14,607
5,858
107,596
81,603
A small
        proportion of financial assets
that
        do not qualify for derecognition relate to
loans, credit cards, debt securities
        and trade receivables that have been securitised under arrangements by
        which HSBC retains a continuing involvement in such transferred assets.
        Continuing involvement may entail retaining the rights to future cash
        flows arising from the assets after investors have received their contractual
        terms (for example, interest rate strips); providing subordinated interest;
        liquidity support; continuing to service the underlying asset; or entering
        into derivative transactions with the securitisation vehicles. As such,
    HSBC continues to be exposed to risks associated with these transactions.
The rights
        and obligations that HSBC retains from its continuing involvement in
        securitisations are initially recorded as an allocation of the fair value
        of the financial asset between the part that is derecognised and the
        part that continues to be recognised on the date of transfer. The following
        analyses the carrying amount of financial assets at 31 December 2005,
        to the extent of HSBC's continuing involvement, that qualified for
    partial derecognition during the year, and their associated liabilities:
Carrying
Carrying
amount of
Carrying
amount of
assets
amount of
assets
(currently
associated
(original)
recognised)
liabilities
US$m
US$m
US$m
Nature of transaction
Securitisations
6,731
256
256
20
Interests
    in associates and joint ventures
Principal
    associates of HSBC
At 31 December 2005
HSBC's
Issued
Country of
interest
in
equity
Carrying
Fair
incorporation
equity capital
capital
amount
value
US$m
US$m
Listed
People's
Republic of
Bank of Communications Co., Limited
China
19.9
%
RMB45,804m
2,480
4,143
People's
Ping An Insurance (Group) Company of
Republic of
China Limited
China
19.9
%
RMB6,195m
1,837
2,274
The Saudi British Bank
Saudi Arabia
40
%
SR2,500m
772
8,800
5,089
15,217
Unlisted
AEA Investors (Cayman) I LP
1,6
Barrowgate Limited
2,7
Hong Kong
24.64
%
–
US$ 81m
£32m fully paid
British Arab Commercial Bank Limited
England
46.51
%
£5m nil paid
Erisa S.A.
France
49.99
%
€115m
HSBC PE European No. 2 LP
3,6
People's
Republic of
Industrial Bank Company Limited
China
15.98
%
RMB3,999m
Private Equity Portfolio (Investment)
LP Inc
4,6
Wells Fargo HSBC Trade Bank, N.A
5
United States
20
%
–
292
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1
Venture Capital Limited partnership. Address of principal place of business is c/o Walkers SPV Limited, Walker House, 87 Mary Street, PO Box 908GT, George Town, Grand Cayman,
Cayman Islands.
2
Issued equity capital is less than HK$1 million.
3
Limited partnership. Address of principal place of business is 68 Upper Thames Street, London EC4V 3PE.
4
Limited partnership. Address of principal place of business is 68 Upper Thames Street, London EC4V 3PE.
5
Issued equity capital is less than US$1 million.
6
Limited partnership where the group owns more than 50 per cent but does not have control due to the limitations within these types of entities.
7
Investment held through Hang Seng Bank Limited, a 62.14 per cent owned subsidiary of HSBC.
All the
        above investments in associates are owned by subsidiaries of HSBC Holdings.
        During the year, HSBC's shareholding of 21.16 per cent in the Cyprus
        Popular Bank Limited (trading as Laiki Group) was reclassified as a held
    for sale asset. See Note 25.
HSBC has
        US$4,318 million (2004: US$nil) of investments in associates
    and joint ventures listed in Hong Kong.
For the
        year ended 31 December 2005, HSBC's share of associates and joint ventures tax on profit
        was US$225 million (2004: US$45 million), which is included within
    share of profit in associates and joint ventures on the income statement.
Summarised aggregate financial information on associates
2005
2004
US$m
US$m
HSBC's share of:
–
assets
63,347
49,738
–
liabilities
58,883
46,938
–
revenues
3,330
2,009
–
profit/(loss)
556
270
HSBC's
        share of associates' contingent liabilities amounted to US$7,818
    million at 31 December 2005 (2004: US$5,663 million).
HSBC's
        15.98 per cent investment in Industrial Bank Company Limited was equity
        accounted with effect from May 2004, reflecting HSBC's significant
        influence over this associate.
HSBC's significant influence was established as a result of representation
on the Board of Directors, and in accordance with the Technical Support and Assistance
Agreements, HSBC is assisting in the development of financial and operating
policies.
HSBC's
        19.9 per cent investment in Ping An Insurance Company of China Limited
        was equity accounted with effect from 31 August 2005, reflecting HSBC's
        significant influence over
this associate. HSBC's significant influence was established as a result
of the acquisition of an additional participation of 9.91 per cent on 31 August
2005, for a consideration of US$1,039 million.
HSBC's
        significant influence on Bank of Communications Co., Limited was established
        as a result of representation on the Board of Directors, and in accordance
        with the Technical
Support and Assistance
        Agreements, HSBC is assisting in the development of financial and operating
        policies and a number of staff
have been seconded to assist in this process.
The statutory
        accounting reference date of Bank of Communications Co., Limited and
        Ping An Insurance Company of China Limited is 31 December. For the year
        ended 31 December 2005, these companies were included on the basis of
        financial statements made up to 30 September 2005, taking into account
        changes in the subsequent period from 1 October 2005 to 31 December 2005
    that would have materially affected their results.
HSBC also
        has a 100 per cent interest in the issued preferred stock (less than
        US$1 million) of Wells Fargo HSBC Trade Bank, N.A. HSBC has a 40
        per cent economic interest in Wells Fargo HSBC Trade Bank, N.A. by virtue
        of the joint agreement under which HSBC's equity capital and preferred
    stock interests are being held.
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
Interests in joint ventures
At 31 December 2005
HSBC's
interest in
Issued
Country of
Principal
equity
equity
Incorporation
activity
capital
capital
Holding
HCM Holdings Limited
England
Company
51
%
£
3m
HCM Holdings
        Limited prepares its financial statements up to 31 December and its principal
        country of operation is the United Kingdom. During 2005 HCM Holdings
        disposed of its trading subsidiary. The remaining investment represents
    an interest in a holding company.
Although
        HSBC owns more than 50 per cent of the equity capital of HCM Holdings
        Limited, the agreement with the other shareholder means that there are
        severe long-term restrictions which
substantially hinder HSBC's rights over the assets and management of the
entity. HSBC does however continue to exercise significant influence and together
with the other shareholder controls the entity.
Summarised aggregate financial information on joint ventures
2005
2004
US$m
US$m
HSBC's share of:
–
current
    assets
95
38
–
non-current
    assets
55
126
–
current
    liabilities
34
29
–
non-current
    liabilities
107
131
–
income
108
6
–
expenses
20
8
21
Goodwill
    and intangible assets
Goodwill
        and intangible assets includes goodwill arising on business combinations,
        the present value of in-force long-term insurance business, and other
    intangible assets.
Goodwill
Rest of Asia-
North
South
Europe
Hong Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Cost
At 1 January 2005
15,873
120
284
13,490
595
30,362
Additions
108
1
4
547
–
660
Disposals
(70
)
–
–
(3
)
–
(73
)
Exchange differences
(2,137
)
(1
)
(17
)
428
85
(1,642
)
Other changes
3
–
(1
)
(22
)
(62
)
(82
)
At 31 December 2005
13,777
120
270
14,440
618
29,225
The addition
        to goodwill in North America related principally to the acquisition of
    Metris Companies Inc. on 1 December 2005.
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Rest of Asia-
North
South
Europe
Hong Kong
Pacific
America
America
Total
US$m
US$m
US$m
US$m
US$m
US$m
Cost
At 1 January 2004
14,655
117
279
12,945
502
28,498
Additions
282
2
–
526
61
871
Disposals
(6
)
–
–
–
–
(6
)
Exchange differences
942
1
5
19
21
988
Other changes
–
–
–
–
11
11
At 31 December 2004
15,873
120
284
13,490
595
30,362
Included
        within 'Other operating income' for the year ended 31 December
        2005 is US$23 million (2004: US$nil) relating to the excess of
        acquirer's interest in the net fair value of acquiree's identifiable
        assets, liabilities and contingent liabilities over cost, which was recognised
    in respect of the acquisition of Allianz Rentas Vitalicias.
The present value of in-force long-term insurance business ('PVIF')
Movement on the PVIF
2005
US$m
At 1 January
1,877
IFRSs transition adjustment at 1 January 2005
(384
)
Addition from current year new business
289
Movement from in-force business
(268
)
Exchange differences and other movements
(114
)
At 31 December
1,400
PVIF-specific assumptions
The
            key assumptions used in the computation of PVIF for HSBC's main insurance
    subsidiaries are:
UK
Hong Kong
Risk free rate
3.90
%
4.19
%
Risk discount rate
8.00
%
11.00
%
Expenses inflation
3.20
%
3.00
%
The PVIF
        represents the value of the shareholder's interest in the in-force
        business of the life insurance operations. The calculation of the PVIF
        is based upon assumptions that take into account risk and uncertainty.
        To project these cash flows, a variety of assumptions regarding future
        experience is made by each insurance operation which reflect local market
        conditions and management's judgement of local future trends. Some
        of the Group's insurance operations incorporate risk margins separately
        into the projection assumptions for each product, while others incorporate
        risk margins into the overall discount rate. This is reflected in the
    wide range of risk discount rates applied.
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
Other
      intangible assets
The
      analysis of the movement of intangible assets, excluding the present value
      of in-force long-term insurance business, for the year ended 31 December
    2005 is as follows:
Customer/
Mortgage
Internally
merchant
Trade
servicing
generated
Purchased
relation-
names
rights
software
software
ships
Other
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Cost
At 1 January 2005
41
791
1,823
210
764
393
4,022
Additions
1
–
136
420
49
13
8
626
Acquisition of subsidiaries
–
–
–
–
271
–
271
Disposals
–
–
–
(63
)
(15
)
(1
)
(79
)
Exchange differences
2
2
(104
)
(19
)
(72
)
(44
)
(235
)
Other changes
–
50
(45
)
118
73
17
213
At 31 December 2005
43
979
2,094
295
1,034
373
4,818
Accumulated amortisation
At 1 January 2005
(8
)
(474
)
(1,064
)
(115
)
(95
)
(7
)
(1,763
)
Charge for the year
2
(6
)
(27
)
(354
)
(76
)
(99
)
(19
)
(581
)
Disposals
–
–
–
29
–
–
29
Exchange differences
(1
)
1
123
(37
)
5
2
93
Other changes
–
(60
)
(6
)
29
16
–
(21
)
At 31 December 2005
(15
)
(560
)
(1,301
)
(170
)
(173
)
(24
)
(2,243
)
Net carrying amount
at 31 December 2005
28
419
793
125
861
349
2,575
Cost
At 1 January 2004
20
854
1,556
159
490
13
3,092
Additions
1
15
67
314
47
259
23
725
Acquisition of subsidiaries
–
–
–
–
3
–
3
Disposals
–
(54
)
(4
)
(6
)
–
(1
)
(65
)
Exchange differences
6
2
67
4
12
8
99
Other changes
–
(78
)
(110
)
6
–
350
168
At 31 December 2004
41
791
1,823
210
764
393
4,022
Accumulated amortisation
At 1 January 2004
–
(364
)
(804
)
(87
)
5
(1
)
(1,251
)
Charge for the year
2
(5
)
(205
)
(379
)
(27
)
(78
)
(5
)
(699
)
Disposals
–
–
–
2
–
–
2
Impairment losses
–
(15
)
–
–
–
–
(15
)
Exchange differences
–
(1
)
9
2
–
(1
)
9
Other changes
(3
)
111
110
(5
)
(22
)
–
191
At 31 December 2004
(8
)
(474
)
(1,064
)
(115
)
(95
)
(7
)
(1,763
)
Net carrying amount
at 31 December 2004
33
317
759
95
669
386
2,259
1
At 31 December 2005, HSBC had US$56 million (2004: US$95 million) of contractual commitments to acquire intangible assets.
2
The amortisation charge for the year is recognised within the income statement under 'Amortisation of intangible assets', with the exception of the amortisation of
mortgage servicing rights that are charged to net fee income.
22
Impairment
    of assets other than financial instruments
During
        2005 there was no impairment of goodwill (2004: US$nil). Impairment
        testing in respect of goodwill is performed annually by comparing the
        recoverable amount of cash generating
units ('CGUs') that has been determined at 1 July 2005 based on a value
in use calculation. That calculation uses cash flow estimates based on management's
cash flow projections, extrapolated in perpetuity using a nominal long-term growth
rate based on current GDP and inflation for the countries within which the CGU
operates. The discount rate used is based on the cost of capital HSBC allocates
to investments in the countries within which the CGU operates.
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The cost
        of capital assigned to an individual cash-generating unit and used to
        discount its future cash flows can have a significant effect on its valuation.
        The cost of capital percentage is generally derived from an appropriate
        Capital Asset Pricing Model, which itself depends on inputs reflecting
        a number of financial and economic variables including the risk-free
        rate in the country concerned and a premium to reflect the inherent risk
        of the business being evaluated. These variables are established on the
    basis of management judgement.
Management
        judgement is required in estimating the future cash flows of the cash-generating
        units. These values are sensitive to the cash flows projected for the
        periods for which detailed forecasts are available, and to assumptions
        regarding the long-term sustainable pattern of cash flows thereafter.
        While the acceptable range within which underlying assumptions can be
        applied is governed by the requirement for resulting forecasts to be
        compared with actual performance and verifiable economic data in future
        years, the cash flow forecasts necessarily and appropriately reflect
    management's view of future business prospects.
The following
        CGUs include in their carrying value goodwill that is a significant proportion
        of total goodwill reported by HSBC. These CGUs do not carry on their
        balance sheet any intangible assets with indefinite useful lives, other
    than goodwill.
Nominal
growth rate
beyond initial
Goodwill at
Discount
cash flow
Cash Generating Unit
1 July 2005
rate
projections
US$m
%
%
Personal Financial Services – Europe
3,515
10.2
4.3
Commercial Banking – Europe
2,913
9.9
3.9
Private Banking – Europe
3,701
10.0
3.2
Corporate, Investment Banking and Markets – Europe
3,694
10.1
4.0
Personal Financial Services – North America (other than Mexico)
10,451
10.0
6.1
Total goodwill in the CGUs listed above
24,274
There was
        no evidence of impairment arising from this review. The only circumstances
        where a reasonably possible change in key assumptions might have caused
        an impairment loss to be recognised was in respect of Private Banking
    Europe where:
–
a fall
        of 0.9% in the long-term growth rate beyond the initial cash flow projections;
    or
–
an increase
    of 0.8% in the discount rate
would
        have caused an impairment loss to be recognised. Recognising this, the
        calculation of the value in use for Private Banking – Europe, based
        on discounted projected cash flows, has been additionally benchmarked
        against market transactions in private banking companies in Europe to
    ensure the carrying value is supportable.
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
23
Property,
    plant and equipment
HSBC
Property,
    plant and equipment
Long
Short
Equipment
Freehold
Leasehold
leasehold
Equipment,
on
land and
land and
land and
fixtures
operating
buildings
buildings
buildings
and fittings
leases
Total
1
US$m
US$m
US$m
US$m
US$m
US$m
Cost or fair value
At 1 January 2005
4,384
2,153
2,252
8,722
6,117
23,628
Additions at cost
2
601
142
124
1,269
751
2,887
Acquisition of subsidiaries
10
–
5
14
–
29
Fair value adjustments
48
95
58
–
–
201
Disposals
(224
)
(87
)
(77
)
(542
)
(359
)
(1,289
)
Transfers
30
–
(30
)
–
–
–
Exchange differences
(245
)
(82
)
(55
)
(445
)
(660
)
(1,487
)
Other changes
224
14
(12
)
(379
)
(885
)
(1,038
)
At 31 December 2005
4,828
2,235
2,265
8,639
4,964
22,931
Accumulated depreciation
At 1 January 2005
(204
)
(74
)
(590
)
(5,375
)
(1,761
)
(8,004
)
Depreciation charge for the year
(76
)
(55
)
(101
)
(1,082
)
(318
)
(1,632
)
Disposals
6
–
51
431
243
731
Impairment losses reversed
2
–
–
–
–
2
Exchange differences
18
5
35
285
182
525
Other changes
2
(8
)
1
323
335
653
At 31 December 2005
(252
)
(132
)
(604
)
(5,418
)
(1,319
)
(7,725
)
Net carrying amount at
31
    December 2005
4,576
2,103
1,661
3,221
3,645
15,206
Cost or fair value
At 1 January 2004
3,615
2,091
2,169
7,301
5,095
20,271
Additions at cost
2
533
1
62
1,210
1,002
2,808
Acquisition of subsidiaries
169
–
–
52
–
221
Fair value adjustments
23
40
36
–
–
99
Disposals
(130
)
(27
)
(34
)
(341
)
(430
)
(962
)
Exchange differences
192
58
50
460
452
1,212
Other changes
(18
)
(10
)
(31
)
40
(2
)
(21
)
At 31 December 2004
4,384
2,153
2,252
8,722
6,117
23,628
Accumulated depreciation
At 1 January 2004
(97
)
(8
)
(499
)
(4,313
)
(1,510
)
(6,427
)
Depreciation charge for the year
(100
)
(64
)
(99
)
(1,070
)
(398
)
(1,731
)
Disposals
7
–
16
313
282
618
Impairment losses recognised
(24
)
–
–
–
–
(24
)
Exchange differences
(18
)
(1
)
(30
)
(282
)
(131
)
(462
)
Other changes
28
(1
)
22
(23
)
(4
)
22
At 31 December 2004
(204
)
(74
)
(590
)
(5,375
)
(1,761
)
(8,004
)
Net carrying amount at
31
    December 2004
4,180
2,079
1,662
3,347
4,356
15,624
Leasehold
          land and buildings are held under finance lease contracts where the
          value of the land cannot reliably be separated from the value of the
    lease, and the premiums are not clearly held under operating leases.
1
Includes
          assets with a net book value of US$13 million (2004: US$12
    million) pledged as security for liabilities.
2
At
          31 December 2005, HSBC had US$1,256 million (2004: US$878 million)
    of contractual commitments to acquire property, plant and equipment.
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Included
        within 'Short leasehold land and buildings' are the following
        amounts in respect of assets classed as improvements to buildings, which
        are carried at depreciated
historical cost:
2005
2004
Accumulated
Accumulated
Cost
depreciation
Cost
depreciation
US$m
US$m
US$m
US$m
At 1 January
993
(347
)
933
(323
)
Additions
124
–
60
–
Disposals
(58
)
36
(25
)
4
Depreciation charge for the year
–
(22
)
–
(26
)
Exchange differences
(52
)
32
45
(25
)
Other changes
19
(14
)
(20
)
23
At 31 December
1,026
(315
)
993
(347
)
Net carrying amount at 31 December
711
646
Investment
    properties
The
      composition of the investment properties at fair value in the year was
    as follows:
Long
Short
Freehold
leasehold
leasehold
land and
land and
land and
buildings
buildings
buildings
Total
US$m
US$m
US$m
US$m
Fair value
At 1 January 2005
704
250
209
1,163
Additions at cost
455
137
–
592
Disposals
(47
)
(3
)
(12
)
(62
)
Fair value adjustments
48
95
58
201
Exchange differences
(8
)
(4
)
–
(12
)
Other changes
286
2
–
288
At 31 December 2005
1,438
477
255
2,170
Fair value
At 1 January 2004
310
235
170
715
Additions at cost
423
–
–
423
Disposals
(1
)
(16
)
(4
)
(21
)
Fair value adjustments
23
40
36
99
Other changes
(51
)
(9
)
7
(53
)
At 31 December 2004
704
250
209
1,163
Investment
      properties are valued on an open market value basis as at 31 December each
      year by independent professional valuers who have recent experience in
      the location and type of properties. Investment properties in Hong Kong,
      the Macau Special Administrative Region and mainland China, which represent
      25 per cent by value of HSBC's investment properties subject to revaluation,
      were valued by DTZ Debenham Tie Leung Limited, which is a member of the
    Hong Kong Institute of Surveyors.
As
      a result of the revaluation, the net book value of investment properties
      increased by US$201 million (2004: surplus of US$99 million). A
      surplus of US$201 million (2004:
surplus of US$99 million), was credited to the income statement for the year
ended 31 December 2005.
HSBC
    Holdings had no investment properties at 31 December 2005 or 2004.
Included
      within 'Other operating income' was rental income of US$116
      million (2004: US$67 million) earned by HSBC on its investment properties.
      Direct operating expenses
of US$39 million (2004: US$14 million) incurred in respect of the investment
properties during the year were recognised in 'General and administrative
expenses'. Direct operating expenses arising in respect of investment properties
that did not generate rental income during 2005 amounted to US$3 million
(2004: US$1 million).
HSBC
      recognised US$10 million (2004: US$9 million) as contractual obligations
    to purchase, construct, develop, maintain or enhance investment properties.
299
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
HSBC
    properties leased to customers
HSBC
      properties leased to customers included US$646 million at 31 December
      2005 (2004: US$552 million) let under operating leases, net of accumulated
      depreciation of US$42
million (2004: US$53 million). None was held by HSBC Holdings.
HSBC
    Holdings
Property,
    plant and equipment
Equipment, fixtures and fittings
2005
2004
US$m
US$m
Cost
At 1 January
4
4
Additions at cost
1
1
Disposals
(1
)
(1
)
At 31 December
4
4
Accumulated depreciation
At 1 January
(2
)
(2
)
Depreciation charge for the year
(1
)
(1
)
Disposals
–
1
At 31 December
(3
)
(2
)
Net carrying amount at 31 December
1
2
300
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24
Investments
    in subsidiaries
Principal
    subsidiary undertakings of HSBC Holdings
Country of
HSBC's
incorporation
interest in
or registration
equity capital
Issued equity
%
capital
Europe
HFC Bank Limited
England
100
£109m
HSBC Investments
(UK) Limited (formerly HSBC Asset Management (Europe) Limited)
England
100
£142m
HSBC Asset Finance (UK) Limited
England
100
£265m
HSBC Bank A.S.
Turkey
100
TRL277m
HSBC Bank Malta p.l.c.
Malta
70.03
Lm9m
HSBC Bank Middle East Limited
Jersey
100
US$331m
HSBC Bank plc
England
100
£797m
HSBC France (formerly CCF S.A.)
France
99.99
€372m
HSBC Guyerzeller Bank AG
Switzerland
100
SFr95m
HSBC Insurance Brokers Limited
England
100
£2.8m
HSBC Life (UK) Limited
England
100
£94m
HSBC Private Bank (Guernsey) Limited
1
Guernsey
100
US$
5m
HSBC Private Bank (Suisse) S.A.
Switzerland
100
SFr683m
HSBC Private Bank (UK) Limited
England
100
£177m
HSBC Trinkaus & Burkhardt KGaA (partnership limited by shares)
Germany
77.89
€
70m
Hong Kong
Hang Seng Bank Limited
Hong Kong
62.14
HK$9,559m
HSBC Insurance (Asia) Limited
Hong Kong
100
HK$125m
HSBC Life (International) Limited
Bermuda
100
HK$327m
The Hongkong and Shanghai Banking Corporation Limited
Hong Kong
100
HK$22,494m
Rest of Asia-Pacific
HSBC Bank Australia Limited
Australia
100
A$811m
HSBC Bank Egypt S.A.E.
Egypt
94.53
E£500m
HSBC Investments
(Taiwan) Limited (formerly HSBC Asset Management (Taiwan) Limited)
Taiwan
100
TWD788m
HSBC Bank Malaysia Berhad
Malaysia
100
RM$114m
North America
The Bank of Bermuda Limited
Bermuda
100
US$30m
HSBC Bank Canada
Canada
100
C$1,125m
HSBC Bank USA, N.A.
United States
100
US$2m
HSBC Finance Corporation
United States
100
US$2,875m
HSBC Mexico S.A.
Mexico
99.74
MXP3,772m
HSBC Securities (USA) Inc.
United States
100
–
2
HSBC Technology & Services (USA) Inc.
United States
100
–
2
South America
HSBC Bank Argentina S.A.
Argentina
99.99
ARS926m
HSBC Bank Brasil S.A. – Banco Múltiplo
Brazil
100
BRL1,930m
HSBC La Buenos Aires Seguros S.A.
Argentina
99.53
ARS44m
HSBC Seguros (Brasil) S.A.
Brazil
97.92
BRL194m
Maxima S.A. AFJP
Argentina
59.99
ARS200m
1
HSBC also owns 100 per cent of the issued redeemable preference share capital of US$17 million.
2
Issued equity capital is less than US$1 million.
All
    of the above subsidiaries are included in the consolidation.
Details
      of all HSBC companies will be annexed to the next Annual Return of HSBC
    Holdings filed with the UK Registrar of Companies.
All
      the above make their financial statements up to 31 December except for
      HSBC Bank Argentina S.A., HSBC La Buenos Aires Seguros S.A. and Maxima
    S.A. AFJP, whose financial statements are made up to 30 June annually.
The principal countries of operation are the same as the countries of incorporation
      except for HSBC Bank Middle East Limited which operates mainly in the Middle
      East, and HSBC Life (International) Limited which operates mainly in Hong
    Kong.
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Subsidiaries
          which experience significant restrictions on their ability to transfer
    funds to HSBC in the form of cash dividends or to repay loans and advances
None of
        the Group's subsidiaries has experienced significant restrictions
        on paying dividends or repaying loans and advances except in the case
        of HSBC Argentina during the recent debt crisis. All regulated banking
        and insurance entities are subject to regulations which require them
        to maintain capital ratios at agreed levels and so govern the availability
    of funds available for distribution.
Subsidiaries
    where HSBC owns less than 50 per cent of the voting rights
HSBC's
interest in
equity capital
Description of relationship
Subsidiary
%
that gives HSBC control
2005
Beijing HSBC Insurance Brokers Limited
24.9
HSBC has the right
to appoint the majority of the board, therefore has management control.
HSBC Insurance Brokers (India) Private Limited
25.9
HSBC has the right
to appoint the majority of the board, therefore has management control.
HSBC Private Equity Fund 3
38.8
HSBC is the fund manager and controls the fund.
HSBC Continental European Alpha Fund
6.1
The fund is a 'Wider
Purpose Fund' and consolidation is required under IAS 27 'Consolidated
and Separate Financial Statements'.
HSBC Global Technology Alpha Fund
48.7
The fund is a 'Wider
Purpose Fund' and consolidation is required under IAS 27.
2004
Beijing HSBC Insurance Brokers Limited
24.9
HSBC has the right
to appoint the majority of the board, therefore has management control.
HSBC Insurance Brokers (India) Private Limited
25.9
HSBC has the right
to appoint the majority of the board, therefore has management control.
HSBC Private Equity Fund 3
47.3
HSBC is the fund manager and controls the fund.
HSBC Continental European Alpha Fund
19.9
The fund is a 'Wider
Purpose Fund' and consolidation is required under IAS 27.
Investments
          where HSBC owns 20 per cent or more of the voting rights but does not
    classify the investment as a subsidiary, joint venture or associate
HSBC's
interest in
equity capital
Description of relationship that results in HSBC accounting
Investment
%
for entity as an investment
2005
Zhong-Run Company Limited
25.0
Entity is held
by a venture capital organisation which is exempt from classifying investments
as associates under IAS 28.
Acquisitions
HSBC
      made the following acquisitions of subsidiaries or business operations
    in 2005, which were accounted for using the purchase method:
On
      1 December 2005, HSBC Financial Corporation Limited, a wholly-owned subsidiary
      of
      HSBC, acquired 100 per cent of the share capital of Metris Companies Inc.
      ('Metris') for a cash consideration of US$1,595 million.
      Metris was the 11th largest issuer of MasterCard and Visa Cards in the
    US.
Goodwill
      of US$521 million arose from this acquisition. The goodwill on the
      Metris acquisition represents value obtainable from synergies with HSBC,
      expertise HSBC brings to the proposition and the platform the acquisition
      provides for the Group to extend its presence in the near-prime credit
    card segment of the US market.
The
    post acquisition profit before tax of Metris was US$6 million.
HSBC
      also made the following acquisitions of subsidiaries or business operations
    in 2005, which were accounted for using the purchase method:
(i)
On 1 June 2005,
HSBC Investments (USA) Inc., a wholly-owned subsidiary of HSBC, acquired Atlantic
Advisors LLC for a contingent consideration of US$9 million. Goodwill of
US$9
million arose from this acquisition.
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(ii)
On 6 June 2005, HSBC Financial Corporation Limited, a wholly owned subsidiary of HSBC, acquired the entire share capital of Invis Incorporated for a consideration of US$13 million.
Goodwill of US$4 million arose from this acquisition.
(iii)
On 31 August 2005, HSBC Bank (Panama) S.A., a wholly owned subsidiary of HSBC, acquired the entire share capital of the Financomer Group for a cash consideration of US$21 million.
Goodwill of US$13 million arose from this acquisition.
(iv)
On 31 August 2005, HSBC acquired a 70.1 per cent equity interest in Dar Es Salaam Investment Bank of Iraq for a cash consideration of US$15 million. Goodwill of US$4 million arose
from this acquisition.
(v)
Increase in stake in an existing subsidiary is excluded from the table below. On 31 December 2005, HSBC increased its stake in HSBC Trinkaus & Burkhardt KGaA by 4.42 per cent to 77.89
per cent for a cash consideration of US$119 million. Goodwill of US$76 million arose on the acquisition.
The
      fair values of the assets, liabilities and contingent liabilities of the
      companies acquired during the year, which relate principally to Metris,
    were as follows:
Carrying value
immediately
Fair
prior to
value
acquisition
US$m
US$m
At date of acquisition
Cash and balances at central banks
61
61
Loans and advances to banks
51
36
Loans and advances to customers
5,258
5,494
Debt securities
236
235
Intangible assets
271
–
Property, plant and equipment
29
24
Other asset categories
161
138
Customer accounts
(47
)
(34
)
Debt securities in issue
(4,610
)
(4,595
)
Provisions for liabilities and charges
(93
)
(93
)
Other liability categories
(211
)
(195
)
Less: minority interests
(4
)
–
Net assets acquired
1,102
1,071
Goodwill attributable:
Subsidiaries (Note 21)
551
Total consideration including costs of acquisition
1,653
In
      addition to the above, there were other minor acquisitions and increases
    in investment in subsidiaries which increased goodwill by US$109 million.
25
Other assets
2005
2004
US$m
US$m
Bullion
2,358
3,180
Assets held for sale
959
988
Reinsurers' share of liabilities under insurance contracts
1,545
–
Current taxation recoverable
496
213
Deferred taxation (Note 30)
2,665
3,260
Endorsements and acceptances
7,973
–
Other accounts
10,600
15,436
26,596
23,077
Assets held for sale
2005
2004
US$m
US$m
Disposal groups and non-current assets held for sale
Interests in associates
162
–
Property, plant and equipment
774
823
Receivables
23
165
Total
    assets classified as held for sale
959
988
303
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Interests
    in associates
Following
        a review of strategic options in relation to HSBC's interest in
        The Cyprus Popular Bank Limited (trading as Laiki Group), an associate
        of the Group, it was decided to dispose of the holding. The sale was
        completed on 6 February 2006. Neither a gain nor loss was created on
        reclassifying this asset as held for sale. The interest is presented
    within the geographical segment Europe.
Property,
    plant and equipment
The property,
        plant and equipment classified as held for sale is the result of repossession
        of property that had been pledged as collateral by customers. These assets
        are disposed of within 12 months of acquisition. Neither a gain nor loss
        was created on reclassifying these assets as held for sale. The majority
    arose within the geographical segment North America.
Receivables
The receivables
        classified as held for sale relate to mortgage loans which HSBC no longer
        offers to its customers. An agreement to sell the portfolio has been
        signed, and the sale is scheduled to be completed in March 2006. Neither
        a gain nor loss was created on reclassifying these assets as held for
    sale. They are presented within the geographical segment South America.
26
Financial liabilities designated at fair value
HSBC
2005
US$m
Deposits by banks and customer accounts
253
Liabilities to customers under investment contracts
10,445
Debt securities in issue (Note 27)
28,338
Subordinated liabilities (Note 31)
18,447
Preference shares (Note 31)
4,346
61,829
The
      carrying amount at 31 December 2005 of financial liabilities designated
      at fair value was US$1,899 million higher than the contractual amount
    at maturity. At
      31 December 2005, the accumulated amount of the change in fair value attributable
    to changes in credit risk was US$664 million.
HSBC Holdings
2005
US$m
Subordinated liabilities (Note 31):
– owed
    to third parties
9,315
– owed
    to HSBC undertakings
4,055
13,370
The
      carrying amount at 31 December 2005 of financial liabilities designated
      at fair value was US$910 million higher than the contractual amount
    at maturity. At
      31 December 2005, the accumulated amount of the change in fair value attributable
    to changes in credit risk was US$398 million.
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27
Debt securities in issue
2005
2004
Carrying
Carrying
amount
amount
US$m
US$m
Bonds and medium term notes
165,773
135,200
Other debt securities in issue
77,613
76,521
243,386
211,721
Of which, debt securities in issue reported as:
– trading
    liabilities
(26,976
)
–
– financial
    liabilities designated at fair value (Note 26)
(28,338
)
–
188,072
211,721
Certain
      debt securities in issue are managed on a fair value basis as part of HSBC's
      interest rate risk management policies. The hedged portion of these debt
      securities is presented
within the balance sheet caption 'Financial liabilities designated at fair
value', with the remaining portion included within 'Trading liabilities'.
The
      following table analyses bonds and medium term notes in issue at 31 December
    2005 with original maturities greater than one year:
2005
2004
US$m
US$m
Fixed rate
8.875% Adjustable Conversion-Rate Equity Security Units
–
594
Debentures – 8.375%: due 2007
101
100
Secured financing:
1.14%
              to 3.99%: due 2006 to 2009
1,669
2,805
4.00%
              to 4.99%: due 2006 to 2010
5,090
414
5.00%
              to 5.99%: due 2006 to 2010
843
638
6.00%
              to 6.99%: due 2006 to 2010
41
–
7.00%
              to 7.99%: due 2006 to 2010
141
217
8.00%
              to 8.99%: due 2005
–
12
Other fixed rate senior debt:
2.15%
              to 3.99%: due 2006 to 2044
10,527
8,935
4.00%
              to 4.99%: due 2006 to 2023
32,295
11,685
5.00%
              to 5.99%: due 2006 to 2035
21,302
12,853
6.00%
              to 6.99%: due 2006 to 2033
25,356
18,853
7.00%
              to 7.99%: due 2006 to 2032
12,450
14,878
8.00%
              to 9.99%: due 2006 to 2015
2,743
3,694
10.00%
              or higher: due 2006 to 2014
890
–
113,448
75,678
Variable interest rate
Secured financings – 0.00% to 9.99%: due 2006 to 2009
15,601
23,070
FHLB advances – 4.00% to 4.99%: due 2006 to 2008
5,000
5,000
Other variable interest rate senior debt – 2.16% to 6.17%: due 2006 to 2036
24,374
25,510
44,975
53,580
Structured notes
Interest rate linked
2,748
2,794
Equity, equity index or credit linked
4,602
3,148
7,350
5,942
Total bonds and medium term notes
165,773
135,200
305
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
28
Other
    liabilities
HSBC
HSBC Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Amounts
    due to investors in funds consolidated by
HSBC
683
–
–
–
Current taxation
1,640
1,648
–
–
Obligations under finance leases
639
695
–
–
Dividend declared and payable by HSBC Holdings
1,193
1,189
1,193
1,189
Endorsements and acceptances
8,033
–
–
–
Other liabilities
14,327
17,049
10
9
26,515
20,581
1,203
1,198
Obligations under finance leases falling due:
– within
    1 year
25
25
–
–
– between
    1 and 5 years
54
40
–
–
– over
    5 years
560
630
–
–
639
695
–
–
29
Liabilities
    under insurance contracts issued
2005
Reinsurers'
Gross
share
Net
US$m
US$m
US$m
Non-life insurance liabilities
Unearned premium provision
1,346
(202
)
1,144
Notified claims
872
(335
)
537
Claims incurred but not reported
424
(130
)
294
Other
229
(2
)
227
2,871
(669
)
2,202
Life insurance policyholders' liabilities
Life (non-linked)
8,369
(807
)
7,562
Investment contracts with discretionary participation features
1
9
–
9
Life (linked)
2,895
(69
)
2,826
11,273
(876
)
10,397
Total liabilities under insurance contracts issued
14,144
(1,545
)
12,599
1
Though investment contracts with discretionary participation features are financial instruments, HSBC continued to treat them as insurance contracts as permitted by IFRS
4.
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The
      movement of liabilities under insurance contracts during the year ended
    31 December 2005 was as follows:
Non-life insurance liabilities
2005
Reinsurers'
Gross
share
Net
US$m
US$m
US$m
Unearned premium provision
At 1 January
1,250
(217
)
1,033
Gross written premiums
2,364
(479
)
1,885
Gross earned premiums
(2,139
)
419
(1,720
)
Exchange differences and other movements
(129
)
75
(54
)
At 31 December
1,346
(202
)
1,144
Notified and incurred but not reported claims
At 1 January
1,360
(463
)
897
Notified
              claims
871
(408
)
463
Claims
              incurred but not reported
489
(55
)
434
Claims paid in current year
(966
)
146
(820
)
Claims incurred in respect of current year
1,070
(150
)
920
Claims incurred in respect of prior years
(32
)
6
(26
)
Exchange differences and other movements
(136
)
(4
)
(140
)
At 31 December
1,296
(465
)
831
Notified
              claims
872
(335
)
537
Claims
              incurred but not reported
424
(130
)
294
1,296
(465
)
831
Other
229
(2
)
227
Total non-life insurance liabilities
2,871
(669
)
2,202
The
      above table includes an insignificant amount in respect of the development
      of prior year claims. For this reason, no detailed table of claims development
      has been provided. This is because a significant majority of the non-life
    insurance business claims are settled within a short period of time.
Life insurance policyholders' liabilities
2005
Reinsurers'
Gross
share
Net
US$m
US$m
US$m
Life (non-linked)
At 1 January
6,860
(1,049
)
5,811
Benefits paid
(621
)
111
(510
)
Claims incurred
2,304
80
2,384
Exchange differences and other movements
(174
)
51
(123
)
At 31 December
8,369
(807
)
7,562
Investment contracts with discretionary participation features
At 1 January
–
–
–
Claims incurred
9
–
9
At 31 December
9
–
9
Life (linked)
At 1 January
2,523
(73
)
2,450
Benefits paid
(357
)
11
(346
)
Claims incurred
802
(22
)
780
Exchange differences and other movements
(73
)
15
(58
)
At 31 December
2,895
(69
)
2,826
Total policyholders' liabilities
11,273
(876
)
10,397
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
The claims
        incurred represent the aggregate of all events giving rise to additional
        policyholders' liabilities in the year. These include death claims,
        surrenders, lapses, the setting up of liability to policyholders at the
        initial inception of the policy, the declaration of bonuses and other
    amounts attributable to policyholders.
30
Provisions
Total
        provisions at 31 December 2005 were US$1,966 million (2004: US$4,071
        million), of which US$530 million (2004: US$1,435 million) relates
        to deferred tax and
US$1,436 million (2004: US$2,636 million) relates to other provisions.
Deferred taxation
HSBC
2005
2004
Deferred
Deferred
Deferred
Deferred
Total
tax asset
tax liability
Total
tax asset
tax liability
US$m
US$m
US$m
US$m
US$m
US$m
Temporary differences:
– retirement
    benefits
1,621
1,537
84
2,039
728
1,311
– loan
    impairment allowances
2,220
1,899
321
2,407
2,115
292
– assets
    leased to customers
(1,342
)
(1,250
)
(92
)
(1,706
)
(221
)
(1,485
)
– revaluation
    of property
(339
)
61
(400
)
(458
)
(237
)
(221
)
– accelerated
    capital allowances
(55
)
(5
)
(50
)
(88
)
63
(151
)
– other
    short term timing differences
(107
)
247
(354
)
(456
)
697
(1,153
)
Unused tax losses
223
176
47
115
115
–
Provision
    for tax on profit remitted
from
    overseas
(86
)
–
(86
)
(28
)
–
(28
)
2,135
2,665
(530
)
1,825
3,260
(1,435
)
The
      amount of temporary differences for which no deferred tax asset is recognised
      in the balance sheet is US$835 million (2004: US$973 million).
      Of this amount, US$458 million
(2004: US$569 million) has no expiry date and US$377 million (2004: US$404
million) is scheduled to expire within 10 years.
HSBC Holdings
Deferred tax liability
2005
2004
US$m
US$m
Temporary differences:
– short-term
    timing differences
5
(1
)
Provision for tax on profit remitted from overseas
65
65
70
64
Deferred
      tax is not recognised on temporary differences associated with investments
      in subsidiaries and branches because earnings are intended to be indefinitely
      reinvested in the case of subsidiaries and no further tax is expected to
      arise in the foreseeable future in the case of branches. The total amount
      of such relevant temporary differences amounted to US$15,367 million
    (2004: US$12,681 million).
There
      are no deductible temporary differences, unused tax losses and unused tax
    credits for which no deferred tax asset is recognised in the balance sheet.
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Other provisions
2005
Other
provisions
US$m
At 1 January
2,636
IFRSs transition adjustment at 1 January 2005
(1,033
)
Additional provisions/increase in provisions
1
637
Provisions utilised
(327
)
Amounts reversed
(310
)
Exchange differences and other movements
(167
)
At 31 December
1,436
1
The increase in 'other provisions' includes unwinding of discounts of US$11 million (2004: US$12 million) in relation to vacant space provisions and US$23
million (2004: US$19 million) in relation to Brazilian provisions for civil and fiscal labour claims.
Included
    within 'Other provisions' are:
(i)
Provisions for onerous property contracts of US$149 million (2004: US$202 million), of which US$74 million (2004: US$66 million) relates to discounted future costs
associated with leasehold properties that became vacant as a consequence of HSBC's move to Canary Wharf in 2002. The provisions cover rent voids while finding new tenants, shortfalls in expected rent receivable compared with rent payable, and
the cost of refurbishing the buildings to attract tenants. Uncertainties arise from movements in market rents, delays in finding new tenants and the timing of rental reviews.
(ii)
Labour, civil and
fiscal litigation provisions in HSBC's Brazil operations of US$235 million
(2004:
US$231
million). These relate to labour and overtime litigation claims brought by employees
after
leaving the bank. The provisions are based on the expected number of departing
employees, their individual salaries and historical trends. The timing of the
settlement of these claims is uncertain.
(iii)
Provisions of US$652 million (2004: US$809 million) have been made in respect of costs arising from contingent liabilities and contractual commitments (Note 40), including
guarantees of US$55 million (2004: US$77 million) and commitments of US$122 million (2004: US$71 million).
31
Subordinated liabilities
HSBC
Carrying amount
2005
2004
US$m
US$m
Subordinated liabilities:
– At
    amortised cost
16,537
26,486
Subordinated liabilities
11,546
26,486
Preferred securities
4,991
–
– Designated
    at fair value (Note 26)
22,793
–
Subordinated liabilities
18,447
–
Preferred securities
4,346
–
39,330
26,486
IFRSs reclassification
as at 1 January 2005:
– Preferred
    securities reclassified as liabilities
–
10,114
Total subordinated liabilities
39,330
36,600
Subordinated liabilities:
– HSBC
    Holdings
10,765
9,669
– Other
    HSBC
28,565
26,931
39,330
36,600
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
HSBC's
    subordinated borrowings
2005
2004
US$m
US$m
Amounts
                owed to third parties by HSBC Holdings
(see
    below)
10,765
9,669
Other
    HSBC subordinated borrowings
€
1,400
m
5.3687% Non-cumulative Step-up Perpetual Preferred Securities
1
1,653
1,908
US$
1,350
m
9.547% Non-cumulative Step-up Perpetual Preferred Securities, Series 1
1
1,350
1,338
US$
1,250
m
4.61% Non-cumulative Step-up Perpetual Preferred Securities
1
1,250
1,250
US$
1,200
m
Primary capital subordinated undated floating rate notes
1,207
1,200
£
700
m
5.844% Non-cumulative Step-up Perpetual Preferred Securities
2
1,205
1,354
US$
1,000
m
5.875% subordinated notes 2034
1,017
993
US$
1,000
m
4.625% subordinated notes 2014
997
997
US$
1,000
m
5.911% trust preferred securities
3
990
–
£
500
m
5.375% subordinated notes 2033
940
964
US$
900
m
10.176% Non-cumulative Step-up Perpetual Preferred Securities, Series 2
1
900
889
€
750
m
5.13% Non-cumulative Step-up Perpetual Preferred Securities
1
885
1,025
£
500
m
4.75% callable subordinated notes 2020
4
861
–
£
500
m
8.208% Non-cumulative Step-up Perpetual Preferred Securities
1
861
958
US$
750
m
Undated floating rate primary capital notes
752
750
US$
750
m
5.625% subordinated notes 2035
737
–
€
600
m
4.25% Callable subordinated notes 2016
5
731
819
€
600
m
8.03% Non-cumulative Step-up Perpetual Preferred Securities
1
708
812
£
350
m
5.375% Callable subordinated step-up notes 2030
6
647
677
£
350
m
Callable subordinated variable coupon notes 2017
7
635
677
£
350
m
5% Callable subordinated notes 2023
8
613
676
€
500
m
Callable subordinated floating rate notes 2020
9
588
–
£
300
m
5.862% Non-cumulative Step-up Perpetual Preferred Securities
2
558
580
£
300
m
6.5% subordinated notes 2023
509
577
US$
500
m
7.625% subordinated notes 2006
507
500
US$
500
m
Undated floating rate primary capital notes
502
500
£
225
m
6.25% subordinated notes 2041
384
432
US$
300
m
7.65% subordinated notes 2025
10
358
300
US$
300
m
6.95% subordinated notes 2011
326
300
US$
300
m
Undated floating rate primary capital notes Series 3
302
300
US$
300
m
7% subordinated notes 2006
300
300
£
150
m
8.625% step-up undated subordinated notes
11
277
290
£
150
m
9.25% step-up undated subordinated notes
12
268
290
BRL608m
Subordinated debentures 2008
261
229
US$
250
m
5.875% subordinated notes 2008
240
237
US$
250
m
7.20% subordinated debentures 2097
216
216
US$
200
m
7.75% subordinated notes 2009
207
–
US$
200
m
7.53% STOPS capital securities 2026
202
–
US$
200
m
7.50% trust preferred securities 2031
202
203
US$
200
m
8.25% trust preferred securities 2031
200
204
US$
200
m
7.808% capital securities 2026
200
200
US$
200
m
8.38% capital securities 2027
200
200
US$
200
m
6.625% subordinated notes 2009
198
200
£
200
m
9% subordinated notes 2005
–
385
US$
300
m
10% trust preferred securities
–
306
Other subordinated liabilities each less than US$200m
2,621
2,895
28,565
26,931
39,330
36,600
Subordinated
      loan capital is repayable at par on maturity, but some is repayable prior
      to maturity at the option of the borrower, generally with the consent of
      the Financial Services Authority, and, where relevant, the local banking
      regulator, in certain cases at a premium over par. Interest rates on the
      floating rate loan capital are related to interbank offered rates. On the
      remaining subordinated loan capital, interest is payable at fixed rates
    up to 10.176 per cent.
1
See Step-up Perpetual Preferred Securities, note (a) Guaranteed by HSBC Holdings. Classified as liabilities from 1 January 2005.
2
See Step-up Perpetual Preferred Securities, note (b) Guaranteed by HSBC Bank. . Classified as liabilities from 1 January 2005.
3
The distributions on the trust preferred securities change in November 2015 to three-month dollar LIBOR plus 1.926 per cent.
4
The interest rate on the 4.75 per cent callable subordinated notes 2020 changes in September 2015 to three-month sterling LIBOR plus 0.82 per cent.
310
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5
The interest rate on the 4.25 per cent callable subordinated notes changes in March 2011 to three-month EURIBOR plus 1.05 per cent.
6
The interest rate on the 5.375 per cent callable subordinated step-up notes 2030 changes in November 2025 to three month sterling LIBOR plus 1.50 per cent.
7
The interest rate on the callable subordinated variable coupon notes 2017 is fixed at 5.75 per cent until June 2012. Thereafter, the rate per annum is the sum of the gross
redemption yield of the then prevailing five-year UK gilt plus 1.70 per cent.
8
The interest on the 5 per cent callable subordinated notes 2023 changes in March 2018 to become the rate per annum which is the sum of the gross redemption yield of the
prevailing five-year UK gilt plus 1.80 per cent.
9
The interest margin on the callable subordinated floating notes 2020 increases by 0.5 per cent from September 2015.
10
The 7.65 per cent subordinated notes 2025 are repayable at the option of each of the holders in May 2007.
11
The interest rate on the 8.625 per cent step-up updated subordinated notes changes in December 2007 to become, for each successive five year period, the rate per annum which is
the sum of the yield on the then five year benchmark UK gilt plus 1.87 per cent.
12
The interest rate on the 9.25 per cent set-up updated subordinated notes changes in December 2006 to become, for each successive five year period, the rate per annum which is
the sum of the yield on the then five year benchmark UK gilt plus 2.15 per cent.
Footnotes
        3 to 12 (excluding footnote 10) all relate to notes that are repayable
        at the option of the borrower on the date of the change of the interest
        rate, and at subsequent interest rate reset dates and interest payment
        dates in some cases, subject to
the
    prior consent of the Financial Services Authority.
Step-up
    Perpetual Preferred Securities
(a)
Guaranteed by HSBC Holdings
The seven issues of Non-cumulative Step-up Perpetual Preferred Securities (footnote 1) were made by Jersey limited partnerships and are guaranteed, on a subordinated basis, by HSBC
Holdings. The proceeds of the issues were on-lent to HSBC Holdings by the limited partnerships by issue of subordinated notes. The Preferred Securities qualify as innovative tier 1 capital for HSBC. The Preferred Securities, together with the
guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of HSBC Holdings that are equivalent to the rights that they would have had if they had purchased non-cumulative
perpetual preference shares of HSBC Holdings.
The Preferred Securities are perpetual, but redeemable in 2014, 2010, 2013, 2016, 2030, 2015 and 2012 respectively at the option of the general partner of the limited partnerships. If not
redeemed the distributions payable step-up and become floating rate or, for the sterling issue, for each successive five-year period, the sum of the then five-year benchmark UK gilt plus a margin. There are limitations on the payment of
distributions if prohibited under UK banking regulations or other requirements, if a payment would cause a breach of HSBC's capital adequacy requirements, or if HSBC Holdings has insufficient distributable reserves (as defined).
HSBC Holdings has covenanted that if it is prevented under certain circumstances from paying distributions on the Preferred Securities in full, it will not pay dividends or other
distributions in respect of its ordinary shares, or effect repurchase or redemption of its ordinary shares, until after a distribution has been paid in full.
If (i) HSBC's total capital ratio falls below the regulatory minimum ratio required, or (ii) the Directors expect that, in view of the deteriorating financial condition of HSBC
Holdings, (i) will occur in the near term, then the Preferred Securities will be substituted by Preference Shares of HSBC Holdings having economic terms which are in all material respects equivalent to those of the Preferred Securities and the
guarantee taken together.
(b)
Guaranteed by HSBC Bank
The two issues of Non-cumulative Step-up Perpetual Preferred Securities (footnote 2) were made by Jersey limited partnerships and are guaranteed, on a subordinated basis, by HSBC Bank.
The proceeds of the issues were on-lent to HSBC Bank by the limited partnerships by issue of subordinated notes. The Preferred Securities qualify as innovative tier 1 capital for HSBC and for HSBC Bank on a solo and consolidated basis and, together
with the guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of HSBC Bank that are equivalent to the rights they would have had if they had purchased non-cumulative
perpetual preference shares of HSBC Bank.
The Preferred Securities are perpetual, but redeemable in 2031 and 2020, respectively, at the option of the general partner of the limited partnerships. If not redeemed the distributions
payable step-up and become floating rate. The same limitations on the payment of distributions apply to HSBC Bank as to HSBC, as described above. HSBC Bank has provided a similar covenant to that provided by HSBC Holdings, also as described
above.
If (i) any Preferred Securities are outstanding in November 2048 or April 2049, respectively, or (ii) the total capital ratio of HSBC Bank on a solo and consolidated basis falls below the
regulatory minimum ratio required,
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
or (iii)
        in view of the deteriorating financial condition of HSBC Bank, the Directors
        expect (ii) to occur in the near term, then the Preferred Securities
        will be substituted by Preference Shares of HSBC Bank having economic
        terms which are in all material respects equivalent to those of the Preferred
    Securities and the guarantee taken together.
HSBC Holdings
Carrying amount
2005
2004
US$m
US$m
Subordinated liabilities:
–
at amortised
      cost
5,236
17,812
–
designated
      at fair value
13,370
–
18,606
17,812
2005
2004
US$m
US$m
HSBC Holdings' dated subordinated loan capital is repayable:
–
between 2
      and 5 years
2,723
1,408
–
over 5 years
15,883
16,404
18,606
17,812
HSBC
    Holdings subordinated borrowings
Amounts falling due after
more
              than 1 year
2005
2004
US$m
US$m
Amounts
    owed to third parties
€2,000
m
Callable subordinated floating rate notes 2014
1
2,374
2,730
US$
1,400
m
5.25% subordinated notes 2012
1,421
1,394
€
1,000
m
5.375% subordinated notes 2012
1,322
1,360
£
650
m
5.75% subordinated notes 2027
1,267
1,250
US$
1,000
m
7.5% subordinated notes 2009
1,115
999
€
700
m
3.625% callable subordinated notes 2020
3
831
–
US$
750
m
Callable subordinated floating rate notes 2015
1
749
–
£
250
m
9.875% subordinated bonds 2018
2
595
478
US$
488
m
7.625% subordinated notes 2032
482
481
€
300
m
5.5% subordinated notes 2009
390
409
US$
222
m
7.35% subordinated notes 2032
219
218
US$
350
m
Subordinated step-up coupon floating rate notes 2010
–
350
10,765
9,669
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Amounts falling due after
more
              than 1 year
2005
2004
US$m
US$m
Amounts owed to HSBC undertakings
€1,400
m
5.3687% fixed/floating
subordinated notes 2043 – HSBC Capital Funding (Euro 2) LP
1,878
1,894
US$1,350
m
9.547% subordinated
step-up cumulative notes 2040 – HSBC Capital Funding (Dollar 1) LP
1,331
1,338
US$1,250
m
4.61% fixed/floating
subordinated notes 2043 – HSBC Capital Funding (Dollar 2) LP
1,185
1,238
€750
m
5.13% fixed/floating
subordinated notes 2044 – HSBC Capital Funding (Euro 3) LP.
992
1,012
US$900
m
10.176% subordinated
step-up cumulative notes 2040 – HSBC Capital Funding (Dollar 1) LP
900
891
£500
m
8.208% subordinated
step-up cumulative notes 2040 – HSBC Capital Funding (Sterling 1) LP
853
958
€600
m
8.03% subordinated
step-up cumulative notes 2040 – HSBC Capital Funding (Euro 1) LP.
702
812
7,841
8,143
18,606
17,812
1
The interest margins on the callable subordinated floating rate notes 2014 and 2015 increase by 0.5 per cent from September 2009 and March 2010, respectively. The notes are
repayable from their step up date at the option of the borrower, subject to the prior consent of the Financial Services Authority.
2
The interest rate on the 9.875 per cent subordinated bonds 2018 changes in April 2013 to become the higher of (i) 9.875 per cent or (ii) the sum of the yield on the relevant
benchmark treasury stock plus 2.5 per cent. The bonds may be redeemed in April 2013 at par and redemption has also been allowed from April 1998, subject to the prior consent of the Financial Services Authority, for an amount based on the redemption
yields of the relevant benchmark treasury stocks.
3
The interest rate on the 3.625 per cent callable subordinated notes 2020 changes in June 2015 to become three-month EURIBOR plus 0.93 per cent. The notes may be redeemed at par
from June 2015 at the option of the borrower, subject to the prior consent of the Financial Services Authority.
32
Fair
    values of financial instruments
HSBC
The
      following table provides an analysis of the fair value of financial instruments
    not measured at fair value in the balance sheet:
2005
2004
Carrying
Fair
Carrying
Fair
amount
value
amount
value
US$m
US$m
US$m
US$m
Assets
Loans and advances to banks
125,965
126,218
143,449
143,794
Loans and advances to customers
740,002
739,439
672,891
674,360
Financial investments: Debt securities
8,082
8,263
153,103
154,400
Liabilities
Deposits by banks
69,727
69,540
84,055
83,493
Customer accounts
739,419
739,316
693,072
691,527
Debt securities in issue
188,072
188,401
211,721
214,652
Subordinated liabilities
16,537
16,380
26,486
28,359
The
      methods used to determine fair values for financial instruments for the
      purpose of measurement and disclosure are set out in Note 2(d). The majority
      of HSBC's financial instruments measured at fair value are valued
      using quoted market prices, or valuation techniques based on observable
      market data. Observable market prices are not, however, available for many
      of HSBC's financial assets and liabilities not measured at fair value.
      The determination of the fair values of the assets and liabilities in the
    table above are as follows:
(i)
Loans and advances to banks and customers
The fair values of personal and commercial loans and advances are estimated by discounting anticipated cash flows (including interest at contractual rates).
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Performing
      loans are grouped, as far as possible, into homogeneous pools segregated
      by maturity and the coupon rates of the loans within each pool. In general,
      cash flows are discounted using current market rates for instruments with
      similar maturity, repricing and credit risk characteristics. For fixed
      rate loans, assumptions are made on the expected prepayment rates appropriate
    to the type of loan.
Conforming
      residential mortgages in the US are treated differently when there is an
      established market value for asset-backed securities. In such cases, fair
      value is estimated by reference to quoted market prices for loans with
    similar characteristics and maturities.
For impaired
      uncollateralised commercial loans, fair value is estimated by discounting
      the future cash flows over the time period they are expected to be recovered.
      For impaired commercial loans where collateral exists, fair value is the
      lower of the carrying values of the loans net of impairment allowances,
    and the fair value of the collateral, discounted as appropriate.
(ii)
Financial investments
In 2004, financial investments include debt securities and equity shares intended to be held on a continuing basis. Such financial investments were included in the balance sheet at cost
less provision for any permanent diminution in value.
From 1 January 2005, on implementation of IAS39, the only financial investments not measured at fair value in the balance sheet are held-to-maturity debt securities. Held-to-maturity debt
securities are initially recorded at fair value plus any directly attributable transaction costs, and are subsequently measured at amortised cost using the effective interest rate method, less any impairment losses.
The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are determined using valuation techniques that
take into consideration future earnings streams and valuations of equivalent quoted securities.
(iii)
Deposits by banks and customer accounts
Deposits by banks and customer accounts are grouped by residual maturity. Fair values are estimated using discounted cash flows, applying either market rates, where applicable, or current
rates offered for deposits of similar remaining maturities.
(iv)
Debt securities in issue and subordinated liabilities
Fair values
      are determined using quoted market prices at the balance sheet date where
    applicable, or by reference to quoted market prices for similar instruments.
The
      fair values presented in the table above are stated at a specific date
      and may be significantly different from the amounts which will actually
      be paid or received on the maturity or settlement dates of the instruments.
      In many cases, it would not be possible to realise immediately the estimated
      fair values. Accordingly these fair values do not represent the value of
      these financial instruments to HSBC as a going
concern.
The
      fair values of intangible assets, such as values placed on portfolios of
      core deposits, credit card relationships and customer goodwill, are not
      included above, because they are not
financial instruments.
As
      other financial institutions use different valuation methodologies and
      assumptions in determining fair values, comparisons of fair values between
      financial institutions may not be meaningful and users are advised to exercise
    caution when using this data.
In addition,
      the following table lists those financial instruments where the carrying
      amount is a reasonable approximation of fair value, for example, because
      they are either short term in nature or reprice to current market rates
    frequently:
Assets
Liabilities
Cash
    and balances at central banks
Hong
    Kong Government currency notes in circulation
(representative
    of Hong Kong banknotes issued)
Items
    in the course of collection
Items
    in the course of transmission
Hong
    Kong Government certificates of indebtedness
Endorsements
    and acceptances
(representative
    of Hong Kong banknotes issued)
Endorsements
    and acceptances
Short-term
    payables within 'Other Liabilities'
Short-term
    receivables within 'Other Assets'
314
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HSBC Holdings
2005
Carrying
Fair
amount
value
US$m
US$m
Assets
Loans and advances to HSBC undertakings
14,092
12,252
Liabilities
Amounts owed to HSBC undertakings
4,075
3,728
Subordinated liabilities
5,236
6,493
33
Maturity analysis of assets and liabilities
The
      following is an analysis of assets and liabilities by remaining contractual
      maturities at the balance sheet date for assets and liability line items
      that combines amounts expected to be recovered or settled in under one
    year, and after one year.
Trading
      assets and liabilities are excluded because they are not held for collection
    or settlement over the period of contractual maturity.
HSBC
At 31 December 2005
Due after
Due within
more than
one year
one year
Total
US$m
US$m
US$m
Assets
Financial assets designated at fair value
1,537
13,509
15,046
Loans and advances to banks
121,387
4,578
125,965
Loans and advances to customers
301,181
438,821
740,002
Financial investments
79,239
103,103
182,342
Other financial assets
12,589
134
12,723
515,933
560,145
1,076,078
Liabilities
Deposits by banks
60,863
8,864
69,727
Customer accounts
712,317
27,102
739,419
Financial liabilities designated at fair value
6,854
54,975
61,829
Debt securities in issue
100,636
87,436
188,072
Other financial liabilities
10,565
799
11,364
Subordinated liabilities
313
16,224
16,537
891,548
195,400
1,086,948
At 31 December 2004
Due after
Due within
more than
one year
one year
Total
US$m
US$m
US$m
Assets
Loans and advances to banks
139,007
4,442
143,449
Loans and advances to customers
257,882
415,009
672,891
Financial investments
77,707
107,625
185,332
474,596
527,076
1,001,672
Liabilities
Deposits by banks
78,080
5,975
84,055
Customer accounts
670,224
22,848
693,072
Debt securities in issue
102,927
108,794
211,721
Other financial liabilities
25
676
701
Subordinated liabilities
749
25,737
26,486
852,005
164,030
1,016,035
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
HSBC
    Holdings
At 31 December 2005
Due after
Due within
more than
one year
one year
Total
US$m
US$m
US$m
Assets
Loans and advances to HSBC undertakings
4,661
9,431
14,092
Financial investments
–
3,517
3,517
Other assets
171
–
171
Prepayments and accrued income
11
8
19
4,843
12,956
17,799
Liabilities
Amounts owed to HSBC undertakings
1,900
2,175
4,075
Financial liabilities designated at fair value
–
13,370
13,370
Other liabilities
1,196
7
1,203
Accruals and deferred income
95
–
95
Subordinated liabilities
–
5,236
5,236
3,191
20,788
23,979
At 31 December 2004
Due after
Due within
more than
one year
one year
Total
US$m
US$m
US$m
Assets
Loans and advances to HSBC undertakings
10,197
6,439
16,636
Financial investments
–
1,885
1,885
Other assets
632
–
632
Prepayments and accrued income
5
–
5
10,834
8,324
19,158
Liabilities
Amounts owed to HSBC undertakings
242
7,110
7,352
Other liabilities
1,198
–
1,198
Accruals and deferred income
172
–
172
Subordinated liabilities
–
17,812
17,812
1,612
24,922
26,534
34
Foreign
    exchange exposures
Structural
    foreign exchange exposures
HSBC's
      structural foreign exchange exposures are represented by the net asset
      value of its foreign exchange equity and subordinated debt investments
      in subsidiary undertakings, branches, joint ventures and associates. Gains
      or losses on structural foreign exchange exposures are taken to reserves.
      HSBC's management of its structural foreign exchange exposures is
      discussed in the 'Market risk' section on page
168.
HSBC
      Holdings retains foreign exchange exposure to dividends receivable from
    its UK subsidiaries and euro-denominated loans to subsidiaries.
316
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Net structural foreign exchange exposures
2005
2004
US$m
US$m
Currency of structural exposure
Euros
18,821
19,054
Sterling
15,615
17,749
Chinese renminbi
5,135
3,105
Mexican pesos
3,777
2,907
Hong Kong dollars
1
2,945
12,693
Canadian dollars
2,926
2,250
Brazilian reais
2,174
1,498
Swiss francs
1,957
1,921
Indian rupees
1,182
745
UAE dirhams
1,111
760
Turkish lira
919
705
Malaysian ringgit
705
605
Australian dollars
609
703
Korean won
506
420
Saudi riyals
2
347
107
Singapore dollars
334
401
Taiwanese dollars
298
326
Japanese yen
252
225
Maltese lira
250
278
Egyptian pounds
234
181
Thai baht
234
203
Indonesia rupiah
188
155
Chilean pesos
187
175
Philippine pesos
176
86
New Zealand dollars
141
8
South African rand
106
65
Argentine pesos
3
(85
)
(76
)
Others, each less than US$100 million
787
587
Total
61,831
67,836
1
The reduction in the net structural foreign exchange exposure to Hong Kong dollars relates principally to the reclassification of preference share capital from equity to
financial liability with effect from 1 January 2005, on application of IAS32.
2
After deducting sales of Saudi riyals amounting to US$480 million (2004: US$480 million) in order to manage the foreign exchange risk of the investments.
3
The negative net investment in Argentine pesos reflects the deficiency in domestic net assets following the pesification of certain balances formerly denominated in US
dollars.
35
Assets
        charged as security for liabilities and collateral accepted as security
    for assets
Financial
    assets pledged to secure liabilities are as follows:
Assets
              pledged at
31
              December
2005
2004
US$m
US$m
Treasury bills and other eligible securities
7,607
3,152
Loans and advances to banks
1,310
–
Loans and advances to customers
36,590
34,992
Debt securities
89,973
53,819
Equity shares
5,137
–
Other
537
1,438
141,154
93,401
These
      transactions are conducted under terms that are usual and customary to
    standard lending, and stock borrowing and lending activities.
Collateral
      accepted as security for assets
The
      fair value of financial assets accepted as collateral that HSBC is permitted
    to sell or repledge in the absence of default is US$138,303 million.
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
The
      fair value of financial assets accepted as collateral that have been sold
      or repledged is US$97,113 million. HSBC is obliged to return equivalent
    securities.
These
      transactions are conducted under terms that are usual and customary to
    standard stock borrowing and lending activities.
36
Minority interests
2005
2004
US$m
US$m
Minority interests
    attributable to holders of ordinary shares in subsidiaries
3,618
2,957
Preference shares issued by subsidiaries
2,176
10,718
Total minority interests
5,794
13,675
Preference shares issued by subsidiaries
2005
2004
US$m
US$m
US$
575
m
6.36% non-cumulative preferred stock, Series B
1
559
–
US$
518
m
Floating rate non-cumulative preferred stock, Series F
2
518
–
US$
374
m
Floating rate non-cumulative preferred stock, Series G
2
374
–
CAD175m
Non-cumulative redeemable class 1 preferred shares, Series C
3
150
–
CAD175m
Non-cumulative redeemable class 1 preferred shares, Series D
3
150
–
US$
150
m
Depositary shares each representing 25% interest in a share of
adjustable rate cumulative preferred stock, Series D
4
150
150
US$
150
m
Cumulative preferred stock
5
150
150
US$
125
m
Dutch auction rate transferable securities preferred stock, Series A and B
6
125
125
Non-cumulative redeemable class 1 preferred shares,
CAD125m
Series A redeemed in 2005
–
104
US$
75
m
Cumulative preferred stock
–
75
€
1,400
m
5.3687% non-cumulative Step-up Perpetual Preferred Securities
–
1,908
£
700
m
5.844% non-cumulative Step-up Perpetual Preferred Securities
–
1,354
US$
1,350
m
9.547% non-cumulative Step-up Perpetual Preferred Securities, Series 1
–
1,338
US$
1,250
m
4.61% non-cumulative Step-up Perpetual Preferred Securities
–
1,250
€
750
m
5.13% non-cumulative Step-up Perpetual Preferred Securities
–
1,025
£
500
m
8.208% non-cumulative Step-up Perpetual Preferred Securities
–
958
US$
900
m
10.176% non-cumulative Step-up Perpetual Preferred Securities, Series 2
–
889
€
600
m
8.03% non-cumulative Step-up Perpetual Preferred Securities
–
812
£
300
m
5.862% non-cumulative Step-up Perpetual Preferred Securities
–
580
2,176
10,718
From 1 January
      2005, the Step-up Perpetual Preferred Securities are classified as financial
    liabilities under IAS 32 and are included in Subordinated liabilities.
1
The series B preferred stock is redeemable, at the option of HSBC Finance Corporation, in whole or part, from 24 June 2010 at par.
2
The Series F and Series G preferred stock are redeemable at par, at the option of HSBC USA Inc., in whole or part, on any dividend payment date on or after 7 April 2010 and at
any time from 1 January 2011, respectively.
3
The Series C and Series D preferred stock are redeemable at a declining premium above par, at the option of HSBC Bank Canada, in whole or part, from 30 June 2010 and 31 December
2010, respectively.
4
The preferred stock has been redeemable, at the option of HSBC USA Inc., in whole or part, from 1 July 1999 at par.
5
The preferred stock is redeemable, at the option of HSBC USA Inc., in whole or part, at any time on or after 1 October 2007 at par.
6
The preferred stock of each series is redeemable, at the option of HSBC USA Inc., in whole or part, on any dividend payment date at par.
All
      redemptions are subject to the prior consent of the Financial Services
    Authority and, where relevant, the local banking regulator.
37
Called
    up share capital
Authorised
The
      authorised ordinary share capital of HSBC Holdings at 31 December 2005
      and 2004 was US$7,500 million divided into 15,000 million ordinary
    shares of US$0.50 each.
At
      31 December 2005 and 2004, the authorised preference share capital of HSBC
      Holdings was 10 million non-cumulative preference shares of £0.01
      each, 10 million non-cumulative
preference shares of US$0.01 each, and
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10 million
        non-cumulative preference shares of €0.01 each.
At 31
        December 2005 and 2004, the authorised non-voting deferred share capital
        of HSBC Holdings was £301,500 divided into 301,500 non-voting deferred
        shares of £1 each.
Issued
2005
2004
US$m
US$m
HSBC
        Holdings ordinary shares
5,667
5,587
Number
US$m
HSBC
          Holdings ordinary shares
At
        1 January 2005
11,172,075,550
5,587
Shares
            issued in connection with the early settlement of HSBC Finance
8.875
            per cent Adjustable Conversion-Rate Equity Security Units
324,726
–
Shares
        issued under HSBC Finance share plans
878,224
–
Shares
        issued under other employee share plans
56,363,536
28
Shares
        issued in lieu of dividends
103,961,906
52
At
        31 December 2005
11,333,603,942
5,667
Number
US$m
At
        1 January 2004
10,960,018,480
5,481
Shares
            issued in connection with the early settlement of HSBC Finance
8.875
            per cent Adjustable Conversion-Rate Equity Security Units
1,590,319
1
Shares
        issued under HSBC Finance share plans
293,254
–
Shares
        issued under QUEST
1,079,099
–
Shares
        issued under other employee share plans
49,052,156
25
Shares
        issued in lieu of dividends
160,042,242
80
At
        31 December 2004
11,172,075,550
5,587
All
        ordinary shares confer identical rights in respect of capital, dividends,
        voting and otherwise.
Number
US$m
HSBC
          Holdings preference shares
At
        1 January 2005
–
–
Issue
        of non-cumulative preference shares of US$0.01 each
1,450,000
–
At
        31 December 2005
1,450,000
–
Dividends
        on HSBC Holdings non-cumulative dollar preference shares are paid quarterly
        at the sole and absolute discretion of the Board of Directors. The Board
        of Directors will not declare a dividend if payment of the dividend would
        cause HSBC not to meet the applicable capital adequacy requirements of
        the FSA. HSBC Holdings may not declare or pay dividends on any class
        of its shares ranking lower in the right to dividends than the preference
        shares nor redeem nor purchase in any manner any of its other shares
        ranking equal with or lower than the preference shares unless it has
        paid in full, or set aside an amount to provide for payment in full,
        the dividends on the preference shares for the then-current dividend
        period. The preference shares carry no rights to conversion into ordinary
        shares of HSBC Holdings. Holders of the preference shares will only be
        entitled to attend and vote at general meetings of shareholders of HSBC
        Holdings if the dividend payable on the preference shares has not been
        paid in full for four consecutive dividend payment dates. In such circumstances,
        holders of preference shares will be entitled to vote on all matters
        put to general meetings until such time as HSBC Holdings shall have paid
        a full dividend on the preference shares. HSBC Holdings may redeem the
        preference shares in whole at any time on or after 16 December 2010,
        with the consent of the FSA.
The
        301,500 non-voting deferred shares were in issue throughout 2004 and
        2005 and are held by a subsidiary undertaking of HSBC Holdings. Holders
        of the non-voting deferred shares are not entitled to receive dividends
        on these shares. In addition, on winding-up or other return of capital,
        holders are entitled to receive the amount paid up on their shares after
        distribution to ordinary shareholders of the amount of £10,000,000
        in respect of each ordinary share held by them.
Details
        of the options outstanding to subscribe for HSBC Holdings ordinary shares
        under the HSBC Holdings Group Share Option Plan, HSBC Holdings Executive
        Share Option Scheme, The HSBC Share Plan and HSBC Holdings savings-related
        share option plans are given in Note 9, 'Share-based payments',
        on pages 269 to 275. In aggregate, the options outstanding under these
        plans is as follows:
319
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H S B C   H O L
    D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Number
          of
HSBC
          Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
341,281,540
2006
          to 2015
£2.1727– £9.642
31
        December 2004
374,369,127
2005
        to 2014
£2.1727– £9.642
31
        December 2003
347,007,843
2004
        to 2013
£2.1727– £9.642
Following
        the acquisition of HSBC France in 2000, outstanding employee share options
        over HSBC France shares vested. On exercise of the options, the HSBC
        France shares are exchangeable for HSBC Holdings ordinary shares in the
        same ratio as for the acquisition of HSBC France (13 HSBC Holdings ordinary
        shares for each HSBC France share).
During
        2005, 435,784 (2004: 451,080) HSBC France shares were issued following
        the exercise of employee share options and exchanged for 5,665,192 HSBC
        Holdings ordinary shares such shares being delivered from The HSBC Holdings
        Employee Benefit Trust 2001 (No. 1) (2004: 5,864,040). During 2005, no
        options over HSBC France shares lapsed (2004: 800). During 2005, 1,500
        (2004: 9,500) HSBC France shares previously issued following the exercise
        of employee share options were exchanged for 19,500 (2004: 123,500) HSBC
        Holdings ordinary shares, such shares being delivered from The HSBC Holdings
        Employee Benefit Trust 2001 (No. 1). There were 1,732,996 HSBC France
        employee share options exchangeable for HSBC Holdings ordinary shares
        outstanding at 31 December 2005 (2004: 2,162,780). At 31 December 2005,
        The HSBC Holdings Employee Benefit Trust 2001 (No. 1) held 21,102,823
        (2004: 26,787,515) HSBC Holdings ordinary shares which may be exchanged
        for HSBC France shares arising from the exercise of options.
HSBC France
        options effectively outstanding over HSBC Holdings ordinary shares under
        this arrangement are as follows:
Number
          of
HSBC
          France
shares
          exchangeable
for
          HSBC Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
1,732,996
2006
          to 2010
€35.52– €142.50
31
        December 2004
2,170,280
2005
        to 2010
€
32.78– €142.50
31
        December 2003
2,625,660
2004
        to 2010
€
32.78– €142.50
There also
        exist outstanding options over the shares of various HSBC France subsidiaries
        which are exchangeable for HSBC Holdings ordinary shares, the details
        of which are set out in the Directors' Report on pages 189 to 214
        and summarised below. On exercise of options over shares of Sinopia Asset
        Management ('Sinopia') the Sinopia shares were exchangeable
        for HSBC Holdings ordinary shares in the ratio of 2.143 HSBC Holdings
        ordinary shares for each Sinopia share. During 2005, 125,500 (2004: 94,000)
        Sinopia shares were issued following the exercise of employee share options
        and exchanged for 268,944 (2004: 201,439) HSBC Holdings ordinary shares,
        such shares being delivered from The CCF Employee Benefit Trust 2001
        (Sinopia).
Sinopia
        options that were effectively outstanding over HSBC Holdings ordinary
        shares under this arrangement were as follows:
Number
          of Sinopia
shares
          exchangeable
for
          HSBC Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
-
-
-
31
        December 2004
125,500
2005
€18.66– €18.80
31
        December 2003
221,500
2004
        to 2005
€8.61– €21.85
On exercise
        of options over shares of HSBC Private Bank France, the HSBC Private
        Bank France shares are exchangeable for HSBC Holdings ordinary shares
        in the ratio of 1.83 HSBC Holdings shares for each HSBC Private Bank
        France share. During 2005, 473,400 HSBC Private Bank France shares were
        issued following the exercise of employee share options and exchanged
        for 841,291 HSBC Holdings ordinary shares, such shares being delivered
        from The CCF Employee Benefit Trust 2001 (Private Banking France). During
        2005, options over 59,875 (2004: 126,000) HSBC Private Bank shares lapsed.
        During 2005, 1,150 HSBC Private Bank France shares previously issued
        following the exercise of employee share options were exchanged for 2,104
        HSBC Holdings ordinary shares. At 31
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December
        2005, 14,819 (2004: 1,125) HSBC Private Bank France shares were in issue
        and will be exchanged for HSBC Holdings ordinary shares on the fourth
        anniversary of the date of the awards of the options. There were 597,660
        HSBC Private Bank France employee share options exchangeable for HSBC
        Holdings ordinary shares outstanding at 31 December 2005 (2004: 1,130,935).
        At 31 December 2005, The CCF Employee Benefit Trust 2001 held 1,452,775
        (2004: 2,294,066) HSBC Holdings ordinary shares which may be exchanged
        for HSBC Private Bank France shares arising from the exercise of options.
HSBC Private
        Bank France options (including shares issued but not exchanged) effectively
        outstanding over HSBC Holdings ordinary shares under this arrangement
        are as follows:
Number
          of HSBC
Private
          Bank France
shares
          exchangeable
for
          HSBC Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
612,479
2006
          to 2012
€10.84
– €22.22
31
        December 2004
1,132,060
2005
        to 2012
€
10.84
– €22.22
31
        December 2003
1,359,810
2004
        to 2012
€
10.84
– €22.22
On the
        acquisition of Banque Hervet in 2001, Banque Hervet shares were held
        in a Plan d'Epargne Entreprise on behalf of Banque Hervet employees
        to vest and be released to employees over a 5 year period. It was agreed
        to exchange these Banque Hervet shares, on vesting, for HSBC Holdings
        ordinary shares in the ratio of 3.46 HSBC Holdings ordinary shares for
        each Banque Hervet share. During 2005, 7,670 (2004: 44,870) Banque Hervet
        shares were released in connection with the vesting of interests in the
        Plan d'Epargne Entreprise and exchanged for 26,539 (2004: 155,219)
        HSBC Holdings ordinary shares, such shares being delivered from The CCF
        Employee Benefit Trust 2001 (Banque Hervet). At 31 December 2005, The
        CCF Employee Benefit Trust 2001 (Banque Hervet) held 586,213 (2004: 612,752)
        HSBC Holdings ordinary shares which may be exchanged for Banque Hervet
        shares from the vesting of interests.
Banque
        Hervet shares to be exchanged for HSBC Holdings ordinary shares under
        this arrangement are as follows:
Number
          of Banque
Hervet
          shares
exchangeable
          for
HSBC
          Holdings
ordinary
          shares
Period
          of vesting
31
          December 2005
169,416
2006
31
        December 2004
177,086
2005 – 2006
31
        December 2003
221,956
2004 – 2006
Following
        the acquisition of HSBC Finance Corporation in 2003, all outstanding
        options and equity-based awards over HSBC Finance Corporation common
        shares were converted into rights to receive HSBC Holdings ordinary shares
        in the same ratio as the share exchange offer for HSBC Finance Corporation
        (2.675 HSBC Holdings ordinary shares for each HSBC Finance Corporation
        common share) and the exercise prices per share adjusted accordingly.
        During 2005, options over 3,563,020 (2004: 6,073,291) HSBC Holdings ordinary
        shares were exercised and 2,638,816 (2004: 5,771,110) HSBC Holdings ordinary
        shares delivered from The HSBC (Household) Employee Benefit Trust 2003
        to satisfy the exercise of these options. During 2005, options over 152,936
        (2004: 415,430) HSBC Holdings ordinary shares lapsed. At 31 December
        2005, The HSBC (Household) Employee Benefit Trust 2003 held 3,006,623
        (2004: 5,645,439) HSBC Holdings ordinary shares and 2,198,829 (2004:
        2,200,000) ADSs, each of which represents five HSBC Holdings ordinary
        shares, which may be used to satisfy the exercise of these options and
        equity-based awards under the HSBC Finance Corporation share plans.
Options
        and equity-based awards outstanding over HSBC Holdings ordinary shares
        under the HSBC Finance Corporation share plans are as follows:
Number
          of
HSBC
          Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
38,107,930
2006
          to 2012
nil – US$21.37
31
        December 2004
41,823,886
2005
        to 2021
nil – US$25.40
31
        December 2003
48,312,607
2004
        to 2021
nil – US$25.40
321
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H S B C   H O L
    D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Prior to
        its acquisition by HSBC Holdings, HSBC Finance Corporation issued 8.875
        per cent Adjustable Conversion-Rate Equity Security Units ('Units')
        which included a contract under which the holder agreed to purchase,
        for US$25 each, HSBC Finance Corporation common shares on 15 February
        2006, with an option for early settlement. The Units which remained outstanding
        following the acquisition of HSBC Finance Corporation were converted
        into contracts to purchase HSBC Holdings ordinary shares. Holders of
        Units electing to settle early received 2.6041 HSBC Holdings ordinary
        shares per Unit. Units exercised at maturity, 15 February 2006, will
        entitle the holder to receive a number of shares based on the market
        value of HSBC Holdings ordinary shares at the time, up to a maximum of
        2.6041 HSBC Holdings ordinary shares for each Unit. During 2005, 324,726
        (2004: 1,590,319) HSBC Holdings ordinary shares were issued in connection
        with the early settlement of 124,698 (2004: 610,700) Units.
The maximum
        number of Units outstanding over HSBC Holdings ordinary shares are as
    follows:
Number
              of Units
exchangeable
          for
HSBC
          Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
1,315,140
2006
US$8.00 – US$9.60
31
        December 2004
1,439,838
2005
        to 2006
US$8.00 – US$9.60
31
        December 2003
2,050,540
2004
        to 2006
US$8.00 – US$9.60
Following
        the acquisition of Bank of Bermuda in 2004, all outstanding employee
        share options over Bank of Bermuda shares were converted into rights
        to receive HSBC Holdings ordinary shares based on the consideration of
        US$40 for each Bank of Bermuda share and the average closing price
        of HSBC Holdings ordinary shares, derived from the London Stock Exchange
        Daily Official List, for the five business days preceding the closing
        date of the acquisition. During 2005, options over 459,091 HSBC Holdings
        ordinary shares were exercised (2004: 744,727) and delivered from the
        HSBC (Bank of Bermuda) Employee Benefit Trust 2004 to satisfy the exercise
        of these options. During 2005, options over 744,421 (2004: 23,500) HSBC
        Holdings ordinary shares lapsed. At 31 December 2005, the HSBC (Bank
        of Bermuda) Employee Benefit Trust 2004 held 2,796,182 HSBC Holdings
        ordinary shares which may be used to satisfy the exercise of options.
Options
        outstanding over HSBC Holdings ordinary shares under the Bank of Bermuda
        share plans are as follows:
Number
          of HSBC
Holdings
ordinary
          shares
Period
          of exercise
Exercise
          price
31
          December 2005
3,366,455
2006
          to 2013
US$7.04 – US$18.35
31
        December 2004
4,569,967
2005
        to 2013
US$3.86 – US$18.35
The maximum
        obligation at 31 December 2005 to deliver HSBC Holdings ordinary shares
        under all of the above arrangements, the HSBC Holdings Restricted Share
        Plan 2000 and The HSBC Share Plan was 486,436,966 (2004: 514,846,111).
        The total number of shares at 31 December 2005 held by employee benefit
        trusts that may be used to satisfy such obligations to deliver HSBC Holdings
        ordinary shares is 130,812,676 (2004: 123,108,967).
322
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38
Equity
2005
Other reserves
Called
              up
share
capital
US$m
Share
premium
US$m
1
Retained
earnings
US$m
2
Available-
for-sale
fair value
reserve
US$m
Cash
              flow
hedging
reserve
US$m
Foreign
exchange
reserve
US$m
Share-
based
payment
reserve
US$m
Merger
reserve
US$m
3
Total
share-
holders'
equity
US$m
Minority
interests
US$m
Total
equity
US$m
At 1 January
5,587
4,881
49,432
–
–
3,215
1,349
21,058
85,522
13,675
99,197
IFRSs transition adjustment at 1 January 2005
–
–
(1,762
)
1,919
410
686
–
–
1,253
(10,077
)
(8,824
)
Shares issued under employee share plans
28
662
–
–
–
–
–
–
690
–
690
Shares issued in lieu of dividends and amounts
arising thereon
52
(52
)
1,811
–
–
–
–
–
1,811
–
1,811
New share capital subscribed, net of costs
1
–
1,405
–
–
–
–
–
–
1,405
–
1,405
Profit for the year attributable to shareholders
–
–
15,081
–
–
–
–
–
15,081
–
15,081
Dividends to shareholders of the parent company
–
–
(7,750
)
–
–
–
–
–
(7,750
)
–
(7,750
)
Own shares adjustment
–
–
(558
)
–
–
–
127
–
(431
)
–
(431
)
Share of changes recognised directly in equity in
the equity of associates or joint ventures
–
–
161
–
–
–
–
–
161
–
161
Actuarial losses on defined benefit plans
4
–
–
(820
)
–
–
–
–
–
(820
)
–
(820
)
Exchange differences
–
–
(3,449
)
(141
)
(41
)
(568
)
14
–
(4,185
)
–
(4,185
)
Fair value losses taken to equity
–
–
–
(351
)
(63
)
–
–
–
(414
)
–
(414
)
Amounts transferred to the income statement
–
–
–
(226
)
(106
)
–
–
–
(332
)
–
(332
)
Exercise of HSBC share options
–
–
303
–
–
–
(481
)
–
(178
)
–
(178
)
Charge to the income statement in respect of
equity settled share-based payment instructions
–
–
–
–
–
–
540
–
540
–
540
Other movements
–
–
58
(400
)
–
–
–
–
(342
)
–
(342
)
Tax
            on items taken directly to or transferred from
    equity
–
–
267
162
(8
)
–
–
–
421
–
421
Transfers
–
–
3,449
141
41
(3,617
)
(14
)
–
–
–
–
Carried forward
5,667
6,896
56,223
1,104
233
(284
)
1,535
21,058
92,432
3,598
96,030
323
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H S B C   H O L D I N G S   P L C
Notes on the Financial Statements
(continued)
2005
Other reserves
Called up
share capital
US$m
Share
premium
US$m
1
Retained
earnings
US$m
2
Available-
for-sale
fair value
reserve
US$m
Cash flow
hedging
reserve
US$m
Foreign
exchange
reserve
US$m
Share-
based
payment
reserve
US$m
Merger
reserve
US$m
3
Total
share-
holders'
equity
US$m
Minority
interests
US$m
Total
equity
US$m
Brought forward
5,667
6,896
56,223
1,104
233
(284
)
1,535
21,058
92,432
3,598
96,030
Profit attributable to minority interests
–
–
–
–
–
–
–
–
–
792
792
Dividends to minority interests
–
–
–
–
–
–
–
–
–
(689
)
(689
)
Exchange differences, minority interests
–
–
–
–
–
–
–
–
–
(72
)
(72
)
Increase in minority interest stake and other
–
–
–
–
–
–
–
–
–
2,165
2,165
At 31 December
3
5,667
6,896
56,223
1,104
233
(284
)
1,535
21,058
92,432
5,794
98,226
1
Share premium
includes US$40 million of issue costs.
2
Retained earnings
include 59,091,472 (US$1,939 million) of own shares held within HSBC's
insurance business, its retirement funds for the benefit of policyholders or
beneficiaries within employee trusts for the settlement of shares expected to
be delivered under employee share schemes or bonus plans, and the market-making
activities in Global Markets.
3
Statutory share
premium relief under Section 131 of the Companies Act 1985 was taken in respect
of the acquisition of HSBC Bank plc in 1992, HSBC France in 2000 and HSBC Finance
Corporation in 2003 and the shares issued were recorded at their nominal value
only. In HSBC's consolidated accounts the fair value difference of US$8,290 million in respect of CCF and US$12,768
million in respect of HSBC Finance
Corporation is a merger reserve.
4
In addition,
actuarial gains of US$8 million were recorded in minority interests.
Cumulative
      goodwill amounting to US$5,138 million has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including
US$3,469 million charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of US$1,669
million has been charged against retained earnings.
324
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2004
Other reserves
Called up
share
capital
US$m
Share
premium
US$m
Retained
earnings
US$m
1
Foreign
exchange
Reserve
US$m
2
Share-
based
payment
reserve
US$m
Merger
reserve
US$m
3
Total
share-
holders'
equity
US$m
Minority
interests
US$m
Total
equity
US$m
At 1 January
5,481
4,406
41,673
–
1,130
21,058
73,748
11,105
84,853
Shares issued/redeemed in connection with the HSBC Finance
8.875 per cent Adjustable Conversion-Rate Equity Security Units
1
–
–
–
(1
)
–
–
–
–
Shares issued under employee share plans
25
555
–
–
–
–
580
–
580
Shares issued in lieu of dividends and amounts arising thereon
80
(80
)
2,607
–
–
–
2,607
–
2,607
Profit for the year attributable to shareholders
–
–
12,918
–
–
–
12,918
–
12,918
Dividends to shareholders of the parent company
–
–
(6,914
)
–
–
–
(6,914
)
–
(6,914
)
Own shares adjustments
–
–
(842
)
–
235
–
(607
)
–
(607
)
Actuarial losses on defined benefit plans
4
–
–
(709
)
–
–
–
(709
)
–
(709
)
Exchange differences
–
–
–
3,215
–
–
3,215
–
3,215
Charge to the income statement in respect of equity settled
share-based payment instructions
–
–
–
–
450
–
450
–
450
Exercise of HSBC share options
–
–
380
–
(465
)
–
(85
)
–
(85
)
Tax on items taken directly to or transferred from equity
–
–
319
–
–
–
319
–
319
Profit attributable to minority interests
–
–
–
–
–
–
–
1,340
1,340
Dividends to minority interests
–
–
–
–
–
–
–
(1,194
)
(1,194
)
Exchange differences, minority interests
–
–
–
–
–
–
–
505
505
Increase in minority interest stake and other
–
–
–
–
–
–
–
1,919
1,919
At 31 December
5,587
4,881
49,432
3,215
1,349
21,058
85,522
13,675
99,197
1
Retained earnings
include 36,255,999 (US$1,424 million) of own shares, held within HSBC's
insurance business; its retirement funds for the benefit of policyholders or
beneficiaries within employee trusts for the settlement of shares expected to
be delivered under employee share schemes or bonus plans, and the market-making
activities in Global Markets.
2
Net exchange differences arising on the retranslation of amounts recognised in Retained earnings.
3
Statutory share
premium relief under Section 131 of the Companies Act 1985 was taken in respect
of the acquisition of HSBC Bank plc in 1992, HSBC France in 2000 and HSBC Finance
Corporation in 2003 and the shares issued were recorded at their nominal value
only. In HSBC's consolidated accounts the fair value difference of US$8,290 million in respect of CCF and US$12,768
million in respect of HSBC Finance
Corporation is a merger reserve.
4
In addition,
actuarial losses of US$22 million were recorded in minority interests.
Cumulative goodwill
amounting to US$5,138 million has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including
US$3,469 million charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of US$1,669
million has been charged against retained earnings.
325
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H S B C   H O L D I N G S   P L C
Notes on the Financial Statements
(continued)
39
Notes
          on the cash flow statement
Non-cash
          items included in the income statement
HSBC
HSBC
          Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Depreciation
        and amortisation
2,213
2,225
11
12
Revaluations
        on investment property
(201
)
(99
)
–
–
Issue
        of share options
540
450
–
–
Loan
        impairment losses
7,801
6,191
–
118
Loans
        written off net of recoveries
(8,549
)
(7,931
)
–
–
Provisions
        for liabilities and charges
327
1,181
–
–
Provisions
        utilised
(327
)
(1,018
)
–
(55
)
Impairment
        of financial investments
–
(105
)
(11
)
92
Accretion
        of discounts and amortisation of premiums
(446
)
(175
)
–
–
1,358
719
–
167
Change in operating assets
HSBC
HSBC Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Change in loans to HSBC undertakings
–
–
2,544
(2,880
)
Change in prepayments and accrued income
7,121
(5,329
)
(14
)
–
Change in net trading securities and net derivatives
4,940
2,695
–
–
Change in loans and advances to banks
307
10,825
–
–
Change in loans and advances to customers
(71,107
)
(130,228
)
–
–
Change in financial assets designated at fair value
(15,048
)
–
–
–
Change in other assets
(8,923
)
(2,262
)
(19
)
(3
)
(82,710
)
(124,299
)
2,511
(2,883
)
Change in operating liabilities
HSBC
HSBC Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Change in accruals and deferred income
(3,810
)
2,578
(77
)
(17
)
Change in deposits by banks
(14,328
)
12,187
–
–
Change in customer accounts
46,394
104,877
–
–
Change in debt securities in issue
(19,047
)
52,256
–
–
Change in financial liabilities designated at fair value
61,837
–
–
–
Change in other liabilities
(113
)
6,116
(3,272
)
1,173
70,933
178,014
(3,349
)
1,156
Cash and cash equivalents comprise
HSBC
HSBC Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Cash at bank with HSBC undertakings
–
–
756
246
Cash and balances at central banks
13,712
9,944
–
–
Items in the course of collection from other banks
11,300
6,338
–
–
Loans and advances to banks of one month or less
100,527
117,658
–
–
Treasury
    bills, other bills and certificates of deposit
less
    than three months
22,790
32,317
–
–
Less: items in the course of transmission to other banks
(7,022
)
(5,301
)
–
–
141,307
160,956
756
246
The
      total interest paid by HSBC during the year was US$33,974 million (2004:
    US$19,038 million).
326
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40
Contingent
    liabilities and contractual commitments
Contingent
    liabilities and contractual commitments
HSBC
HSBC Holdings
2005
2004
2005
2004
US$m
US$m
US$m
US$m
Contract amounts
Contingent liabilities
Acceptances and endorsements
–
7,214
–
–
Guarantees
              and irrevocable letters of credit
pledged
    as collateral security
57,475
55,828
36,877
40,708
Other contingent liabilities
152
57
–
–
57,627
63,099
36,877
40,708
Commitments
Documentary
    credits and short-term trade-related
transactions
8,090
7,788
–
–
Forward
    asset purchases and forward forward
deposits
    placed
2,179
2,689
–
–
Undrawn
    note issuing and revolving
underwriting
    facilities
468
601
–
–
Undrawn
    formal standby facilities, credit lines
and
    other commitments to lend:
– 1
 year and under
527,506
464,541
2,517
2,625
– over
 1 year
103,398
92,077
1,146
542
641,641
567,696
3,663
3,167
The
      above table discloses the nominal principal amounts of third party off-balance
      sheet transactions. Contingent liabilities and commitments are mainly credit-related
      instruments which include letters of credit, guarantees and commitments
      to extend credit. Contractual amounts represent the amounts at risk should
      contracts be fully drawn upon and clients default. Since a significant
      portion of guarantees and commitments are expected to expire without being
      drawn upon, the total of the contractual amounts is not representative
    of future liquidity requirements.
At
      31 December 2005, HSBC had US$1,218
      million (2004: US$1,212 million) of capital commitments contracted
      but not provided for and US$333 million (2004: US$311 million)
    of capital commitments authorised but not contracted for.
Guarantees
HSBC
      provides guarantees and similar undertakings on behalf of both third party
      customers and other entities within the HSBC Group. These guarantees are
      generally provided in the normal
course of HSBC's banking business. The principal types of guarantees provided,
and the maximum potential amount of future payments which HSBC could be required
to make at 31 December 2005, were as follows:
At 31 December 2005
At 31 December 2004
Guarantees
Guarantees
by HSBC
by HSBC
Holdings
Holdings
Guarantees in
in favour of
Guarantees
in favour of
favour of
other HSBC
in favour of
other HSBC
third parties
Group entities
third parties
Group entities
US$m
US$m
US$m
US$m
Guarantee type
Acceptances and endorsements
1
–
–
7,214
–
Financial guarantees
2
19,080
36,877
18,412
40,708
Standby
              letters of credit which are financial
guarantees
3
3,649
–
3,108
–
Other direct credit substitutes
4
5,302
–
6,848
–
Performance bonds
5
6,355
–
4,910
–
Bid bonds
5
595
–
382
–
Standby letters of credit
related to particular transactions
5
6,640
–
5,322
–
Other transaction-related guarantees
5
15,709
–
16,824
–
Other items
297
–
79
–
57,627
36,877
63,099
40,708
327
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H S B C   H O L D I N G S   P L C
Notes on the Financial Statements
(continued)
1
Acceptances and endorsements arise when HSBC guarantees payments on negotiable instruments drawn up by customers, prior to selling the accepted instruments into the market on a
discounted basis. From 1 January 2005, acceptances and endorsements are recognised on-balance sheet in 'Other assets' and 'Other liabilities' as a result of the adoption of IAS 39.
2
Financial guarantees include undertakings to fulfill the obligations of customers or HSBC Group entities should the obligated party fail to do so.
3
Standby letters of credit which are financial guarantees are irrevocable obligations on the part of HSBC to pay third parties when customers fail to meet
commitments.
4
Other direct credit substitutes include re-insurance letters of credit and trade-related letters of credit issued without provision for the issuing entity to retain title to the
underlying shipment.
5
Performance bonds, bid bonds, standby letters of credit and other transaction-related guarantees are undertakings by which the obligation on HSBC to make payment depends on the
outcome of a future event which is unconnected to the creditworthiness of the customer concerned.
The
      amounts disclosed in the above table reflect HSBC's maximum exposure
      under a large number of individual guarantee undertakings. The risks and
      exposures arising from guarantees are captured and managed in accordance
      with HSBC's overall credit risk management policies and procedures.
      Approximately half of the above guarantees have a term of less than one
      year. Guarantees with terms of more than one year are subject to
HSBC's annual credit review process.
When
      HSBC gives a guarantee on behalf of a customer, it retains the right to
      recover from that customer amounts paid under the guarantee. A provision
      is booked only when HSBC considers it probable that it has an obligation
    under an outstanding guarantee. Provisions are disclosed in Note 30.
Joint
    ventures and associates
HSBC
      and its operations are contingently liable with respect to lawsuits and
      other matters that arise in the normal course of business. Management is
      of the opinion that while it is impossible to ascertain the ultimate legal
      and financial liability with respect to these contingencies, their eventual
      outcome is not expected to materially affect the Group's financial
    position and operations.
In
        relation to joint ventures, HSBC had no contingent liabilities, incurred
        jointly or otherwise.
HSBC had
      no commitments of its joint ventures at 31 December 2005 (2004: US$ nil).
HSBC
      had no capital commitments incurred jointly or otherwise in relation to
    its interests in joint ventures.
In
      relation to associates, HSBC's share of those matters, incurred jointly
      with other investors, that had not been provided for amounted to US$7,733
      million (2004: US$5,663 million). No matters arose where HSBC was severally
    liable.
Post-employment
    benefit obligations
HSBC had
    no contingent liabilities relating to post-employment benefits.
41
Lease commitments
Finance lease commitments
2005
2004
Total future
Total future
minimum
Interest
Present
minimum
Interest
Present
payments
charges
value
payments
charges
value
US$m
US$m
US$m
US$m
US$m
US$m
No later than one year
50
(25
)
25
51
(26
)
25
Later than
    one year and no later than five years
152
(98
)
54
155
(115
)
40
Later than five years
630
(70
)
560
745
(115
)
630
832
(193
)
639
951
(256
)
695
In
      2005 US$1 million (2004: US$1 million) was paid as contingent rents
    and charged to 'General and administrative expenses'.
328
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No
      future minimum sublease payments (2004: US$nil) were expected to be
    received under non-cancellable subleases at 31 December 2005.
Operating
    lease commitments
At
      31 December 2005, HSBC was obligated under a number of non-cancellable
      operating leases for properties, plant and equipment for which the future
      minimum lease payments extend over a
number of years.
2005
2004
Land and
Land and
buildings
Equipment
buildings
Equipment
US$m
US$m
US$m
US$m
Future
            minimum lease payments under non-cancellable operating
    leases:
–
no later than one year
712
32
609
29
–
later than one year and no later than five years
1,730
24
1,430
20
–
later than five years
1,452
–
1,099
–
3,894
56
3,138
49
At
      31 December 2005, future minimum sublease payments of US$26 million
      (2004: US$1 million) were expected to be received under the non-cancellable
      subleases at the balance sheet
date.
In
      2005, US$1,901 million (2004: US$951 million) was charged to 'General
      and administrative expenses' in respect of lease and sublease agreements,
      of which US$1,880
million (2004: US$930 million) related to minimum lease payments, US$21
million (2004: US$21 million) to contingent rents, and US$nil
(2004: US$nil) to sublease payments.
The
      contingent rent represents escalation payments made to landlords for operating,
    tax and other escalation expenses.
Finance
    lease receivables
2005
2004
Total future
Unearned
Total future
Unearned
minimum
finance
Present
minimum
interest
Present
payments
income
value
payments
income
value
US$m
US$m
US$m
US$m
US$m
US$m
Lease
    receivables:
–
no later than one year
2,170
(266
)
1,904
2,153
(287
)
1,866
–
later than
    one year and no later than five years
5,908
(1,329
)
4,579
5,843
(1,228
)
4,615
–
later than five years
8,369
(3,109
)
5,260
9,580
(2,824
)
6,756
16,447
(4,704
)
11,743
17,576
(4,339
)
13,237
At
      31 December 2005, unguaranteed residual values of US$68 million (2004:
      US$94 million), had been accrued, and the accumulated allowance for
      uncollectible minimum lease payments
receivable amounted to US$15 million (2004: US$28 million).
Operating
    lease receivables
2005
2004
Land and
Land and
buildings
Equipment
buildings
Equipment
US$m
US$m
US$m
US$m
Future
    minimum lease payments under non-cancellable operating leases:
–
no later than one year
71
397
48
535
–
later than one year and no later than five years
160
1,136
84
1,150
–
later than five years
153
456
96
418
384
1,989
228
2,103
In
      2005, no material income (2004: US$nil) was received as contingent
    rents and recognised in 'Other operating income'.
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H S B C   H O L D I N G S   P L C
Notes on the Financial Statements
(continued)
HSBC leases
      a variety of different assets to third parties under operating and finance
      lease arrangements, including transport assets (such as rolling stock,
      aircraft and motor vehicles),
property and general plant and machinery.
42
Litigation
HSBC, through a number of its subsidiary undertakings, is named in and is defending legal actions in various jurisdictions arising from its normal business. None of these proceedings is
regarded as material litigation.
43
Related party transactions
Compensation to the Board of Directors and other key management personnel
1
HSBC
2005
2004
US$m
US$m
Short-term employee benefits
71
80
Post-employment benefits
2
2
Share-based payment
21
16
94
98
1
Key
              management personnel of HSBC are Board Directors and Group Managing Directors.
Transactions,
    arrangements and agreements involving Directors and others
Particulars
      of transactions, arrangements and agreements entered into by subsidiaries
      of HSBC Holdings with Directors and connected persons and companies controlled
      by them and with officers of HSBC Holdings, disclosed pursuant to section
    232 of the Companies Act 1985, were as follows:
2005
2004
Number of
Balance at
Number of
Balance at
persons
31 December
persons
31 December
US$000
US$000
Directors
and connected persons
and
companies controlled by them
1
76
82
Loans
279,297
310,239
Credit cards
250
324
Guarantees
10,622
21,628
Officers
2
37
34
Loans
42,857
47,767
Credit cards
352
395
Guarantees
164
168
Further
      information on related party transactions, disclosed pursuant to the requirements
      of IAS 24, is shown below. The disclosure of the year-end balance and the
      highest amount outstanding during the year is considered the most meaningful
      information to represent the amount of the transactions and the amount
    of outstanding balances during the year.
1
All of the Directors are key management personnel of HSBC Holdings. The highest amounts outstanding during 2005 of loans, credit card transactions and guarantees with HSBC for
the Directors and connected persons and companies controlled by them were US$495,990,427, US$617,259 and US$16,775,779 respectively. (2004: US$642,727,305, US$811,453 and US$34,767,316 respectively.)
2
Included within Officers are non-Director members of the key management personnel of HSBC Holdings. During 2005, 6 non- Director key management personnel and members of their
close families entered into loan, credit card transactions and guarantees with HSBC (2004: 4 persons). The highest amounts outstanding during 2005 of loans, credit card transactions and guarantees with HSBC for the non-Director key management
personnel and members of their close family were US$30,116,609, US$287,888 and US$20,385 respectively (2004: US$56,577,166, US$207,235 and US$20,385 respectively). The balances of loans and credit card transactions and
guarantees with HSBC outstanding at 31 December 2005 for the non-Director key management personnel and members of their close family were US$20,166,452, US$66,467 and US$20,385 respectively (2004: US$24,264,409, US$ 128,155 and
US$20,385 respectively).
Particulars
      of Directors' transactions are recorded in a register held at the
      Registered Office of HSBC Holdings which is available for inspection by
      members for 15 days prior to the HSBC Holdings Annual General Meeting and
    at the Annual General Meeting itself.
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Some
      of the transactions were connected transactions, as defined by the Rules
      Governing The Listing of Securities on The Stock Exchange of Hong Kong
      Limited but were exempt from any disclosure requirements under the provisions
    of those Rules.
The
      above transactions were made in the ordinary course of business and on
      substantially the same terms, including interest rates and security, as
      for comparable transactions with persons of a similar standing or, where
      applicable, with other employees. The transactions did not involve more
    than the normal risk of repayment or present other unfavourable features.
Transactions
    with other related parties of HSBC
2005
2004
Highest
Balance at
Highest
Balance at
balance during
31 December
balance during
31 December
the year
1
2005
1
the
    year
1
2004
1
US$m
US$m
US$m
US$m
Amounts due from joint ventures
–
Unsubordinated
539
539
839
839
Amounts due from associates
–
Subordinated
63
29
48
38
–
Unsubordinated
1,133
333
340
327
1,735
901
1,227
1,204
Amounts due to joint ventures
1,382
1,382
978
966
Amounts due to associates
161
133
101
95
1,543
1,515
1,079
1,061
1
The
        disclosure of the year-end balance and the highest balance during the
        year is considered the most meaningful information to represent transactions
        during the
year.
The
      above outstanding balances arose from the ordinary course of business and
      on substantially the same terms, including interest rates and security,
      as for comparable transactions with
third party counterparties.
Pension
    funds
At
      31 December 2005, US$19.4 billion (2004: US$19.3 billion) of HSBC
      pension fund assets were under management by HSBC companies. Fees of US$50
      million (2004: US$35 million) were earned by HSBC companies for these
      management services. HSBC's pension funds had placed deposits of US$252
      million (2004: US$268 million) with its banking subsidiaries. The above
      outstanding balances arose from the ordinary course of business and on
      substantially the same terms, including interest rates and security, as
    for comparable transactions with third party counterparties.
HSBC
      International Staff Retirements Benefits Scheme entered into swap transactions
      with HSBC to match the return on the plan assets to the benefit payments
      of the obligations. At 31 December 2005, the fair value of the swap is
    an asset of US$53 million to the pension scheme (2004: US$3 million).
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H S B C   H O L D I N G S   P L C
Notes on the Financial Statements
(continued)
HSBC
        Holdings
Transactions
    and balances during the year with subsidiaries were as follows:
2005
2004
Highest
Highest
balance during
Balance at
balance during
Balance at
the year
1
31 December
1
the year
1
31 December
1
Subsidiaries
US$m
US$m
US$m
US$m
Assets
Cash at bank
756
756
1,409
246
Derivatives
1,795
968
1,643
1,643
Loans and advances
17,282
14,092
16,636
16,636
Financial investments
6,240
3,256
1,885
1,885
Investments in subsidiaries
58,038
58,038
55,668
55,668
Total related party assets
84,111
77,110
77,241
76,078
Liabilities
Amounts owed to HSBC undertakings
7,352
4,075
7,352
7,352
Derivatives
286
286
38
10
Subordinated liabilities:
–
cost
3,997
3,786
8,143
8,143
–
fair
    value
4,498
4,055
–
–
Total related party liabilities
16,133
12,202
15,533
15,505
Contingent liabilities and commitments
41,455
36,877
40,789
40,708
1
The
        disclosure of the year-end balance and the highest balance during the
        year is considered the most meaningful information to represent transactions
        during the
year.
The
      above outstanding balances arose from the ordinary course of business and
      are on substantially the same terms, including interest rates and security,
      as for comparable transactions with third party counterparties, except
      for US$3,296 million of loans and advances to subsidiaries and US$3,235
      million of loans from HSBC undertakings to HSBC Holdings made at an agreement
    of zero per cent interest.
44
Events
    after the balance sheet date
A
fourth
      interim
dividend of US$3,513 million (US$0.31 per share) (2004: US$3,007
million, US$0.27 per share)
was
declared after 31 December 2005 and is subject to approval by the shareholders
at the Annual General Meeting.
On
      6 March 2006, the Board of Directors authorised the financial statements
    for issue.
45
UK
    and Hong Kong accounting requirements
The
      financial statements have been prepared in accordance with IFRSs. There
      would be no material differences had they been prepared in accordance with
      Hong Kong Accounting
Standards.
46
Transition
    to IFRSs
HSBC's
      reported financial position, financial performance and cash flows have
      been affected by the transition from UK GAAP to IFRSs. The transition has
      not affected HSBC's net cash flows nor the underlying economics of
      its businesses, though the periods in which certain income and expenses
    are recognised have changed.
HSBC
      has taken advantage of the section in IFRS 1 that exempts companies from
      presenting comparative information in accordance with IAS 32, IAS 39 and
      IFRS 4. The transitional adjustments are therefore set out in two stages:
      those relating to the restatement of 2004 comparative financial information
      (Notes (a) to (d) below), and those taking effect from 1 January 2005 (Notes
    (e) and (f)).
(a)
Transitional
      exemptions adopted by HSBC in addition to the exemption from restating
    comparative information
    in accordance with IAS 32, IAS 39 and IFRS 4.
(b)
Key impact
      analysis of IFRSs on the financial position at 31 December 2004, and financial
      performance and cash flows for the year ended 31 December 2004. The most
      significant effects
of the transition to IFRSs on
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HSBC's restated comparative financial information are the result of differences in the accounting treatment applied to goodwill, retirement benefits and dividends.
(c)
Reconciliation to IFRSs of the financial performance for the year ended 31 December 2004 and the financial position at 31 December 2004 and 1 January 2004 previously reported under UK
GAAP.
(d)
Analysis of the effect of IAS 1 'Presentation of Financial Statements' on the financial performance for the year ended 31 December 2004 and the financial position at 31 December
2004 and 1 January 2004. This note describes the adjustments made to reformat HSBC's income statements and balance sheets from UK GAAP to IFRSs.
(e)
Key impact analysis of adopting IAS 32, IAS 39 and IFRS 4 on the opening balance sheet at 1 January 2005.
(f)
Reconciliation of consolidated balance sheets at 31 December 2004 and 1 January 2005.
(g)
Principal accounting policies applicable to the 2004 comparative information which differ from those applied in 2005.
(h)
Effect of the transition to IFRSs on the financial position of HSBC Holdings. This note includes the reconciliation of HSBC Holdings' UK GAAP balance sheets at 31 December 2004 and 1
January 2004 to its IFRSs balance sheets and an analysis of the effect of adopting IAS 32, IAS 39 and IFRS 4 on the opening balance sheet at 1 January 2005.
Notes (c)
      and (d) bridge financial statement disclosures under UK GAAP and IFRSs
      and are designed to assist the reader in understanding the nature and quantum
      of differences between them.
Notes (a) to (d) are extracts from HSBC's publication,
2004
IFRSs Comparative Financial Information,
which was issued on 5 July 2005. Notes (e) and (f) are taken
from HSBC's
Interim
Report 2005
. Note (g) contains extracts from HSBC's
Annual
Report and Accounts 2004
.
(a)
Transitional
    exemptions
In addition
      to exempting companies from the requirement to restate comparatives for
      IAS 32, IAS 39 and IFRS 4, IFRS 1 grants certain exemptions from the full
      requirements of IFRSs to
companies adopting IFRSs for the first time.
HSBC has
    taken the following exemptions in making the transition to IFRSs:
(i)
Business
    combinations
HSBC has
      elected not to restate business combinations that took place prior to the
      1 January 2004 transition date. Had this exemption not been taken the main
      effects would have been to recognise additional deferred tax on fair value
      adjustments made at the date of acquisition and to recognise additional
      intangible assets with consequential adjustments to the carrying value
      of goodwill and retained earnings as at 1 January
2004.
The recognition
      of additional intangibles with a definite life would have given rise to
      an increased amortisation charge, which would have reduced IFRSs net income
      prospectively with a
consequential reduction in total shareholders' equity. The restatement of
goodwill would have had no impact on prospective net income unless it was written
off following a subsequent impairment review.
(ii)
Fair
    value or revaluation as deemed cost
HSBC has
      elected to measure individual items of property at fair value at the date
    of transition to IFRSs and use that fair value as deemed cost at that date.
If
      HSBC had continued to revalue properties, this would have led to increases
      in tangible fixed assets at 31 December 2004 and 31 December 2005 with
      corresponding increases in other reserves (net of deferred tax liabilities).
      There would have been a slightly increased depreciation charge and reduced
    net income going forward.
If HSBC
      had reverted to original cost as the basis for carrying properties, net
      income under IFRSs would have been higher for 2004 and 2005 owing to a
      reduced depreciation charge, and
shareholders' equity would have been lower.
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
(iii)
Employee benefits
HSBC has elected to apply the employee benefits exemption and has, therefore, recognised in equity at 1 January 2004 all cumulative actuarial gains and losses on post-employment benefit
plans. Recognising certain actuarial gains and losses under the alternative 'corridor approach' would have reduced liabilities and increased retained earnings at 1 January 2004. HSBC has not elected to adopt a corridor approach going
forward under IAS 19 'Employee Benefits'.
(iv)
Cumulative exchange differences
HSBC has set the cumulative exchange differences for all foreign operations to zero at 1 January 2004. The alternative, a retrospective application of IAS 21 'The Effect of Changes
in Foreign Exchange Rates', would have resulted in a re-allocation between retained earnings and other reserves at 1 January 2004 but would have had no impact on total equity.
(v)
Share-based payment transactions
HSBC has
      elected to undertake full retrospective application of IFRS 2 'Share-based
      Payment'. The alternative, excluding share options issued before 7
      November 2002 as permitted by IFRS 1, would have slightly reduced administrative
      expenses and increased net income in 2004. There would have been no impact
    on retained earnings or total equity.
(b)
Key
      impact analysis of IFRSs on the financial results and position at 31 December
    2004
HSBC previously prepared
    its primary financial statements under UK GAAP, which differs in certain
    significant respects from IFRSs. For a summary of the principal accounting
    policies followed for preparing the 2004 comparative information, see Note
    (g) below.
Reconciliation
          of previously reported shareholders' funds under UK GAAP to total
          shareholders' equity
under IFRSs at 31 December 2004
and
1 January 2004
At
At
31 December
1 January
2004
2004
US$m
US$m
Shareholders' funds
    as previously reported under UK GAAP
86,623
74,473
Goodwill
1,869
(22
)
88,492
74,451
Retirement
    benefits
(4,470
)
(3,529
)
Dividends
2,996
2,627
Leases
(503
)
(402
)
Share-based
    payments
198
211
Software
    capitalisation
551
518
Property
(1,607
)
–
Land held
    under operating leases
(495
)
(755
)
Other
42
245
Tax
318
382
Total
    shareholders' equity under IFRSs
85,522
73,748
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Reconciliation
        of previously reported profit attributable to shareholders under UK GAAP
        to profit attributable to shareholders under IFRSs for the year ended
        31 December
2004
Year ended
31 December
2004
US$m
Profit
      before tax under UK GAAP
17,608
Goodwill amortisation
1,818
19,426
Other
      goodwill adjustments
(102
)
Retirement benefits
(170
)
Leases
(90
)
Share-based payments
(152
)
Software
      capitalisation
25
Property
106
Tax
      on associates
(48
)
Other
(52
)
Profit
      before tax under IFRSs
18,943
Tax
      – UK GAAP
(4,507
)
Tax – IFRSs adjustments
(178
)
Minority
      interests – UK GAAP
(1,261
)
Minority interests – IFRSs adjustments
(79
)
Profit
      attributable to shareholders under IFRSs
12,918
The following
        is a summary of the main differences between UK GAAP and IFRSs applicable
    to HSBC:
IFRS
    3 'Business Combinations' ('IFRS 3')
HSBC applied
        IFRS 3 with effect from 1 January 2004 but, as permitted by IFRS 1, did
    not restate business combinations which occurred prior to 1 January 2004.
The carrying
        value of goodwill existing at 31 December 2003 under UK GAAP was carried
        forward under IFRS 1 from 1 January 2004, subject to two adjustments.
        Firstly, previously unrecognised intangible assets that met the recognition
        criteria under IAS 38 'Intangible Assets' in the financial
        statements of the acquired entity were reported separately to the extent
        that they were included in goodwill at the date of transition. Secondly,
        only adjustments to provisional fair values (and hence goodwill) made
        during the first 12 months after an acquisition were reflected in comparative
        information. Accordingly, goodwill adjustments made after the first 12
        months
in accordance with UK GAAP were reversed.
IFRS 3
        requires that goodwill should not be amortised but should be tested for
        impairment on transition and at least annually at the cash-generating
        unit level by applying a
fair-value-based test as described in IAS 36 'Impairment of Assets'.
There was no impairment on transition or in any subsequent periods.
Under
          IFRS 3, the acquirer only recognises adjustments to the provisional
          fair values of assets and liabilities acquired in a business combination
          within 12 months of the acquisition date, with a corresponding adjustment
          to goodwill. These adjustments are made as if they had occurred at
          the acquisition date, that is the comparative information is adjusted.
          Adjustments to the fair value of assets, liabilities and contingent
          liabilities after the 12 month period are recognised only to correct
          errors or adjust deferred tax assets that could not be recognised separately
          at the date of acquisition. When such a deferred tax asset is recognised,
          goodwill is reduced to the amount that would have been recognised if
          the deferred tax asset had been recognised at the date of the acquisition.
          Any reduction in goodwill is recognised as an expense, offsetting the
          benefit taken in the tax charge for the recognition of the deferred
          tax asset.
The effect
        of ceasing goodwill amortisation on operating profit for the year ended
        31 December
2004 was US$1,814 million.
The impact
        of other goodwill adjustments, essentially to adjust fair values on acquisition
        to the basis noted above, was a reduction in operating profit for the
        year ended 31 December
2004 of US$96 million.
US$241
        million of goodwill was reclassified to other intangible assets on 1
    January 2004.
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
IAS
           19 'Employee Benefits' ('IAS 19')
IAS 19 requires
      pension fund assets to be assessed at fair value and liabilities on the
      basis of current actuarial assumptions using the projected unit credit method.
      As permitted by an amendment to IAS 19, HSBC elected to recognise all actuarial
      gains and losses directly in retained earnings.
The change
      in accounting resulted in the recognition of a pension obligation of US$6,475
      million at 31 December 2004 (1 January 2004: US$4,982 million) which,
      after adjustment for prospective tax relief and the portion of the deficit
      attributable to minority interests, reduced total shareholders' equity
      by US$4,470 million (1 January 2004: US$3,529 million). The effect
      of the transition to IAS 19 on 2004's operating profit was to increase
      the charge for pension costs by US$170 million. US$242 million of
      this related to an increase in pension liability from termination benefits
      attributable to members of the HSBC Bank (UK) Pension Scheme arising from
      major staff reduction programme in the second half of the year. Under UK
      GAAP, the impact of the staff reduction programme on the pension scheme
      was spread over the remaining average life of the scheme.
IAS
           10 'Events after the Balance Sheet Date' ('IAS 10')
Under IAS
      10, equity dividends declared after the balance sheet date are not included
      as a liability at the balance sheet date. Accordingly, HSBC reversed the
      liability for proposed dividends at each balance sheet date. This had the
      effect of increasing shareholders' equity at 31 December 2004 and 1
      January 2004 by US$2,996 million and US$2,627 million respectively.
IAS
           17 'Leases' ('IAS 17')
IAS 17 requires
      that unearned income on finance leases be taken to income at a rate calculated
      to give a constant rate of return on the net investment in the lease, with
      no account taken in calculating the net investment of the tax effects of
      the lease. In general, this leads to a deferral of finance income compared
      with the pattern of recognition under UK GAAP, where income is recognised
      at a constant rate of return on the net cash investment in the lease including
      the effect of tax.
Under UK
      GAAP, assets leased out under operating leases are depreciated over their
      useful lives so that, for each asset, rentals less depreciation are recognised
      at a constant periodic rate of return on the net cash invested in that asset.
      Under IFRSs, operating leased assets are depreciated to ensure that in each
      period the depreciation charge is at least equal to that which would have
      arisen on a straight-line basis.
The effect
      of both finance and operating leases on shareholders' equity at 31
      December 2004 was a decrease of US$503 million (1 January 2004: decrease
      of US$402 million). The effect of the transition to IAS 17 was to decrease
      operating profit by US$90 million for the year ended 31 December 2004.
Under UK
      GAAP, leasehold land was separately identified within the valuation of land
      and buildings. For HSBC, this principally arose in Hong Kong, where all
      land is held by way of leases. IFRSs require leasehold land to be treated
      as held under an operating lease unless title is expected to pass to the
      lessee at the end of the lease. No revaluation is permitted in respect of
      such owner-occupied operating lease assets. Leasehold land valued at US$1,345
      million at 1 January 2004 was reclassified as operating lease assets on
      the date of transition to IFRSs. This resulted in the reversal of previously
      recognised revaluation surpluses amounting to US$622 million, and the
      inclusion of prepaid rentals of US$723 million in 'Other assets'
      at 1 January 2004.
IFRS
           2 'Share-based Payment' ('IFRS 2')
IFRS 2 requires
      companies to adopt a fair-value-based method of accounting for share-based
      compensation plans which takes into account vesting conditions related to
      market performance, for example total shareholder return. Under this method,
      compensation cost is measured at the date of grant based on the assessed
      value of the award and is recognised over the service period, which is usually
      the vesting period.
In respect
      of other vesting conditions, an estimate of the number of options that will
      lapse before they vest is made at grant date and adjustments to this estimate
      are made over the service period. Accordingly, the expense recognised reflects,
      over time, the actual number of lapsed options for non-market performance-related
      conditions.
There is
      no exemption under IFRS 2 for Save-As-You-Earn schemes, as existed under
      UK GAAP.
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HSBC undertook
      full retrospective application of IFRS 2, as permitted by IFRS 1, and recognised
      the fair value of share-based payments to employees whilst reversing charges
      made in respect of employee share schemes under UK GAAP. This resulted in
      a US$152 million reduction in operating profit for the year ended 31
      December 2004.
At 31 December
      2003, HSBC had a liability under UK GAAP in relation to certain sign-on
      and performance bonuses which were to be settled by the purchase of HSBC
      shares and had been expensed as incurred. Under IFRS 2, these transactions
      are treated as equity-settled share-based payments and are expensed over
      the vesting period.
IAS
      27 'Consolidated and Separate Financial Statements' ('IAS
      27')
IAS 27 requires
      that all entities be consolidated on a line-by-line basis. HSBC's insurance
      subsidiaries' third party assets, which were historically presented
      in aggregate on a single line 'Long-term assurance assets attributable
      to policyholders' within 'Other assets' on the consolidated
      balance sheet have, therefore, been included in appropriate headings for
      such assets.
In addition,
      funds under management have been consolidated where the requirements of
      IAS 27 and Standard Interpretations Committee 12 'Consolidation –
      Special Purpose Entities' ('SIC–12') are met.
SIC–12
        also requires consolidation of special purpose entities ('SPEs')
        when the substance of the relationship between the SPE and the reporting
        entity indicates that the SPE is controlled by that entity. This resulted
        in certain of the Group's securitisation and conduit vehicles that
    were off-balance-sheet under UK GAAP being consolidated under IFRSs.
The effect
        of consolidating funds under management and SPEs under IAS 27 and SIC–12
        was to gross up the 31 December 2004 balance sheet by US$4,796 million
        (1 January 2004:
US$5,075 million) with a minor impact on total shareholders' equity.
Attributable profit for the year ended 31 December 2004 increased by US$12
million as a result.
Under IAS
        27, investments in subsidiaries may be carried at cost or accounted for
        in accordance with IAS 39 in an entity's separate financial statements.
        HSBC Holdings took the option of carrying its investments in subsidiaries
        at cost instead of at net asset value, as under its previous UK GAAP
        policy. The effect of this change was a decrease in total shareholders' equity
        by US$39,217
million at 31 December 2004
(US$27,412 million at 1 January 2004).
IAS
    12 'Income Taxes' ('IAS 12')
Under
        IAS 12, deferred tax liabilities and assets are generally recognised
        in respect of all temporary differences except where expressly prohibited
        by the Standard, subject to an assessment of the recoverability of deferred
        tax assets. Deferred tax assets are recognised to the extent that it
        is probable that taxable profit will be available against which the deductible
    temporary differences can be utilised.
In addition,
        unremitted earnings from subsidiaries, associates and joint ventures
        operating in lower tax jurisdictions result in a deferred tax liability
        unless the reporting entity is able to control the timing of the reversal
        of temporary differences and it is probable that the temporary differences
    will not reverse in the foreseeable future.
Under
        IFRSs, fair value adjustments made on acquisition are tax-effected in
        order to present profitability on a tax-equalised basis: under UK GAAP
        no tax adjustments were required for items which did not affect the amount
    of tax payable or recoverable.
The IFRSs
        balance sheet at 31 December 2004 included an increase in the deferred
        tax asset of US$587 million (1 January 2004: US$813 million)
        and a decrease in the deferred tax
liability of US$631 million (1 January 2004: US$563 million). The net
change in deferred tax mainly arose from prospective tax relief on pension deficits,
tax-effecting fair value adjustments on acquisitions, previously unrecognised
tax-effecting of historical property revaluations, and an adjustment to the grossing
up of the value of in-force long-term assurance business.
The effect
        on the IFRSs income statement is shown in Note 46(c). The main item in
        the 'other' column, is the deferred tax of US$274 million
        for the year ended 31 December 2004 on the fair value adjustments arising
    on the acquisition of subsidiaries.
337
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H S B C   H O L
D I N G S   P L C
Notes
        on the Financial Statements
(continued)
IAS
    38 'Intangible Assets' ('IAS 38')
IAS 38
        states that intangible assets should be recognised separately from goodwill
        in a business combination when they arise from contractual or other legal
        rights, or if separable, i.e. capable of being separated or divided from
        the acquired entity and sold, transferred, licensed, rented, or exchanged
        in combination with a related contract, asset or liability. The effect
        of this is that certain intangible assets such as trademarks and customer
        relationships included as part of goodwill under UK GAAP are separately
    measured and recognised on business combinations.
When intangible
        assets have an indefinite useful life, or are not yet ready for use,
        they are tested for impairment annually. This impairment test may be
        performed at any time during an annual period, provided it is performed
        at the same time every year. An intangible asset recognised during the
    current period is tested before the end of the current annual period.
Presentationally,
        intangible assets recognised under UK GAAP, including mortgage servicing
        rights and the value of in-force long-term assurance business, were reclassified
        from 'Other assets' to 'Intangible assets'. This
        resulted in additional intangible assets at 31 December 2004 of US$308
        million relating to mortgage servicing rights and US$1,874 million
        relating to the value of in-force long-term assurance business (1 January
    2004: US$506 million and US$1,579 million respectively).
IAS 38
        further requires costs incurred in the development phase of a project
        to produce application software for internal use to be capitalised and
        amortised over the software's estimated useful life if the software
        will generate probable future economic benefits, and such costs can be
        measured reliably. Under UK GAAP these costs were expensed as incurred.
        This policy change resulted in US$760 million of software being capitalised
    as at 31 December 2004 (1 January 2004: US$718 million).
The capitalisation
        of software previously expensed in full resulted in a decrease in general
        and administrative expenses and an increase in depreciation and amortisation
        charged in respect of capitalised software in the form of regular, ongoing
        amortisation and any impairment charge. The net effect was that expenses
    were US$25 million lower for the year ended 31 December 2004.
IAS
    16 'Property, Plant and Equipment' ('IAS 16')
HSBC adopted
        the 'cost' model by which assets are carried at cost less any
        accumulated depreciation and impairment losses. HSBC also applied the
        exemption in IFRS 1 which allows fair value at the date of transition
        to IFRSs to be used as deemed cost for the value of property in most
        circumstances. No adjustments were required to restate property, plant
        and equipment in the IFRSs opening balance sheet at 1 January 2004 as
        a result of changing from a policy of revaluation to one of depreciated
        cost. However, US$639 million was transferred out of the revaluation
    reserve to retained earnings on 1 January 2004.
Leasehold
        land valued at US$1,345 million at 1 January 2004, which was previously
        capitalised under UK GAAP but did not meet the criteria for capitalisation
        as finance leased assets under IFRSs, was reclassified as operating leased
        assets. See the paragraph entitled 'IAS 17' above for further
    explanation of these adjustments.
IAS
    40 'Investment Property' ('IAS 40')
Investment
        properties are measured at fair value with changes therein recognised
        in the income statement. This resulted in a US$98 million increase
        in operating profit for the year
ended 31 December 2004.
IAS
          21 'The Effects of Changes in Foreign Exchange Rates' ('IAS
    21')
IAS 21
        states that in consolidated financial statements, all exchange differences
        arising on the retranslation of foreign operations with functional currencies
        which differ from the
entity's reporting currency, should be recognised as a separate component
of equity in the foreign exchange reserve.
On disposal
        of a foreign operation, the exchange differences previously recognised
        in reserves in relation to that operation are recognised in the income
        statement for the
period.
As permitted
        by IFRS 1, HSBC deemed cumulative translation differences at 1 January
    2004 to be zero.
338
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IAS
    7 'Cash Flow Statements' ('IAS 7')
HSBC previously
        prepared its cash flow statement in accordance with UK Financial Reporting
        Standard 1 (Revised 1996) 'Cash Flow Statements' ('FRS
        1 (Revised)'). Its objectives and principles are similar to those
    set out in IAS 7.
FRS 1
        (Revised) defines cash as cash and balances at central banks and advances
        to banks payable on demand. IAS 7 in addition includes 'Cash equivalents',
        which are defined as short-term highly liquid investments, held for the
        purpose of meeting short-term cash commitments rather than investment,
        that are both convertible to known amounts of cash, and so near their
        maturity that they present an insignificant risk of changes in value.
        The inclusion of cash equivalents in the definition of reported cash
        flows had no significant effect on the reported net cash flows for the
    period to 31 December 2004.
Under
        UK GAAP, HSBC presented its cash flows by operating activities; dividends
        received from associates; returns on investments and servicing of finance;
        taxation; capital expenditure and financial investments; acquisitions
        and disposals; equity dividends paid; and financing. Under IFRSs, only
    three categories are required. These are operating; investing; and financing.
Amendments
    to transitional balances
The transitional
        balances reported in the 2005 Accounts have been amended in certain respects
        compared to the balances published in the
2004 IFRSs Comparative
    Financial Information Document
.
Following
        further interpretative guidance on IFRSs, leases of land greater than
        500 years are now accounted for as operating leases, having previously
        been reported in the
2004 IFRSs Comparative
        Financial Information Document
as
        finance leases. This resulted in a reduction of fixed assets and an increase
        in lease rental prepayments of US$366 million as at 1 January 2004
    compared to the comparatives published in the above document.
The foreign
        exchange and share-based payment reserves have been grouped with 'Other
        reserves' rather than retained earnings. This resulted in an increase
        in other reserves of
US$3,955 million and a corresponding reduction in reported retained earnings
as at 1 January 2004 compared to the balances reported in the comparative information
document.
339
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H S B C   H O L
D I N G S   P L C
Notes
        on the Financial Statements
(continued)
Consolidated
    income statement for the year ended 31 December 2004
Effect of
IFRSs (except
UK GAAP
transition
IAS 32/39
IFRSs format
to IFRSs
and IFRS 4)
US$m
US$m
US$m
Interest income
50,203
268
50,471
Interest expense
(19,179
)
(193
)
(19,372
)
Net interest income
31,024
75
31,099
Fee income
15,877
25
15,902
Fee expense
(2,784
)
(170
)
(2,954
)
Net fee income
13,093
(145
)
12,948
Trading income
2,566
220
2,786
Net investment income on assets backing policyholder liabilities
–
1,012
1,012
Gains less losses from financial investments
770
(230
)
540
Dividend income
601
21
622
Net earned insurance premiums
–
5,368
5,368
Other operating income
3,335
(1,722
)
1,613
Total operating income
51,389
4,599
55,988
Loan impairment charges and other credit risk provisions
(6,352
)
161
(6,191
)
Net insurance claims incurred and movement in policyholder
liabilities
–
(4,635
)
(4,635
)
Net operating income
45,037
125
45,162
Employee compensation and benefits
(14,492
)
(31
)
(14,523
)
General and administrative expenses
(9,723
)
(16
)
(9,739
)
Depreciation of property, plant and equipment
(1,664
)
(67
)
(1,731
)
Amortisation of intangible assets
(1,842
)
1,348
(494
)
Total operating expenses
(27,721
)
1,234
(26,487
)
Operating profit
17,316
1,359
18,675
Share of profit in associates and joint ventures
292
(24
)
268
Profit before tax
17,608
1,335
18,943
Tax expense
(4,507
)
(178
)
(4,685
)
Profit for the year
13,101
1,157
14,258
Profit attributable to minority interests
(1,261
)
(79
)
(1,340
)
Profit attributable to shareholders
11,840
1,078
12,918
340
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Consolidated balance sheet at 31 December 2004
Effect of
IFRSs (except
UK GAAP
transition
IAS 32/39
IFRSs format
to IFRSs
and IFRS 4)
US$m
US$m
US$m
ASSETS
Cash and balances at central banks
9,872
72
9,944
Items in the course of collection from other banks
6,352
(14
)
6,338
Hong Kong Government certificates of indebtedness
11,878
–
11,878
Trading securities
111,022
11,138
122,160
Derivatives
32,188
2
32,190
Loans and advances to banks
142,712
737
143,449
Loans and advances to customers
669,831
3,060
672,891
Financial investments
180,461
4,871
185,332
Interests in associates and joint ventures
3,452
(11
)
3,441
Goodwill and intangible assets
29,382
5,113
34,495
Property, plant and equipment
18,829
(3,205
)
15,624
Other assets
41,310
(18,233
)
23,077
Prepayments and accrued income
19,489
(334
)
19,155
Total assets
1,276,778
3,196
1,279,974
LIABILITIES AND EQUITY
Liabilities
Hong Kong currency notes in circulation
11,878
–
11,878
Deposits by banks
83,539
516
84,055
Customer accounts
693,751
(679
)
693,072
Items in the course of transmission to other banks
5,301
–
5,301
Trading liabilities
46,460
–
46,460
Derivatives
35,394
(406
)
34,988
Debt securities in issue
208,593
3,128
211,721
Retirement benefit liabilities
–
6,475
6,475
Other liabilities
41,461
(20,880
)
20,581
Liabilities to policyholders under long-term assurance business
–
19,190
19,190
Accruals and deferred income
16,500
(1
)
16,499
Provisions
– deferred tax
2,066
(631
)
1,435
– other provisions
5,532
(2,896
)
2,636
Subordinated liabilities
26,486
–
26,486
Total liabilities
1,176,961
3,816
1,180,777
Equity
Called up share capital
5,587
–
5,587
Share premium account
4,881
–
4,881
Other reserves
21,457
4,165
25,622
Retained earnings
54,698
(5,266
)
49,432
Total shareholders' equity
86,623
(1,101
)
85,522
Minority interests
13,194
481
13,675
Total equity
99,817
(620
)
99,197
Total equity and liabilities
1,276,778
3,196
1,279,974
341
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H S B C   H O L
D I N G S   P L C
Notes
        on the Financial Statements
(continued)
Consolidated balance sheet at 1 January 2004
Effect of
IFRSs (except
UK GAAP
transition
IAS 32/39
IFRSs format
to IFRSs
and IFRS 4)
US$m
US$m
US$m
ASSETS
Cash and balances at central banks
7,661
72
7,733
Items in the course of collection from other banks
6,628
–
6,628
Hong Kong Government certificates of indebtedness
10,987
–
10,987
Trading securities
86,887
8,529
95,416
Derivatives
27,652
(216
)
27,436
Loans and advances to banks
117,173
861
118,034
Loans and advances to customers
528,977
4,873
533,850
Financial investments
152,795
3,504
156,299
Interests in associates and joint ventures
1,273
(20
)
1,253
Goodwill and intangible assets
28,640
3,278
31,918
Property, plant and equipment
15,748
(1,904
)
13,844
Other assets
35,476
(15,152
)
20,324
Prepayments and accrued income
14,319
(324
)
13,995
Total assets
1,034,216
3,501
1,037,717
LIABILITIES AND EQUITY
Liabilities
Hong Kong currency notes in circulation
10,987
–
10,987
Deposits by banks
70,426
13
70,439
Customer accounts
573,130
(101
)
573,029
Items in the course of transmission to other banks
4,383
–
4,383
Trading liabilities
30,127
–
30,127
Derivatives
28,534
(655
)
27,879
Debt securities in issue
153,562
5,044
158,606
Retirement benefit liabilities
–
4,982
4,982
Other liabilities
36,008
(17,513
)
18,495
Liabilities to policyholders under long-term assurance business
–
15,168
15,168
Accruals and deferred income
13,760
(46
)
13,714
Provisions
– deferred tax
1,670
(563
)
1,107
– other provisions
5,078
(2,327
)
2,751
Subordinated liabilities
21,197
–
21,197
Total liabilities
948,862
4,002
952,864
Equity
Called up share capital
5,481
–
5,481
Share premium account
4,406
–
4,406
Other reserves
21,543
–
21,543
Retained earnings
43,043
(725
)
42,318
Total shareholders' equity
74,473
(725
)
73,748
Minority interests
10,881
224
11,105
Total equity
85,354
(501
)
84,853
Total equity and liabilities
1,034,216
3,501
1,037,717
342
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(c)
Reconciliation
        of financial performance for the year ended 31 December 2004 and financial
        position at 31 December 2004 and 1 January 2004 reported under UK GAAP
    and IFRSs
Consolidated
    income statement for the year ended 31 December 2004
Adjustments
    to conform HSBC's UK GAAP income statement for the year ended 31 December
    2004 to its accounting policies under IFRSs are set out below:
Goodwill
IFRSs
amortisation
Other
Share-
(except
UK
Retirement
under UK
goodwill
Software
based
Consolid-
IAS 32/39
GAAP
benefits
GAAP
adjustments
capitalisation
payments
Leases
Insurance
ation
Property
Other
and IFRS 4)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Interest receivable
50,203
–
–
–
–
–
–
61
254
–
(47
)
50,471
Interest payable
(19,179
)
–
–
–
–
–
–
4
(245
)
–
48
(19,372
)
Net interest income
31,024
–
–
–
–
–
–
65
9
–
1
31,099
Fees and commissions
receivable
15,877
–
–
–
–
–
–
(3
)
(31
)
–
(171
)
15,672
Fees and commissions payable
(2,784
)
–
–
–
–
–
–
(356
)
(9
)
–
195
(2,954
)
Dealing profits
2,566
–
–
–
–
–
–
–
73
–
(20
)
2,619
Dividend income
601
–
–
–
–
–
–
–
25
–
(4
)
622
Net investment income on
assets backing
policyholder liabilities
–
–
–
–
–
–
–
1,012
–
–
–
1,012
Net earned insurance
premiums
–
–
–
–
–
–
–
5,368
–
–
–
5,368
Other operating income
3,303
–
–
–
–
–
–
(1,482
)
21
90
(151
)
1,781
Operating income
50,587
–
–
–
–
–
–
4,604
88
90
(150
)
55,219
Administrative expenses
(24,183
)
(170
)
–
(39
)
329
(152
)
–
(49
)
15
(7
)
32
(24,224
)
Depreciation and amortisation
(3,506
)
–
1,814
(57
)
(304
)
–
(90
)
–
–
4
(86
)
(2,225
)
Operating profit before
provisions
22,898
(170
)
1,814
(96
)
25
(152
)
(90
)
4,555
103
87
(204
)
28,770
Provision for bad and
doubtful debts
(6,357
)
–
–
–
–
–
–
–
–
–
162
(6,195
)
Provision for contingent
liabilities
            and commitments.
(27
)
–
–
–
–
–
–
–
–
–
(44
)
(71
)
Net insurance claims
–
–
–
–
–
–
–
(4,565
)
(70
)
–
–
(4,635
)
Amounts written off fixed
asset investments
–
–
–
–
–
–
–
–
4
–
(2
)
2
Operating profit
16,514
(170
)
1,814
(96
)
25
(152
)
(90
)
(10
)
37
87
(88
)
17,871
343
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
Consolidated income
    statement for the year ended 31 December 2004
(continued)
Goodwill
IFRSs
amortisation
Other
Share-
(except
UK
Retirement
under UK
goodwill
Software
based
Consolid-
IAS 32/39
GAAP
benefits
GAAP
adjustments
capitalisation
payments
Leases
Insurance
ation
Property
Other
and IFRS 4)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Operating profit
16,514
(170
)
1,814
(96
)
25
(152
)
(90
)
(10
)
37
87
(88
)
17,871
Share of profit in associates
and joint ventures
292
–
4
2
–
–
–
–
–
18
(48
)
268
Gains on disposal of fixed
assets and investments
802
–
–
(8
)
–
–
–
11
–
1
(2
)
804
Profit on ordinary activities
before tax
17,608
(170
)
1,818
(102
)
25
(152
)
(90
)
1
37
106
(138
)
18,943
Tax on profit on ordinary
activities
(4,507
)
39
–
57
(21
)
(12
)
27
(1
)
(6
)
(11
)
(250
)
(4,685
)
Profit on ordinary activities
after tax
13,101
(131
)
1,818
(45
)
4
(164
)
(63
)
–
31
95
(388
)
14,258
Minority interests
(1,261
)
(3
)
–
–
–
–
–
–
(19
)
(35
)
(22
)
(1,340
)
Profit attributable to
shareholders
11,840
(134
)
1,818
(45
)
4
(164
)
(63
)
–
12
60
(410
)
12,918
344
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Consolidated
balance
sheet
    at 31
December
2004
Adjustments
to
conform
HSBC's
UK
        GAAP
balance
sheet
        at 31
December
2004 to its
accounting
policies
under
    IFRSs are set out below:
IFRSs
Share-
(except
UK
Retirement
Software
based
Consolid-
IAS 32/39
GAAP
benefits
Dividends
Goodwill
capitalisation
payments
Leases
Insurance
ation
Property
Other
and IFRS 4)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
ASSETS
Cash and balances at central
banks
9,872
–
–
–
–
–
–
–
72
–
–
9,944
Items in the course of
collection
    from other banks
6,352
–
–
–
–
–
–
–
(14
)
–
–
6,338
Treasury bills and other
eligible bills
30,284
–
–
–
–
–
–
197
–
–
–
30,481
Hong Kong Government
certificates
    of indebtedness
11,878
–
–
–
–
–
–
–
–
–
–
11,878
Loans and advances to banks
142,712
–
–
–
–
–
–
699
40
–
(2
)
143,449
Loans and advances to
customers
669,831
–
–
–
–
–
(122
)
342
3,602
–
(762
)
672,891
Debt securities
240,999
4
–
–
–
–
–
8,109
(701
)
–
–
248,411
Equity shares
19,319
–
–
–
–
–
–
6,896
1,321
–
183
27,719
Interests in associates and
joint ventures
3,452
–
–
3
–
–
–
–
–
(14
)
–
3,441
Other participating interests
881
–
–
–
–
–
–
–
–
–
–
881
Goodwill and intangible
assets
29,382
–
–
1,809
760
–
–
1,874
(3
)
–
673
34,495
Tangible fixed assets
18,829
–
–
–
–
–
(596
)
–
–
(2,520
)
(89
)
15,624
Other assets
73,498
1,152
–
57
(138
)
110
–
(19,141
)
468
(249
)
(490
)
55,267
Prepayments and accrued
income
19,489
(1,003
)
–
–
–
–
–
(64
)
11
736
(14
)
19,155
Total assets
1,276,778
153
–
1,869
622
110
(718
)
(1,088
)
4,796
(2,047
)
(501
)
1,279,974
345
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H S B C   H O L
D I N G S   P L C
Notes on the
      Financial Statements
(continued)
Consolidated
balance
sheet
    at 31 December 2004
(continued)
IFRSs
Share-
(except
UK
Retirement
Software
based
Consolid-
IAS 32/39
GAAP
benefits
Dividends
Goodwill
capitalisation
payments
Leases
Insurance
ation
Property
Other
and IFRS 4)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
LIABILITIES
Hong Kong currency notes in
circulation
11,878
–
–
–
–
–
–
–
–
–
–
11,878
Deposits by banks
83,539
–
–
–
–
–
–
–
516
–
–
84,055
Customer accounts
693,751
–
–
–
–
–
–
(528
)
(151
)
–
693,072
Items in the course of
transmission
    to other banks
5,301
–
–
–
–
–
–
–
–
–
–
5,301
Debt securities in issue
208,593
–
–
–
–
–
–
(486
)
3,614
–
–
211,721
Other liabilities
123,315
(3
)
(3,173
)
–
–
27
–
(18,428
)
295
–
(4
)
102,029
Liabilities to policyholders
under long-term assurance
business
–
–
–
–
–
–
–
19,190
–
–
–
19,190
Retirement benefit liabilities
–
6,475
–
–
–
–
–
–
–
–
–
6,475
Accruals and deferred income
16,500
31
–
–
–
(140
)
–
2
57
–
49
16,499
Provision for liabilities and
charges:
– deferred
    taxation
2,066
(128
)
–
–
71
25
(215
)
362
18
216
(980
)
1,435
– other
    provisions
5,532
(1,740
)
–
–
–
–
–
(1,202
)
1
–
45
2,636
Subordinated liabilities
26,486
–
–
–
–
–
–
–
–
–
–
26,486
Minority interests
13,194
(12
)
177
–
–
–
–
–
484
(161
)
(7
)
13,675
Called up share capital
5,587
–
–
–
–
–
–
–
–
–
–
5,587
Share premium account
4,881
–
–
–
–
–
–
–
–
–
–
4,881
Other reserves
21,457
–
–
–
–
–
–
–
–
–
210
21,667
Revaluation reserve
2,660
–
–
–
–
–
–
–
–
(2,660
)
–
–
Profit and loss account
52,038
(4,470
)
2,996
1,869
551
198
(503
)
2
(38
)
558
186
53,387
Total liabilities
1,276,778
153
–
1,869
622
110
(718
)
(1,088
)
4,796
(2,047
)
(501
)
1,279,974
346
Back to Contents
Consolidated
balance
sheet
    at 1
January
2004
Adjustments
to
conform
HSBC's
UK
        GAAP
balance
sheet
        at 1
January
2004 to its
accounting
policies
under
    IFRSs are set out below:
IFRSs
Share-
(except
UK
Retirement
Software
based
Consolid-
IAS 32/39
GAAP
benefits
Dividends
Goodwill
capitalisation
payments
Leases
Insurance
ation
Property
Other
and IFRS 4)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
ASSETS
Cash and balances at central
banks
7,661
–
–
–
–
–
–
–
72
–
–
7,733
Items in the course of
collection
            from other banks.
6,628
–
–
–
–
–
–
–
–
–
–
6,628
Treasury bills and other
eligible bills
20,391
–
–
–
–
–
–
84
–
–
–
20,475
Hong Kong Government
certificates
    of indebtedness
10,987
–
–
–
–
–
–
–
–
–
–
10,987
Loans and advances to banks
117,173
–
–
–
–
–
–
752
109
–
–
118,034
Loans and advances to
customers
528,977
–
–
–
–
–
(110
)
316
5,555
–
(888
)
533,850
Debt securities
205,722
4
–
–
–
–
–
6,597
(466
)
–
–
211,857
Equity shares
12,879
–
–
–
–
–
–
5,037
578
–
200
18,694
Interests in associates and
joint ventures
1,273
(1
)
–
8
–
–
–
–
(16
)
(11
)
–
1,253
Other participating interests
690
–
–
–
–
–
–
–
–
–
–
690
Goodwill and intangible
assets
28,640
–
–
112
718
–
–
1,579
–
–
869
31,918
Tangible fixed assets
15,748
–
–
–
–
–
(465
)
–
–
(1,345
)
(94
)
13,844
Other assets
63,128
733
–
44
(127
)
111
–
(15,169
)
(649
)
(26
)
(286
)
47,759
Prepayments and accrued
income
14,319
(948
)
–
(77
)
–
24
–
76
(108
)
723
(14
)
13,995
Total assets
1,034,216
(212
)
–
87
591
135
(575
)
(728
)
5,075
(659
)
(213
)
1,037,717
347
Back to Contents
H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Consolidated
      balance sheet at 1 January 2004
(continued)
UK
      GAAP
Retirement
benefits
Dividends
Goodwill
Software
capitalisation
Share
based
payments
Leases
Insurance
Consolid-
ation
Property
Other
IFRSs
(except
IAS
        32/39
and
      IFRS 4)
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
LIABILITIES
Hong
      Kong currency notes in
circulation
10,987
–
–
–
–
–
–
–
–
–
–
10,987
Deposits
      by banks
70,426
–
–
–
–
–
–
13
–
–
–
70,439
Customer
      accounts
573,130
–
–
–
–
–
–
(78
)
(23
)
–
–
573,029
Items
      in the course of
transmission
      to other banks
4,383
–
–
–
–
–
–
–
–
–
–
4,383
Debt
      securities in issue
153,562
–
–
–
–
–
–
(516
)
5,560
–
–
158,606
Other
      liabilities
94,669
(126
)
(2,794
)
156
–
(5
)
–
(14,773
)
(598
)
–
(28
)
76,501
Liabilities
      to policyholders
under
      long-term assurance
business
–
–
–
–
–
–
–
15,168
–
–
–
15,168
Retirement
      benefit liabilities
–
4,982
–
–
–
–
–
–
–
–
–
4,982
Accruals
      and deferred income
13,760
(6
)
–
26
–
(106
)
–
–
12
–
28
13,714
Provision
      for liabilities and
charges:
–
      deferred taxation
1,670
(142
)
–
–
73
35
(173
)
306
3
197
(862
)
1,107
–
      other provisions
5,078
(1,390
)
–
(73
)
–
–
–
(848
)
(25
)
–
9
2,751
Subordinated
      liabilities
21,197
–
–
–
–
–
–
–
–
–
–
21,197
Minority
      interests
10,881
(1
)
167
–
–
–
–
–
148
(101
)
11
11,105
Called
      up share capital
5,481
–
–
–
–
–
–
–
–
–
–
5,481
Share
      premium account
4,406
–
–
–
–
–
–
–
–
–
–
4,406
Other
      reserves
21,543
–
–
–
–
–
–
–
–
–
–
21,543
Revaluation
      reserve
1,615
–
–
–
–
–
–
–
–
(1,615
)
–
–
Profit
      and loss account
41,428
(3,529
)
2,627
(22
)
518
211
(402
)
–
(2
)
860
629
42,318
Total
      liabilities
1,034,216
(212
)
–
87
591
135
(575
)
(728
)
5,075
(659
)
(213
)
1,037,717
348
Back to Contents
(d)
Analysis of
      the effect of IAS 1 'Presentation of Financial Statements' on
      the financial performance for the year ended 31 December 2004 and financial
      position at 31 December 2004 and 1 January 2004
Consolidated
      income statement for the year ended 31 December 2004 under IFRSs (except
      IAS 32, IAS 39 and IFRS 4)
IFRSs
      numbers in UK GAAP format
Reclassification
IFRSs
      numbers in IFRSs format
US$m
US$m
US$m
Interest
      receivable
50,471
50,471
Interest
      income
Interest
      payable
(19,372
)
(19,372
)
Interest
      expense
Net
      interest income
31,099
31,099
Net
      interest income
Fees
      and commissions receivable
15,672
230
15,902
Fee
      income
Fees
      and commissions payable
(2,954
)
(2,954
)
Fee
      expense
12,948
Net
      fee income
Dealing
      profits
2,619
167
2,786
Trading
      income
Net
      investment income on assets backing policyholder liabilities
1,012
1,012
Net
      investment income on assets backing policyholders' liabilities
540
540
Gains
      less losses from financial investments
Dividend
      income
622
622
Dividend
      income
Net
      earned insurance premiums
5,368
5,368
Net
      earned insurance premiums
Other
      operating income
1,781
(168
)
1,613
Other
      operating income
Operating
      income
55,219
769
55,988
Total
      operating income
(4,635
)
(4,635
)
Net
      insurance claims incurred and movement in policyholder liabilities
(6,191
)
(6,191
)
Loan
      impairment charges and other credit risk provisions
45,162
Net
      operating income
Administrative
      expenses
(24,224
)
24,224
(14,523
)
(14,523
)
Employee
      compensation and benefits
(9,739
)
(9,739
)
General
      and administrative expenses
Depreciation
      and amortisation
(2,225
)
2,225
(1,731
)
(1,731
)
Depreciation
      of property, plant and equipment
(494
)
(494
)
Amortisation
      of intangible assets
(26,487
)
Total
      operating expenses
Operating
      profit before provisions
28,770
Provision
      for bad and doubtful debts
(6,195
)
6,195
Provision
      for contingent liabilities and commitments
(71
)
71
Net
      insurance claims incurred and movement in policyholder liabilities .
(4,635
)
4,635
Amounts
      written off fixed asset investments
2
(2
)
Operating
      profit
17,871
804
18,675
Operating
      profit
349
Back to Contents
H S B C   H
  O L D I N G S   P L C
Notes
on the Financial Statements
(continued)
Consolidated
      income statement for the year ended 31 December 2004 under IFRSs (except
      IAS 32, IAS 39 and IFRS 4)
(continued)
IFRSs
      numbers in UK GAAP format
Reclassification
IFRSs
      numbers in IFRSs format
US$m
US$m
US$m
Operating
      profit
17,871
804
18,675
Operating
      profit
Share
      of profit in associates and joint ventures
316
(48
)
268
Share
      of profit in associates and joint ventures
Gains
      on disposal of fixed assets and investments
804
(804
)
Profit
      on ordinary activities before tax
18,991
(48
)
18,943
Profit
      before tax
Tax
      on profit on ordinary activities
(4,733
)
48
(4,685
)
Tax
      expense
Profit
      on ordinary activities after tax
14,258
14,258
Profit
      for the year
Minority
      interests
(1,340
)
(1,340
)
Profit
      attributable to minority interests
Profit
      attributable to shareholders
12,918
–
12,918
Profit
      attributable to shareholders of the parent company
350
Back to Contents
Consolidated
      balance sheet at 31 December 2004 under IFRSs (except IAS 32, IAS 39 and
      IFRS 4)
IFRSs
      numbers in UK GAAP format
Reclassification
IFRSs
      numbers in IFRSs format
US$m
US$m
US$m
ASSETS
ASSETS
Cash
      and balances at central banks
9,944
9,944
Cash
      and balances at central banks
Items
      in the course of collection from other banks
6,338
6,338
Items
      in the course of collection from other banks
Treasury
      bills and other eligible bills
30,481
(30,481
)
Hong
      Kong Government certificates of indebtedness
11,878
11,878
Hong
      Kong Government certificates of indebtedness
122,160
122,160
Trading
      assets
32,190
32,190
Derivatives
Loans
      and advances to banks
143,449
143,449
Loans
      and advances to banks
Loans
      and advances to customers
672,891
672,891
Loans
      and advances to customers
Debt
      securities
248,411
(248,411
)
Equity
      shares
27,719
(27,719
)
185,332
185,332
Financial
      investments
Interests
      in associates and joint ventures
3,441
3,441
Interests
      in associates and joint ventures
Other
      participating interests
881
(881
)
Goodwill
      and intangible assets
34,495
34,495
Goodwill
      and intangible assets
Tangible
      fixed assets
15,624
15,624
Property,
      plant and equipment
Other
      assets
55,267
(32,190
)
23,077
Other
      assets
Prepayments
      and accrued income
19,155
19,155
Prepayments
      and accrued income
Total
      assets
1,279,974
–
1,279,974
Total
      assets
351
Back to Contents
H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Consolidated
      balance sheet at 31 December 2004 under IFRSs (except IAS 32, IAS 39 and
      IFRS 4)
(continued)
IFRSs
      numbers in UK GAAP format
Reclassification
IFRSs
      numbers in IFRSs format
US$m
US$m
US$m
LIABILITIES
LIABILITIES
      AND EQUITY
Liabilities
Hong
      Kong currency notes in circulation
11,878
11,878
Hong
      Kong currency notes in circulation
Deposits
      by banks
84,055
84,055
Deposits
      by banks
Customer
      accounts
693,072
693,072
Customer
      accounts
Items
      in the course of transmission to other banks
5,301
5,301
Items
      in the course of transmission to other banks
46,460
46,460
Trading
      liabilities
34,988
34,988
Derivatives
Debt
      securities in issue
211,721
211,721
Debt
      securities in issue
Retirement
      benefit liabilities
6,475
6,475
Retirement
      benefit liabilities
Other
      liabilities
102,029
(81,448
)
20,581
Other
      liabilities
Liabilities
      to policyholders under long term assurance business
19,190
19,190
Liabilities
      to policyholders under long term assurance business
Accruals
      and deferred income
16,499
16,499
Accruals
      and deferred income
Provisions
      for liabilities and charges:
Provisions
–
      deferred taxation
1,435
1,435
–
      deferred tax
–
      other provisions
2,636
2,636
–
      other provisions
Subordinated
      liabilities
26,486
26,486
Subordinated
      liabilities
1,180,777
Total
      liabilities
Minority
      interests
13,675
(13,675
)
Equity
Called
      up share capital
5,587
5,587
Called
      up share capital
Share
      premium account
4,881
4,881
Share
      premium account
Other
      reserves
21,667
3,955
25,622
Other
      reserves
Profit
      and loss account
53,387
(3,955
)
49,432
Retained
      earnings
Shareholders'
      funds
85,522
85,522
Total
      shareholders' equity
13,675
13,675
Minority
      interests
99,197
Total
      equity
Total
      liabilities
1,279,974
–
1,279,974
Total
      equity and liabilities
352
Back to Contents
Consolidated
              balance sheet at 1 January 2004 under IFRSs (except IAS 32, IAS 39 and
    IFRS 4)
IFRSs numbers in UK GAAP format
Reclassification
IFRSs numbers in IFRSs format
US$m
US$m
US$m
ASSETS
ASSETS
Cash and balances at central banks
7,733
7,733
Cash and balances at central banks
Items in the course of collection from other banks
6,628
6,628
Items in the course of collection from other banks
Treasury bills and other eligible bills
20,475
(20,475
)
Hong Kong Government certificates of indebtedness
10,987
10,987
Hong Kong Government certificates of indebtedness
95,416
95,416
Trading assets
27,436
27,436
Derivatives
Loans and advances to banks
118,034
118,034
Loans and advances to banks
Loans and advances to customers
533,850
533,850
Loans and advances to customers
Debt securities
211,857
(211,857
)
Equity shares
18,694
(18,694
)
156,299
156,299
Financial investments
Interests in associates and joint ventures
1,253
1,253
Interests in associates and joint ventures
Other participating interests
690
(690
)
Goodwill and intangible assets
31,918
31,918
Goodwill and intangible assets
Tangible fixed assets
13,844
13,844
Property, plant and equipment
Other assets
47,759
(27,435
)
20,324
Other assets
Prepayments and accrued income
13,995
13,995
Prepayments and accrued income
Total assets
1,037,717
–
1,037,717
Total assets
353
Back to Contents
H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
Consolidated
              balance sheet at 1 January 2004 under IFRSs (except IAS 32, IAS 39 and
    IFRS 4)
(continued)
IFRSs numbers in UK GAAP format
Reclassification
IFRSs numbers in IFRSs format
US$m
US$m
US$m
LIABILITIES
LIABILITIES AND EQUITY
Liabilities
Hong Kong currency notes in circulation
10,987
10,987
Hong Kong currency notes in circulation
Deposits by banks
70,439
70,439
Deposits by banks
Customer accounts
573,029
573,029
Customer accounts
Items in the course of transmission to other banks
4,383
4,383
Items in the course of transmission to other banks
30,127
30,127
Trading liabilities
27,879
27,879
Derivatives
Debt securities in issue
158,606
158,606
Debt securities in issue
Retirement benefit liabilities
4,982
4,982
Retirement benefit liabilities
Other liabilities
76,501
(58,006
)
18,495
Other liabilities
Liabilities to policyholders under long term assurance business
15,168
15,168
Liabilities to policyholders under long term assurance business
Accruals and deferred income
13,714
13,714
Accruals and deferred income
Provisions for liabilities and charges:
Provisions
–
deferred taxation
1,107
1,107
–
deferred
tax
–
other provisions
2,751
2,751
–
other provisions
Subordinated liabilities
21,197
21,197
Subordinated liabilities
952,864
Total liabilities
Minority interests
11,105
(11,105
)
Equity
Called up share capital
5,481
5,481
Called up share capital
Share premium account
4,406
4,406
Share premium account
Other reserves
21,543
645
22,188
Other reserves
Profit and loss account
42,318
(645
)
41,673
Retained earnings
Shareholders' funds
73,748
73,748
Total shareholders' equity
11,105
11,105
Minority interests
84,853
Total equity
Total liabilities
1,037,717
–
1,037,717
Total equity and liabilities
354
Back to Contents
(e)
Key impact analysis
of adopting IAS 32, IAS 39 and IFRS 4 on the opening balance sheet as at 1
January 2005
HSBC's consolidated
balance sheet at 1 January 2005 differed from the closing balance sheet dated
31
December 2004
as
the former reflected the first-time adoption of IAS 32 'Financial Instruments:
Presentation'
('IAS
32'), IAS 39 'Financial Instruments: Recognition and Measurement' ('IAS
39') and IFRS 4 'Insurance Contracts' ('IFRS
4').
For a summary of the principal accounting policies followed in preparing the 2004 comparative information, see Note 2 and (g) below.
Reconciliation
        of previously reported shareholders' funds under UK GAAP to total
    shareholders' equity under IFRSs at 1 January 2005
At
1 January
2005
US$m
Shareholders' funds as previously reported under UK GAAP
86,623
Non IAS 32, IAS 39 and IFRS 4 adjustments
(1,101
)
Total shareholders' equity under IFRSs excluding IAS 32, IAS 39 and IFRS 4
85,522
IAS 32, IAS 39 and IFRS 4 adjustments
Derivatives and hedge accounting
(59
)
Investment securities
2,026
Fair value option
(812
)
Fee income
(151
)
Loan impairment
138
Insurance
(192
)
Other
303
Total shareholders' equity under IFRSs
86,775
Explanation
    of differences
Derivatives
    and hedge accounting
Under
        UK GAAP derivatives were classified as trading or non-trading. Trading
        derivatives were reported at market value in the balance sheet, with
        movements in market value recognised immediately in the income statement.
        Non-trading derivatives, which were transacted for hedging and risk management
        purposes, were accounted for on an accruals basis, equivalent to the
    assets, liabilities or net positions being hedged.
IAS 39
        requires that all derivatives be recognised at fair value in the balance
        sheet as assets or liabilities. The accounting for changes in the fair
        value of a derivative depends on the intended use of the derivative and
        its resulting designation, as
described in Note 2(k).
The application
        of IAS 39 as at 1 January 2005 resulted in the recognition of additional
        assets of US$346 million and additional liabilities of US$49
        million relating to the fair values of derivatives at that date which
        were previously accounted for on an accruals basis. In addition, the
        carrying values of non-derivative financial instruments subject to fair
        value hedges were adjusted by US$743 million at 1 January 2005 in
        relation to the fair value attributable to the hedged risks of those
        financial instruments. The combined impact on shareholders' equity
        at 1 January 2005 was US$59 million, of which US$410 million
        was taken to the cash flow hedging
reserve.
Investment
    securities
Debt securities
        and equity shares intended to be held on a continuing basis under UK
        GAAP were disclosed as investment securities and included in the balance
        sheet at cost less provision for any permanent diminution in value. Other
        debt securities and equity shares held for trading purposes were included
    in the balance sheet at market value.
Under
        IAS 39, all investment securities (debt securities and equity shares)
        are classified and disclosed within one of the following three categories: 'held-to-maturity'; 'available-for-sale';
    or 'at fair value through profit or loss'. Securities previously
    classified as held-for-trading purposes remain so classified. The accounting
    treatment for
355
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
each of
        the categories above under IFRSs is described in Note 2. On transition
        to IFRSs, under IAS 39 HSBC classified most of its investment securities
        as available-for-sale. This resulted in an available-for-sale reserve
        of US$1,919 million, representing the cumulative unrealised gain
    on these securities being recorded within shareholders' equity.
Following
        the adoption of IAS 39 in its separate financial statements, HSBC Holdings
        has reclassified its investments in debt securities from 'Investments – debt
        securities of
HSBC undertakings' to available-for-sale financial investments. This has
resulted in the recording within total shareholders' equity of an available-for-sale
reserve of US$464 million, representing the cumulative unrealised gains on
these securities.
Fair
    value option
Under
        IAS 39, financial assets and financial liabilities may be designated
        at fair value if they meet the criteria set out in the 'Amendment
        to IAS 39 Financial Instruments: Recognition and Measurement: The Fair
        Value Option' ('the Amendment'). HSBC has designated at
        fair value at 1 January 2005 certain loans and advances to customers,
        financial investments, and some own debt issued which satisfied the criteria
        in the Amendment. This had the impact of reducing shareholders' equity
    by US$812 million on 1 January 2005.
HSBC Holdings
        has designated at fair value at 1 January 2005 certain subordinated liabilities
        which satisfied the criteria in the Amendment. This had the effect of
        reducing total
shareholders' equity by US$317 million at 1 January 2005.
Fee
    income
Fee income
        was previously accounted for in the period when receivable, except when
        charged to cover the costs of a continuing service to, or risk borne
        for, the customer, or was interest in nature. In these cases, income
        was recognised on an appropriate basis over the relevant period. Under
        IFRSs, the main change in accounting relates to loan fee income and incremental
        directly attributable loan origination costs, which are amortised to
        the income statement over the expected life of the loan as part of the
        effective interest calculation. This resulted in a reduction in shareholders' equity
        of US$151 million, as previously recognised fees after deduction
        of directly attributable costs were reversed and spread forward over
    the residual term of the financial instrument.
Non-equity
    minority interest reclassification
Preference
        shares issued by subsidiaries were previously classified in the balance
        sheet as non-equity minority interests with preference share dividends
        recorded as non-equity minority interests in the income statement. Under
        IAS 32, preference shares are generally classified in the balance sheet
        as liabilities. This had the impact of increasing liabilities by US$10,218
    million at 1 January 2005.
Loan
    impairment
Under
        HSBC's UK GAAP accounting policies, loans in the consumer finance
        business were written off to the income statement in accordance with
    a predetermined overdue status.
Under
        IAS 39, impairment losses are recognised when an entity has objective
        evidence that an advance is impaired. Impairment under IAS 39 is calculated
        on a discounted future cash flow basis and does not result in an impaired
        loan being fully written off until it is considered that cash flows will
    no longer be received.
This change
        in the recognition basis of cash recoveries has resulted in an asset
        of US$364 million at 1 January 2005 being the reinstatement of that
        portion of the previously written off loans that, based on historical
    evidence, is recoverable.
Insurance
Under
        UK GAAP, a value was placed on HSBC's interest in long-term assurance
        business, including a valuation of the discounted future earnings expected
        to emerge from business currently in force. From 1 January 2005, only
        long-term contracts meeting the definition of an insurance contract under
        IFRS 4 continue to be accounted for in this way. Long-term contracts
        not transferring significant insurance risk, referred to as investment
        contracts, are accounted for as financial instruments. Accordingly, it
        is no longer possible to include for such contracts an asset representing
    the value of the discounted future earnings expected to emerge from business
        currently in force, leading to a reduction in equity of US$192 million.
    Income on such contracts will be
356
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recognised
        in later periods, as investment management fees and incremental directly
        attributable costs are spread over the period in which the services are
        provided.
Offsetting
          of financial assets and financial liabilities
Under
        UK GAAP the netting of asset and liability balances in the balance sheet
        is only allowed when there is the ability to insist on net settlement.
        Under IAS 32 the offsetting of financial assets and financial liabilities
        is only allowed when there is a legally enforceable right to offset and
        the intention to settle net. The change from an ability to insist on
        net settlement to an intention to settle on a net basis is not in line
        with market practice in a number of areas. As a result of this change
        certain financial instruments have been presented gross on the balance
        sheet. This has increased total assets by US$87,772 million.
Acceptances
        were accounted for on a net basis under UK GAAP. There was no grossing
        up of the amount to be paid and the amount receivable from the originator,
        and thus no balance appeared on the balance sheet for these products.
        Under IAS 39 it is necessary to recognise a liability for acceptances
        from the date of acceptance. A corresponding asset due from the originator
        is also recognised. This resulted in a gross up of the balance sheet
        of US$7,214 million, with no impact on shareholders' equity.
357
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
(f)
Reconciliation
of
consolidated
balance
sheets
at
        31
December
2004
    and 1
January
2005
Adjustments
to
HSBC's
balance
sheet
        under IFRSs at 31
December
2004
        to
incorporate
its
accounting
policies
under
    IFRSs at 1
January
2005 (see Note 2) are set out below:
Effect
      of adopting
IAS 32, IAS 39 and IFRS 4
IFRSs
            at
31
    December
Derivatives
and hedge
Investment
Fair value
Fee
Non-equity
reclassi-
Loan
Reclassi-
IFRSs at
1 January
2004
accounting
securities
option
income
fication
impairment
Insurance
Offsetting
fications
Other
Total
2005
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
ASSETS
Cash
    and balances at
central
              banks
9,944
–
–
–
–
–
–
–
–
–
8
8
9,952
Items
    in the course of
collection
    from
other banks
6,338
–
–
–
–
–
–
–
–
–
14
14
6,352
Hong Kong
Government
certificates of
indebtedness
11,878
–
–
–
–
–
–
–
–
–
–
–
11,878
Trading assets
122,160
112
–
(3,762
)
(40
)
–
–
17
–
(2,547
)
55
(6,165
)
115,995
Financial assets
designated at
fair value
–
7
–
14,722
–
–
–
–
–
–
–
14,729
14,729
Derivatives
32,190
6,338
–
2,285
–
–
–
–
4,596
9,800
(2
)
23,017
55,207
Loans and advances
to banks
143,449
551
–
(656
)
–
–
–
–
–
(1
)
(222
)
(328
)
143,121
Loans and advances
to customers
672,891
1
–
(1,978
)
(223
)
–
364
–
66,442
2,800
(1,822
)
65,584
738,475
Financial
investments
185,332
55
2,546
(8,325
)
(12
)
–
–
637
1,072
491
173
(3,363
)
181,969
Interests in associates
and joint ventures
3,441
17
(3
)
–
–
–
–
9
–
–
–
23
3,464
Goodwill and
intangible assets .
34,495
–
–
–
–
–
–
(384
)
–
–
3
(381
)
34,114
Property, plant and
equipment
15,624
–
–
–
–
–
–
–
–
–
–
–
15,624
Other assets
23,077
(104
)
(51
)
313
(13
)
–
(87
)
(639
)
15,570
(10,543
)
(193
)
4,253
27,330
Prepayments and
accrued income
19,155
(5,992
)
(43
)
(1,643
)
189
–
(144
)
–
92
–
(57
)
(7,598
)
11,557
Total assets
1,279,974
985
2,449
956
(99
)
–
133
(360
)
87,772
–
(2,043
)
89,793
1,369,767
358
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Reconciliation
    of consolidated balance sheets at 31 December 2004 and 1 January 2005
(continued
)
Effect
      of adopting
IAS 32, IAS 39 and IFRS 4
IFRSs at
31 December
Derivatives
and hedge
Investment
Fair value
Fee
Non-equity
reclassi-
Loan
Reclassi-
IFRSs at
1 January
2004
accounting
securities
option
income
fication
impairment
Insurance
Offsetting
fications
Other
Total
2005
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
LIABILITIES AND
EQUITY
Liabilities
Hong Kong
currency notes
in circulation
11,878
–
–
–
–
–
–
–
–
–
–
–
11,878
Deposits by banks
84,055
246
–
(101
)
–
–
–
–
–
(6,609
)
(9
)
(6,473
)
77,582
Customer accounts .
693,072
22
–
(5,203
)
16
–
–
6,322
65,010
(25,992
)
(1,619
)
38,556
731,628
Items in the course
of transmission
to other banks
5,301
–
–
–
–
–
–
–
–
–
–
–
5,301
Trading liabilities
46,460
–
–
101
–
–
–
–
1,070
45,375
(117
)
46,429
92,889
Financial liabilities
designated at
fair value
–
2
–
53,815
–
–
–
3,662
–
–
–
57,479
57,479
Derivatives
34,988
3,151
–
90
–
–
–
23
5,916
9,197
(96
)
18,281
53,269
Debt securities in
issue
211,721
(141
)
(62
)
(26,503
)
(1
)
–
–
–
(339
)
(12,925
)
42
(39,929
)
171,792
Retirement benefit
liabilities
6,475
–
–
–
–
–
–
–
–
7
7
6,482
Other liabilities
20,581
693
39
–
88
–
4
(2,813
)
16,010
(9,046
)
(69
)
4,906
25,487
Liabilities under
insurance
contracts issued
–
–
–
–
–
–
–
11,917
–
1,026
–
12,943
12,943
Liabilities to
policyholders
1
19,190
–
–
–
–
–
–
(19,190
)
–
–
–
(19,190
)
–
Accruals and
deferred income
16,499
(3,102
)
1
(20
)
(11
)
–
–
–
105
–
(38
)
(3,065
)
13,434
Provisions
– deferred
    taxation
1,435
69
364
(111
)
(40
)
–
(9
)
(89
)
–
–
(325
)
(141
)
1,294
– other
    provisions
2,636
–
–
–
–
–
–
–
–
(1,026
)
(7
)
(1,033
)
1,603
Subordinated
liabilities
26,486
104
–
(20,300
)
–
10,114
–
–
–
–
(71
)
(10,153
)
16,333
Total liabilities
1,180,777
1,044
342
1,768
52
10,114
(5
)
(168
)
87,772
–
(2,302
)
98,617
1,279,394
359
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
Reconciliation
    of consolidated balance sheets at 31 December 2004 and 1 January 2005
(continued)
Effect
      of adopting
IAS 32, IAS 39 and IFRS 4
IFRSs at
31 December
Derivatives
and hedge
Investment
Fair value
Fee and
commission
Non-equity
reclassi-
Loan
Reclassi-
IFRSs at
1 January
2004
accounting
securities
option
income
fication
impairment
Insurance
Offsetting
fications
Other
Total
2005
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Total liabilities
1,180,777
1,044
342
1,768
52
10,114
(5
)
(168
)
87,772
–
(2,302
)
98,617
1,279,394
Equity
Called up share
capital
5,587
–
–
–
–
–
–
–
–
–
–
–
5,587
Share premium
account
4,881
–
–
–
–
–
–
–
–
–
–
–
4,881
Other reserves
25,622
410
1,919
52
–
–
–
–
–
(16
)
650
3,015
28,637
Retained earnings
49,432
(469
)
107
(864
)
(151
)
–
138
(192
)
–
16
(347
)
(1,762
)
47,670
Total shareholders'
equity
85,522
(59
)
2,026
(812
)
(151
)
–
138
(192
)
–
–
303
1,253
86,775
Minority interests
13,675
–
81
–
–
(10,114
)
–
–
–
–
(44
)
(10,077
)
3,598
Total equity
99,197
(59
)
2,107
(812
)
(151
)
(10,114
)
138
(192
)
–
–
259
(8,824
)
90,373
Total equity and
liabilities
1,279,974
985
2,449
956
(99
)
–
133
(360
)
87,772
–
(2,043
)
89,793
1,369,767
1
Liabilities
    to policyholders under long-term assurance business
360
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(g)
Principal
        accounting policies which only apply to the 2004
comparative information
Apart
        from the exceptions noted below, the same principal accounting policies
        apply to financial information disclosed in respect of both 2005 (see
        Note 2) and 2004. The following accounting policies only apply to the
    2004 comparatives:
Interest
    income and expense
Interest
        income was recognised in the income statement as it accrued, except in
    the case of impaired loans and advances.
Premiums
        and discounts on the issue of debt and fair value adjustments to debt
        arising on acquisitions were amortised to interest payable so as to give
        a constant rate over the life of the debt. When debt was callable, either
        by HSBC or the holder, the premium or discount was amortised over the
    period to the earliest call date.
Non
    interest income
Fee
    income
Fee
    income was accounted for as follows:
–
income
        earned on the execution of a significant act was recognised as revenue
        when the act had been completed (for example, commission and fees arising
        from negotiating, or participating in the negotiation of, a transaction
        for a third party, such as the arrangement for the acquisition of shares
    or other securities);
–
income
        earned from the provision of services was recognised as revenue as the
        services were provided (for example, asset management, portfolio and
    other management advisory and service fees); and
–
income
        which was interest in nature was recognised on an appropriate basis over
        the
relevant period and recorded in 'Interest income'.
Trading
    income
Trading
        income comprised gains and losses from the mark-to-market movements of
        trading instruments. Interest income, expense and dividends were presented
        in 'Interest income', 'Interest expense' and 'Dividend
    income' respectively.
Loans
    and advances to banks and customers
Loans
        and advances to banks and customers included loans and advances originated
        by HSBC which were not intended to be sold in the short term and had
        not been classified as held for trading. Loans and advances were recognised
        when cash was advanced to borrowers. They were measured at amortised
    cost less provisions for bad and doubtful loans and advances.
Impaired
    loans and advances
It
        was HSBC's policy that each operating company would make provisions
        for impaired loans and advances when there was objective evidence of
        impairment. There were two basic types of provision, specific and general,
    each of which was considered in terms of the charge and the amount outstanding.
Specific
    provisions
Specific
        provisions represented the quantification of actual and inherent losses
        from homogeneous portfolios of assets and individually identified accounts.
        Specific provisions were deducted from loans and advances in the balance
        sheet. The majority of specific provisions were determined on a portfolio
    basis.
Portfolios
When
        homogeneous groups of assets were reviewed on a portfolio basis, two
    alternative methods were used to calculate specific provisions:
–
When
        appropriate empirical evidence was available, HSBC utilised roll rate
        methodology (a statistical analysis of historical trends of the probability
    of default and amount of consequential loss, assessed at the
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to Contents
H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
end
          of each time period for which payments were overdue), other historical
          data and an evaluation of current economic conditions to calculate
          an appropriate level of specific provision
  based on inherent loss. Additionally,
            in certain highly developed markets, sophisticated models taking
    into account behavioural and account management trends such as bankruptcy
            and rescheduling statistics were used. Roll rates were regularly
    benchmarked
    against actual outcomes to ensure they remained appropriate.
–
In
        other cases, when information was insufficient or not sufficiently reliable
        to adopt a roll rate
methodology,
        HSBC adopted a formulaic approach which allocated progressively higher
        loss rates in line
with
    the period of time for which a customer's loan was overdue.
Individually
    assessed accounts
Specific
        provisions on individually assessed accounts were determined by an evaluation
        of the exposures on a case-by-case basis. This procedure was applied
        to all accounts that did not qualify for, or were not subject to, a portfolio-based
        approach. In determining such provisions on individually assessed accounts,
    the following factors were considered:
–
HSBC's
    aggregate exposure to the customer (including contingent liabilities);
–
the
          viability of the customer's business model and its capability
          to trade successfully
out of financial
difficulties and generate sufficient cash
flow to service
its debt obligations;
–
the
    likely dividend available on liquidation or bankruptcy;
–
the
          extent of other creditors' commitments ranking ahead of, or pari
          passu with, HSBC and the likelihood of
other creditors
    continuing to support the company;
–
the
          complexity of determining the aggregate amount and ranking of all creditor
          claims and the extent to
which legal and insurance
    uncertainties were evident;
–
the amount
    and timing of expected receipts and recoveries;
–
the
        realisable value of security (or other credit mitigants) and likelihood
    of successful repossession;
–
the
    deduction of any costs involved in recovery of amounts outstanding;
–
the
          ability of the borrower to obtain, and make payments in, the currency
    of the loan if not in local currency;
and
–
when
    available, the secondary market price of the debt.
Releases
        of individually calculated specific provisions were recognised whenever
        HSBC had reasonable evidence that the established estimate of loss had
    reduced.
Cross-border
    exposures
Specific
        provisions were established in respect of cross-border exposures to countries
        assessed by management to be vulnerable to foreign currency payment restrictions.
    This assessment included analysis of both economic and political factors.
Provisions
        were applied to all qualifying exposures within these countries unless
    these exposures:
–
were
    performing, trade-related and of less than one year's maturity;
–
were
          mitigated by acceptable security cover which was, other than in exceptional
    cases, held outside the
country concerned; or
–
were
          represented by securities held for trading purposes for which a liquid
          and active market existed, and
which were marked
    to market daily.
General
    provisions
General
        provisions augmented specific provisions and provided cover for loans
        that were impaired at the balance sheet date but which would not be individually
        identified as such until some time in the future. HSBC required operating
        companies to maintain a general provision, which was determined after
    taking into account:
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–
historical
          loss experience in portfolios of similar risk characteristics (for
    example, by industry sector, loan
grade or product);
–
the
        estimated period between impairment occurring and the loss being identified
        and evidenced by the
establishment
        of
a specific provision against that loss; and
–
management's
        judgement as to whether the then economic and credit conditions were
        such that the actual
level
        of inherent loss was likely to be greater or less than that suggested
    by historical experience.
The
        estimated period between a loss occurring and its identification (as
        evidenced by the establishment of a specific provision for that loss)
        was determined by local management for each
identified portfolio.
Loans
    on which interest was being suspended and non-accrual loans
Loans
        were designated as non-performing as soon as management had doubts as
        to the ultimate collectibility of principal or interest or when contractual
        payments of principal or interest were 90 days overdue. When a loan was
        designated as non-performing, interest was not normally credited to the
        income statement and either interest accruals ceased ('non-accrual
        loans') or interest was credited to an interest suspense account
        in the balance sheet which was netted against the relevant loan ('suspended
    interest').
Within
        portfolios of low value, high volume, homogeneous loans, interest was
        normally suspended on facilities 90 days or more overdue. In certain
        operating subsidiaries, interest income on credit cards may have continued
        to be included in earnings after the account was 90 days overdue, provided
        that a suitable provision was raised against the portion of accrued interest
    which was considered to be irrecoverable.
The
        designation of a loan as non-performing and the suspension of interest
    could be deferred for up to 12 months in either of the following situations:
–
cash
          collateral was held covering the total of principal and interest due
    and the right of offset was legally
sound; or
–
the
          value of any net realisable tangible security was considered more than
          sufficient to cover the full
repayment of all principal
          and interest due, and credit approval had been given to the rolling-up
    or
capitalisation of interest payments.
In
        certain subsidiaries, principally those in the UK and Hong Kong, interest
        on non-performing loans was charged to the customer's account provided
        that there was a realistic prospect of interest being paid at some future
        date. However, the interest was not credited to the income statement
        but to an interest suspense account in the balance sheet, which was netted
    against the relevant loan.
In
        other subsidiaries, when the probability of receiving interest payments
        was remote, interest was no longer accrued and any suspended interest
    balance was written off.
On
        receipt of cash (other than from the realisation of security), the overall
        risk was re-evaluated and, if appropriate, suspended or non-accrual interest
        was recovered and taken to the income statement. A specific provision
        of the same amount as the interest receipt was then raised against the
        principal balance. Amounts received from the realisation of security
        were applied to the repayment of outstanding indebtedness, with any surplus
    used first to recover any specific provisions and then suspended interest.
Loans
        were not reclassified as accruing until interest and principal payments
    were up to date and future payments were reasonably assured.
Loan
    write-offs
Loans
        (and the related provisions) were normally written off, either partially
        or in full, when there was no realistic prospect of recovery of these
        amounts and when the proceeds from
realising security had been received.
Trading
    assets and trading liabilities
Treasury
        bills, debt securities, equity shares and short positions in securities
        were included in 'Trading assets' or 'Trading liabilities' in
        the balance sheet at market value. Changes in the market value of these
        assets and liabilities were recognised in the income statement as 'Trading
        income' as they arose. For liquid portfolios, market values were
        determined by reference to independently sourced mid-market prices. In
    certain less liquid
363
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
portfolios,
        securities were valued by reference to bid or offer prices as appropriate.
        When independent prices were not available, market values were estimated
        by discounting the expected future cash flows using a suitable interest
        rate adjusted for the counterparty's credit risk. Interest income,
        interest expense and dividends arising from trading assets and liabilities
        were aggregated in the income statement with similar amounts arising
    from other activities.
Financial
    investments
Treasury
        bills, debt securities and equity shares intended to be held on a continuing
        basis were classified as financial investments and included in the balance
        sheet at cost less
provision for any permanent diminution in value.
When
        dated financial investments had been purchased at a premium or discount,
        those premiums and discounts were amortised through the income statement
        over the period from the date of purchase to the date of maturity so
        as to give a constant rate of return. If the maturity was at the borrowers' option
        within a specified range of years, the earliest maturity was adopted.
        Those financial investments were included in the balance sheet at cost
        adjusted for the amortisation of premiums and discounts arising on acquisition.
        The amortisation of premiums and discounts was included in 'Interest
        income'. Any gain or loss on realisation of these securities was
        recognised in 'Gains less losses from financial investments' in
    the income statement as it arose.
Derivatives
Derivative
        financial instruments comprised futures, forward, swap and option transactions
        undertaken by HSBC in the foreign exchange, interest rate, equity, credit
        derivative, and commodity markets that were held off-balance sheet. Netting
    was applied where a legal right of offset existed.
Accounting
        for these instruments was dependent upon whether the transactions were
    undertaken for trading or non-trading purposes.
Trading
    transactions
Trading
        transactions included transactions undertaken for market-making, to service
        customers' needs and for proprietary purposes, as well as any related
    hedges.
Transactions
        undertaken for trading purposes were marked to market and the net present
        value of any gain or loss arising was recognised in the income statement
        as 'Trading
income', after appropriate deferrals for unearned credit margins and future
servicing costs. Derivative trading transactions were valued by reference to
an independent liquid price when this was available. For those transactions with
no readily available quoted prices, predominantly over the counter transactions,
market values were determined by reference to independently sourced rates, using
valuation models. If market observable data was not available, the entire initial
change in fair value indicated by the valuation model, but based on unobservable
inputs, was not recognised immediately in the income statement. This amount was
held back and recognised over the life of the transaction where appropriate,
or released to the income statement when the inputs became observable, or when
the transaction matured or was closed out. Adjustments were made for illiquid
positions where
appropriate.
Assets,
        including gains, resulting from derivative exchange rate, interest rate,
        equities, credit derivative and commodity contracts which were marked
        to market were included in 'Derivatives' on the assets side
        of the balance sheet. Liabilities, including losses, resulting from such
        contracts, were included in 'Derivatives' on the liabilities
    side of the balance sheet.
Non-trading
    transactions
Non-trading
        transactions, which were those undertaken for hedging purposes as part
        of HSBC's risk management strategy against cash flows, assets, liabilities
        or positions, were measured on an accrual basis. Non-trading transactions
        included qualifying hedges and positions that synthetically altered the
    characteristics of specified financial instruments.
Non-trading
        transactions were accounted for on an equivalent basis to the underlying
        assets, liabilities or net positions. Any gain or loss arising was recognised
        on the same basis as that arising from the related assets, liabilities
    or positions.
364
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To qualify
        as a hedge, a derivative was required effectively to reduce the price,
        foreign exchange or interest rate risk of the asset, liability or anticipated
        transaction to which it was linked and be capable of designation as a
        hedge at inception of the derivative contract. Accordingly, changes in
        the market value of the derivative were required to be highly correlated
        with changes in the market value of the underlying hedged item at inception
        of the hedge and over the life of the hedge contract. If these criteria
        were met, the derivative was accounted for on the same basis as the underlying
        hedged item. Derivatives used for hedging purposes included swaps, forwards
        and futures. Interest rate swaps were also used to alter synthetically
        the interest rate characteristics of financial instruments. In order
        to qualify for synthetic alteration, a derivative instrument had to be
        linked to specific individual, or pools of similar, assets or liabilities
        by the notional principal and interest rate risks of the associated instruments,
        and had to achieve a result that was consistent with defined risk management
        objectives. If these criteria were met, accruals-based accounting was
        applied, that is income or expense was recognised and accrued to the
        next settlement date in accordance with the contractual terms of the
    agreement.
Any gain
        or loss arising on the termination of a qualifying derivative was deferred
        and amortised to earnings over the original life of the terminated contract.
        When the underlying asset, liability or position was sold or terminated,
        the qualifying derivative was immediately marked to market and any gain
    or loss arising was taken to the income statement.
Insurance
    contracts
The
        value of in-force long-term assurance business was determined by discounting
        future earnings expected to emerge from business then in force, using
        appropriate assumptions in assessing factors such as recent experience
        and general economic conditions. Movements in the value of in-force long-term
        assurance business were included in 'Other operating income' on
    a gross of tax basis.
Debt
    securities in issue and subordinated liabilities
Debt securities
        in issue were initially measured at fair value, which was the consideration
        received net of transaction costs incurred. Premiums and discounts on
        the issue of debt and fair value adjustments to debt arising on acquisitions
        were amortised to interest payable so as to give a constant interest
        rate over the life of the debt. Where debt was callable, either by HSBC
        or the holder, the premium or discount was amortised over the period
    to the earliest call date.
365
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
(h)
Impact
        of the transition
to IFRSs on the financial position of HSBC Holdings
Reconciliation
          of previously reported shareholders' funds under UK GAAP to total
          shareholders' equity
under IFRSs at 31 December 2004
and
1 January 2004
At
At
31 December
1 January
2004
2004
US$m
US$m
Shareholders' funds as previously reported under UK GAAP
86,623
74,473
Dividends
1,662
1,377
Investments in subsidiaries
(38,172
)
(26,388
)
Other
(4
)
(4
)
Total shareholders' equity under IFRSs
50,109
49,458
For
      an explanation of the main differences between UK GAAP and IFRSs applicable
    to HSBC Holdings, see Note (b).
HSBC Holdings balance sheet at 31 December 2004
UK
    GAAP
Effect of
IFRSs
transition
(except IAS 32
IFRSs format
to IFRSs
and IAS 39)
US$m
US$m
US$m
ASSETS
Cash at bank and in hand – balances with HSBC undertakings
246
–
246
Derivatives
1,643
–
1,643
Loans and advances to HSBC undertakings
16,917
(281
)
16,636
Financial investments
1,885
–
1,885
Investments in subsidiaries
94,885
(39,217
)
55,668
Property, plant and equipment
2
–
2
Other assets
632
–
632
Prepayments and accrued income
48
(43
)
5
116,258
(39,541
)
76,717
LIABILITIES AND EQUITY
Liabilities
Amounts owed to HSBC undertakings
7,352
–
7,352
Derivatives
10
–
10
Other liabilities
4,214
(3,016
)
1,198
Accruals and deferred income
172
–
172
Deferred taxation
75
(11
)
64
Subordinated liabilities
17,812
–
17,812
29,635
(3,027
)
26,608
Equity
Called up share capital
5,587
–
5,587
Share premium account
4,881
–
4,881
Merger reserve and other reserves
–
28,942
28,942
Other reserves
69,362
(67,622
)
1,740
Retained earnings
6,793
2,166
8,959
86,623
(36,514
)
50,109
116,258
(39,541
)
76,717
366
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HSBC Holdings balance sheet at 1 January 2004
Effect of
IFRSs
UK GAAP
transition
(except IAS 32
IFRSs format
to IFRSs
and IAS 39)
US$m
US$m
US$m
ASSETS
Cash at bank and in hand – balances with HSBC undertakings
901
–
901
Derivatives
743
–
743
Loans and advances to HSBC undertakings
14,978
(197
)
14,781
Financial investments
1,175
–
1,175
Investments in subsidiaries
79,326
(27,412
)
51,914
Property, plant and equipment
2
–
2
Other assets
588
–
588
Prepayments and accrued income
44
(44
)
–
97,757
(27,653
)
70,104
LIABILITIES AND EQUITY
Liabilities
Amounts owed to HSBC undertakings
6,179
–
6,179
Derivatives
38
–
38
Other liabilities
3,936
(2,627
)
1,309
Accruals and deferred income
223
–
223
Deferred taxation
93
(11
)
82
Subordinated liabilities
12,815
–
12,815
23,284
(2,638
)
20,646
Equity
Called up share capital
5,481
–
5,481
Share premium account
4,406
–
4,406
Merger reserve and other reserves
–
28,942
28,942
Other reserves
57,526
(55,867
)
1,659
Retained earnings
7,060
1,910
8,970
74,473
(25,015
)
49,458
97,757
(27,653
)
70,104
367
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
HSBC
        Holdings balance sheet at 31 December 2004
Adjustments
      to conform HSBC Holdings balance sheet under UK GAAP at 31 December 2004
    to its accounting policies under IFRSs are set out below:
UK
GAAP
Effect
      of transition to IFRSs
IFRSs
(except
IAS 32
and IAS
39)
Dividends
Investments
in
subsidiaries
Other
Total
US$m
US$m
US$m
US$m
US$m
US$m
FIXED
        ASSETS
Tangible
    assets
2
–
–
–
–
2
Investments:
–
shares in HSBC undertakings
94,885
–
(39,217
)
–
(39,217
)
55,668
–
loans to HSBC undertakings
4,712
–
1,045
–
1,045
5,757
–
debt
securities of HSBC undertakings
1,885
–
–
–
–
1,885
–
other investments other than loans
581
–
–
–
–
581
102,065
–
(38,172
)
–
(38,172
)
63,893
CURRENT
        ASSETS
Debtors:
–
money
market deposits with HSBC undertakings
7,036
–
–
–
–
7,036
–
other
            amounts owed by HSBC undertakings
5,131
(1,354
)
–
28
(1,326
)
3,805
–
amounts owed by HSBC undertakings
–
(falling due after more than 1 year)
1,680
–
–
–
1,680
–
other debtors
100
–
–
(43
)
(43
)
57
13,947
(1,354
)
–
(15
)
(1,369
)
12,578
Cash
    at bank and in hand:
–
balances with HSBC undertakings
246
–
–
–
–
246
14,193
(1,354
)
–
(15
)
(1,369
)
12,824
CREDITORS:
    amounts falling due within 1 year
Amounts
    owed to HSBC undertakings
(858
)
–
–
–
–
(858
)
Other
    creditors
(191
)
–
–
–
–
(191
)
Dividends
    declared
(4,205
)
3,016
–
–
3,016
(1,189
)
(5,254
)
3,016
–
–
3,016
(2,238
)
NET CURRENT ASSETS
8,939
1,662
–
(15
)
1,647
10,586
TOTAL ASSETS LESS CURRENT LIABILITIES
111,004
1,662
(38,172
)
(15
)
(36,525
)
74,479
CREDITORS:
    amounts falling due after more than 1 year
Subordinated
    liabilities:
–
owed to third parties
(9,669
)
–
–
–
–
(9,669
)
–
owed to HSBC undertakings
(8,143
)
–
–
–
–
(8,143
)
Amounts
    owed to HSBC undertakings
(6,494
)
–
–
–
–
(6,494
)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred
    taxation
(75
)
–
–
11
11
(64
)
NET ASSETS
86,623
1,662
(38,172
)
(4
)
(36,514
)
50,109
CAPITAL AND RESERVES
Called
    up share capital
5,587
–
–
–
–
5,587
Share
    premium account
4,881
–
–
–
–
4,881
Revaluation
    reserve
68,963
–
(40,021
)
–
(40,021
)
28,942
Reserve
              in respect of obligations under subsidiary
    share options
399
–
1,299
42
1,341
1,740
Profit
    and loss account
6,793
1,662
550
(46
)
2,166
8,959
86,623
1,662
(38,172
)
(4
)
(36,514
)
50,109
368
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HSBC
        Holdings balance sheet at 1 January 2004
Adjustments
        to conform HSBC Holdings balance sheet under UK GAAP at 1 January 2004
    to its accounting policies under IFRSs are set out below:
UK
GAAP
Effect
      of transition to IFRSs
IFRSs
(except
IAS 32
and IAS
39)
Dividends
Investments
in
subsidiaries
Other
Total
US$m
US$m
US$m
US$m
US$m
US$m
FIXED
        ASSETS
Tangible
    assets
2
–
–
–
–
2
Investments:
–
shares in HSBC undertakings
79,326
–
(27,412
)
–
(27,412
)
51,914
–
loans to HSBC undertakings
3,788
–
1,024
–
1,024
4,812
–
debt
    securities of HSBC undertakings
1,175
–
–
–
–
1,175
–
other
    investments other than loans
537
–
–
–
–
537
84,828
–
(26,388
)
–
(26,388
)
58,440
CURRENT
    ASSETS
Debtors:
–
money market
    deposits with HSBC
undertakings
6,995
–
–
–
–
6,995
–
other amounts
    owed by HSBC
undertakings
2,526
(1,250
)
–
29
(1,221
)
1,305
–
amounts owed by HSBC undertakings
(falling due after more than 1 year)
2,412
–
–
–
–
2,412
–
other debtors
95
–
–
(44
)
(44
)
51
12,028
(1,250
)
–
(15
)
(1,265
)
10,763
Cash
    at bank and in hand:
–
balances with HSBC undertakings
901
–
–
–
–
901
12,929
(1,250
)
–
(15
)
(1,265
)
11,664
CREDITORS:
    amounts falling due within 1 year
Amounts
    owed to HSBC undertakings
(700
)
–
–
–
–
(700
)
Other
    creditors
(261
)
–
–
–
–
(261
)
Dividends
    declared
(3,936
)
2,627
–
–
2,627
(1,309
)
(4,897
)
2,627
–
–
2,627
(2,270
)
NET
    CURRENT ASSETS
8,032
1,377
–
(15
)
1,362
9,394
TOTAL ASSETS LESS CURRENT LIABILITIES
92,860
1,377
(26,388
)
(15
)
(25,026
)
67,834
CREDITORS:
    amounts falling due after more  than 1 year
Subordinated
    liabilities
–
owed to third parties
(5,970
)
–
–
–
–
(5,970
)
–
owed to HSBC undertakings
(6,845
)
–
–
–
–
(6,845
)
Amounts
    owed to HSBC undertakings
(5,479
)
–
–
–
–
(5,479
)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred
    taxation
(93
)
–
–
11
11
(82
)
NET ASSETS
74,473
1,377
(26,388
)
(4
)
(25,015
)
49,458
CAPITAL
    AND RESERVES
Called
    up share capital
5,481
–
–
–
–
5,481
Share
    premium account
4,406
–
–
–
–
4,406
Revaluation
    reserve
57,041
–
(28,099
)
–
(28,099
)
28,942
Reserve
                in respect of obligations under subsidiary
    share options
485
–
1,163
11
1,174
1,659
Profit
    and loss account
7,060
1,377
548
(15
)
1,910
8,970
74,473
1,377
(26,388
)
(4
)
(25,015
)
49,458
369
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Analysis
        of the effect of IAS 1 'Presentation of Financial Statements' on the
        financial position of HSBC Holdings at 31 December 2004 and 1 January
    2004
HSBC
        Holdings balance sheet at 31 December 2004 under IFRSs (except IAS 32
    and IAS 39)
IFRSs numbers in UK GAAP format
Reclassification
IFRSs numbers in IFRSs format
US$m
US$m
US$m
ASSETS
ASSETS
Fixed assets
246
246
Cash
              at bank and in hand – balances with HSBC undertakings
Tangible assets
2
(2
)
1,643
1,643
Derivatives
16,636
16,636
Loans and advances to HSBC undertakings
Investments:
1,885
1,885
Financial investments
–
shares in HSBC undertakings
55,668
–
55,668
Investments in subsidiaries
–
loans to HSBC undertakings
5,757
(5,757
)
–
debt securities of HSBC undertakings
1,885
(1,885
)
–
other
    investments other than loans
581
(581
)
2
2
Property, plant and equipment
632
632
Other assets
5
5
Prepayments and accrued income
63,893
Current assets
Debtors:
–
money market deposits with HSBC undertakings
7,036
(7,036
)
–
other amounts owed by HSBC undertakings
3,805
(3,805
)
–
amounts
              owed by HSBC undertakings (falling due after more than 1 year)
1,680
(1,680
)
–
other
    debtors
57
(57
)
12,578
Cash at bank and in hand
–
balances with HSBC undertakings
246
(246
)
12,824
–
76,717
Total assets
370
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HSBC
          Holdings balance sheet at 31 December 2004 under IFRSs (except IAS
    32 and IAS 39) (continued)
IFRSs
    numbers in UK GAAP format
Reclassification
IFRSs numbers in IFRSs format
US$m
US$m
US$m
LIABILITIES AND EQUITY
Creditors:
    amounts falling due within 1 year
Liabilities
Amounts
    owed to HSBC undertakings
858
6,494
7,352
Amounts owed to HSBC undertakings
Other
    creditors
191
(191
)
10
10
Derivatives
Dividends
    declared
1,189
9
1,198
Other liabilities
172
172
Accruals and deferred income
64
64
Deferred taxation
2,238
Net
    current assets
10,586
Total
    assets less current liabilities
74,479
Creditors:
    amounts falling due after more than 1 year
Subordinated
    liabilities
17,812
17,812
Subordinated liabilities
–
owed
    to third parties
9,669
(9,669
)
–
owed
    to HSBC undertakings
8,143
(8,143
)
Amounts
    owed to HSBC undertakings
6,494
(6,494
)
Provisions
    for liabilities and charges
Deferred
    taxation
64
(64
)
26,608
Total liabilities
Net
    assets
50,109
Capital
    and reserves
Equity
Called
    up share capital
5,587
–
5,587
Called up share capital
Share
    premium account
4,881
–
4,881
Share premium account
Revaluation
    reserve
28,942
–
28,942
Merger reserve and other reserves
Reserve
    in respect of obligations under subsidiary share options
1,740
–
1,740
Other reserves
Profit
    and loss account
8,959
–
8,959
Retained earnings
50,109
–
50,109
Total equity
76,717
Total equity and liabilities
371
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H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
HSBC
        Holdings balance sheet at 1 January 2004 under IFRSs (except IAS 32 and
    IAS 39)
IFRSs numbers in UK GAAP format
Reclassification
IFRSs numbers in IFRSs format
US$m
US$m
US$m
ASSETS
ASSETS
Fixed assets
901
901
Cash
    at bank and in hand – balances with HSBC undertakings
Tangible assets
2
(2
)
743
743
Derivatives
14,781
14,781
Loans and advances to HSBC undertakings
Investments:
1,175
1,175
Financial investments
–
shares
    in HSBC undertakings
51,914
–
51,914
Investments in subsidiaries
–
loans to HSBC undertakings
4,812
(4,812
)
–
debt securities of HSBC undertakings
1,175
(1,175
)
–
other investments other than loans
537
(537
)
2
2
Property, plant and equipment
588
588
Other assets
58,440
Current assets
Debtors:
–
money market deposits with HSBC undertakings
6,995
(6,995
)
–
other amounts owed by HSBC undertakings
1,305
(1,305
)
–
amounts
    owed by HSBC undertakings (falling due after more than 1 year)
2,412
(2,412
)
–
other
    debtors
51
(51
)
10,763
Cash at bank and in hand
–
balances with HSBC undertakings
901
(901
)
11,664
–
70,104
Total assets
372
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HSBC
        Holdings balance sheet at 1 January 2004 under IFRSs (except IAS 32 and
    IAS 39) (continued)
IFRSs numbers in UK GAAP format
Reclassification
IFRSs numbers in IFRSs format
US$m
US$m
US$m
LIABILITIES AND EQUITY
Creditors: amounts falling due within 1 year
Liabilities
Amounts owed to HSBC undertakings
700
5,479
6,179
Amounts owed to HSBC undertakings
Other creditors
261
(261
)
38
38
Derivatives
Dividends declared
1,309
–
1,309
Other liabilities
223
223
Accruals and deferred income
82
82
Deferred taxation
2,270
Net current assets
9,394
Total assets less current liabilities
67,834
Creditors: amounts falling due after more than 1 year
Subordinated liabilities
12,815
12,815
Subordinated liabilities
–
owed to third parties
5,970
(5,970
)
–
owed to HSBC undertakings
6,845
(6,845
)
Amounts owed to HSBC undertakings
5,479
(5,479
)
18,294
Provisions for liabilities and charges
Deferred taxation
82
(82
)
20,646
Total liabilities
Net assets
49,458
Capital and reserves
Equity
Called up share capital
5,481
–
5,481
Called up share capital
Share premium account
4,406
–
4,406
Share premium account
Revaluation reserve
28,942
–
28,942
Merger reserve and other reserves
Reserve
    in respect of obligations under subsidiary share options
1,659
–
1,659
Other reserves
Profit and loss account
8,970
–
8,970
Retained earnings
49,458
–
49,458
Total equity
70,104
Total equity and liabilities
373
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to Contents
H S B C   H O L
D I N G S   P L C
Notes on the Financial
      Statements
(continued)
Key
        impact analysis of adopting IAS 32 and IAS 39 on HSBC Holdings' opening
    balance sheet as at 1 January 2005
Reconciliation
        of previously reported shareholders' funds under UK GAAP to total
        shareholders' equity
under IFRSs at 1 January 2005
At
1 January
2005
US$m
Shareholders' funds as previously reported under UK GAAP
86,623
Non IAS 32, and IAS 39 adjustments
(36,514
)
Total shareholders' equity under IFRSs excluding IAS 32 and IAS 39
50,109
IAS 32 and IAS 39 adjustments
Investment securities
464
Fair value option
(317
)
Total shareholders' equity under IFRSs
50,256
For
      an explanation of the items included in the above reconciliation, see Note
    (e).
Reconciliation
        of HSBC Holdings' balance sheets at 31 December 2004 and 1 January
    2005
Adjustments
      to HSBC Holdings' balance sheet under IFRSs at 31 December 2004 to
      incorporate its accounting policies under IFRSs at 1 January 2005 are set
    out below:
IFRSs
      at
31 December
2004
US$m
Effect
    of adopting IAS 32 and IAS 39
IFRSs
            at
1 January
2005
US$m
Investment
securities
US$m
Fair
value
US$m
Reclassifi-
cations
US$m
Total
US$m
ASSETS
Cash at bank and in hand:
–
balances
    with HSBC undertakings
246
–
–
–
–
246
Derivatives
1,643
–
491
1
–
491
2,134
Loans
    and advances to HSBC
undertakings
16,636
–
–
–
–
16,636
Financial investments
1,885
1,244
–
1,728
2,972
4,857
Investment in subsidiaries
55,668
–
–
(1,728
)
(1,728
)
53,940
Property, plant and equipment
2
–
–
–
–
2
Other assets
632
(581
)
–
–
(581
)
51
Prepayments and accrued income
5
–
–
–
–
5
Total assets
76,717
663
491
–
1,154
77,871
LIABILITIES AND EQUITY
Liabilities
Amounts owed to HSBC undertakings
7,352
–
–
–
–
7,352
Derivatives
10
–
72
1
–
72
82
Other liabilities
1,198
–
–
–
–
1,198
Accruals and deferred income
172
–
–
–
–
172
Deferred taxation
64
199
(136
)
–
63
127
Financial
    liabilities designated at
fair value
–
–
13,908
2
–
13,908
13,908
Subordinated liabilities
17,812
–
(13,036
)
2
–
(13,036
)
4,776
Total liabilities
26,608
199
808
–
1,007
27,615
Equity
Called up share capital
5,587
–
–
–
–
5,587
Share premium account
4,881
–
–
–
–
4,881
Merger reserve and other reserves
28,942
–
–
–
–
28,942
Other reserves
1,740
464
–
–
464
2,204
Retained earnings
8,959
–
(317
)
–
(317
)
8,642
Total equity
50,109
464
(317
)
–
147
50,256
Total equity and liabilities
76,717
663
491
–
1,154
77,871
1
Derivatives
    and hedge accounting.
2
Fair
    value option
.
374
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47
Differences
    between IFRSs and US GAAP
The consolidated
        financial statements of HSBC are prepared in accordance with IFRSs which
        differ in certain significant respects from US GAAP. The following is
        a summary of the
significant differences applicable to HSBC.
Shareholders' interest
    in the long-term assurance fund
IFRSs
•
IFRS
        4 permits entities to continue to account for insurance contracts under
        guidance issued under previous GAAP until a comprehensive standard relating
    to the measurement of insurance assets and liabilities is developed.
•
Under UK
        GAAP and, hence, current IFRSs, the value placed on HSBC's interest
        in long-term assurance business includes a valuation of the discounted
        future earnings expected to emerge from business currently in force,
        using appropriate assumptions in assessing factors such as recent experience
        and general economic conditions, together with the surplus retained in
        the long-term assurance funds. The assumptions are determined annually
    in consultation with independent actuaries.
•
Movements
        in the value of in-force long-term assurance business are included in 'Other
    operating income' on a gross of tax basis.
US
      GAAP
•
The net
        present value of future earnings is not recognised. Acquisition costs
        and fees are deferred and amortised in accordance with Statement of Financial
        Accounting Standard ('SFAS') 97 'Accounting and Reporting
        by Insurance Enterprises for Certain Long-duration Contracts and for
        Realised Gains and Losses
from the Sale of Investments'.
Impact
•
Under
        US GAAP, shareholders' equity is lower than under IFRSs because the present
    value of in-force long-term assurance business is not recognised.
•
This
        effect is partly offset by the treatment of acquisition costs, which
        are
deferred and amortised under US GAAP but are written off immediately as an expense
    of long-term assurance business under IFRSs.
Long-term
    assurance assets and liabilities
IFRSs
•
Long-term
        assurance fund assets, excluding own shares held, are classified according
        to the nature of the asset, for example, financial investments, unless
        designated at fair value. The accounting for these assets is consistent
    with other holdings of similar assets.
•
Liabilities
        attributable to policyholders under insurance contracts are recognised
        in accordance
with IFRS 4 and appropriate actuarial principles as 'Liabilities under insurance
contracts issued'. Liabilities attributable to policyholders under linked
investment contracts are recognised at fair value as
financial liabilities under 'Financial liabilities designated at fair value'.
Prior to 1 January 2005, both types of contract were recognised as 'Liabilities
to policyholders under long-term assurance business'.
US
      GAAP
•
Under
        the Statement of Position issued by the American Institute of Certified
        Public Accountants ('AICPA') 03-1 ('SOP 03-1'), 'Accounting
        and Reporting by Insurance Enterprises for Certain Non-traditional and
        Long-duration Contracts and for Separate Accounts', which became
        fully effective in 2004, when long-term assurance assets qualify for
        separate accounting they are measured at fair value and are reported
        in the financial statements as a summary total, with an equivalent summary
        total for related liabilities. Otherwise, assets that do not qualify
        for separate accounting and that represent policyholders' funds
        are accounted for and recognised as general account assets, that is consistent
        with other holdings of similar assets. Any related liability is accounted
        for as a
general account liability.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Impact
•
Long-term
        assurance assets that are recorded in accounts meeting the definition
        of 'separate accounts' in SOP
03-1 are measured at fair value through net income and disclosed
        in a single line, 'Other assets', in the US
GAAP balance
    sheet.
Pension costs
IFRSs
•
IAS 19 'Employee
        Benefits' ('IAS 19') requires pension liabilities to be
        assessed on the basis of current actuarial
valuations performed on each plan, and pension assets to be
        measured at fair value. The net pension surplus or
deficit,
        representing the difference between plan assets and liabilities, is recognised
    on the balance sheet.
•
In accordance
        with IAS 19 (revised 2004), HSBC has elected to record all actuarial
        gains and losses on the
pension
        surplus or deficit in the year in which they occur within the 'Consolidated
        statement of recognised
income
    and expense'.
US
    GAAP
•
SFAS 87, 'Employers' Accounting
        for Pensions', prescribes a similar method of actuarial valuation
        for pension
liabilities and requires the measurement of plan assets at
    fair value.
•
When the
        value of benefits accrued based on employee service up to the balance
        sheet date (the accumulated
benefit
        obligation) exceeds the value of plan assets, HSBC recognises an additional
        minimum pension liability to
the
        extent that the excess is greater than any accrual already established
    for unfunded pension costs.
•
SFAS 87
        does not permit recognition of all actuarial gains and losses in a statement
        other than the primary
income
        statement. As permitted by US GAAP, HSBC uses the 'corridor method',
        whereby actuarial gains and
losses
        outside a certain range are recognised in the income statement in equal
        amounts over the remaining
service
        lives of current employees. That range is 10 per cent of the greater
        of plan assets and plan liabilities. The
remaining additional minimum
        pension liability is recognised directly in 'Other comprehensive
    income'.
Impact
•
Net income
        under US GAAP is lower than under IFRSs as a result of the amortisation
        of the amount by which
actuarial
    losses exceed gains beyond the 10 per cent 'corridor'.
•
Shareholders'
        equity under US GAAP is higher than under IFRSs because deficits recognised
        under IFRSs (to
the
        extent they exceed surpluses) are greater than the minimum pension liability
    recognised under US GAAP.
Stock-based
    compensation
IFRSs
•
IFRS
        2, 'Share-based Payment', requires that when annual bonuses
        are paid in restricted shares and the
employee must remain with the employer for a fixed period
        in order to receive the shares, the award is expensed
over
    that period.
US
    GAAP
•
For
        awards made before 1 July 2005, SFAS 123, 'Accounting for Stock-based
        Compensation', ('SFAS 123')
requires that compensation cost be recognised over the period(s)
        in which the related employee services are
rendered.
        HSBC has interpreted this service period as the period to which the bonus
    relates.
•
For
        2005 bonuses awarded in early 2006, HSBC will follow SFAS 123 (revised
        2004) 'Share-based Payment'
('SFAS 123R'). SFAS 123R is consistent with IFRS
        2 in requiring that restricted bonuses are expensed over the
period
        the employee must remain with HSBC. However, SFAS 123R only applies to
        awards made after the date
of
    adoption, which for HSBC is 1 July 2005.
Impact
•
Some
        of the bonuses awarded in respect of 2002, 2003 and 2004 were recognised
        over the relevant vesting
period
        and
were, therefore, expensed in 'Net income' under IFRSs during 2005.
Under US GAAP, these awards
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were expensed
        in the years for which they were granted. 2005 bonuses will be expensed
        over the vesting period
under
        both IFRSs and US GAAP. Net income was, therefore, higher under US GAAP
    in 2005.
•
IFRSs and
        US GAAP are now largely aligned and this transition difference will be
    eliminated over the next few
years.
Goodwill,
    purchase accounting and intangible assets
IFRSs
•
Prior
        to 1998, goodwill under UK GAAP was written off against equity. HSBC
        did not elect to reinstate this
goodwill
        on its balance sheet upon transition to IFRSs. From 1 January 1998 to
        31 December 2003, goodwill
was
        capitalised and amortised over its useful life. The carrying amount of
        goodwill
existing at 31 December
2003
under UK GAAP was carried forward under the transition rules of IFRS 1 from 1
January 2004, subject to
certain adjustments.
•
IFRS 3 'Business
        Combinations' requires that goodwill should not be amortised but
        should be tested for
impairment at least annually at the reporting unit level by
    applying a test based on recoverable amounts.
•
Quoted
        securities issued as part of the purchase consideration are valued for
        the purpose of determining the cost
of
        the acquisition at their market price on the date the transaction is
    completed.
US
    GAAP
•
Up to
        30 June 2001, goodwill acquired was capitalised and amortised over its
        useful life, which could not exceed
25
        years. The amortisation of previously acquired goodwill ceased with effect
    from 31 December 2001.
•
Quoted
        securities issued as part of the purchase consideration are fair valued
        for the purpose of determining the
cost
        of acquisition at their average market price over a reasonable period
        before and after the date on which the
terms
    of the acquisition are agreed and announced.
Impact
•
Total goodwill
        and shareholders' equity are both higher under US GAAP than under
        IFRSs because, under US
GAAP,
        (i) pre-1998 goodwill is included on the balance sheet and (ii) the amortisation
        of goodwill ceased on
31
    December 2001 compared with 31 December 2003 under IFRSs.
•
However,
        goodwill on the acquisition of HSBC Finance in March 2003 is lower under
        US GAAP than under
IFRSs.
        This is principally the result of differences in the accounting for securitisations
        and intangibles. Under
IFRSs,
        previously recognised gains on the sale of assets to securitisation vehicles
        are eliminated and the
securitised
        assets are recognised on balance sheet. However, because HSBC elected
        not to restate business
combinations prior to 1 January
        2004 on transition to IFRSs, a significant amount of intangible assets
        arising on
acquisition
        were not recognised for IFRSs purposes. Under US GAAP, recognition of
    these assets was required.
•
Offsetting
        this was the recognition of a deferred tax liability under US GAAP in
    respect of these intangibles and
gains on sale of securitised assets.
•
The effect
        of these items was further offset by the higher value under US GAAP of
        HSBC shares issued as part
of
        the purchase consideration. The HSBC share price fell between the time
        of the announcement of the
acquisition
        in November 2002 and its completion in March 2003, so the average price
        under US GAAP
exceeded
    the price on the date of acquisition under IFRSs.
Property
IFRSs
•
Under
        the transition rules of IFRS 1, HSBC elected to freeze the value of all
        its properties held for its own use at
their 1 January 2004 valuations, their 'deemed cost' under
        IFRSs. They will not be revalued in the future. Assets
held
        at historical or deemed cost are
depreciated except for freehold land.
•
Investment
        properties are carried at current market values with gains or losses
        thereon recognised in net income
for
    the period. Investment properties are not depreciated.
377
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
US
    GAAP
•
US GAAP
        does not permit revaluations of property, including investment property,
        although it requires
recognition
        of asset impairment. Any realised surplus or deficit is, therefore, reflected
        in net income upon
disposal
        of the property. Depreciation is charged on all properties based on
cost.
Impact
•
Under
        IFRSs, the value of property held for own use reflects revaluation surpluses
        recorded prior to 1 January
2004.
        Consequently, the values of tangible fixed assets and shareholders' equity
        are lower under US GAAP than
under
    IFRSs.
•
There is
        a correspondingly lower depreciation charge and higher net income under
        US GAAP, partially offset by
higher
    gains (or smaller losses) on the disposal of fixed assets.
•
For investment
        properties, net income under US GAAP does not reflect the gain or loss
        recorded under IFRSs
for
        the
period.
Derivatives
    and hedge accounting
IFRSs
•
Derivatives are recognised initially, and are subsequently remeasured, at fair value. Fair values of exchange- traded derivatives are obtained from quoted market prices. Fair values of
OTC derivatives are obtained using valuation techniques, including discounted cash flow models and option pricing models.
•
In the normal course of business, the fair value of a derivative on initial recognition is considered to be the transaction price (that is the fair value of the consideration given or
received). However, in certain circumstances the fair value of an instrument will be evidenced by comparison with other observable current market transactions in the same instrument (without modification or repackaging) or will be based on a
valuation technique whose variables include only data from observable markets, including interest rate yield curves, option volatilities and currency rates. When such evidence exists, HSBC recognises a trading gain or loss on inception of the
derivative. When unobservable market data have a significant impact on the valuation of derivatives, the entire initial change in fair value indicated by the valuation model is not recognised immediately in the income statement but is recognised
over the life of the transaction on an appropriate basis or recognised in the income statement when the inputs become observable, or when the transaction matures or is closed out.
•
Derivatives may be embedded in other financial instruments; for example, a convertible bond has an embedded conversion option. An embedded derivative is treated as a separate derivative
when its economic characteristics and risks are not clearly and closely related to those of the host contract, its terms are the same as those of a stand-alone derivative, and the combined contract is not held for trading or designated at fair
value. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement.
•
Derivatives are classified as assets when their fair value is positive, or as liabilities when their fair value is negative. Derivative assets and liabilities arising from different
transactions are only netted if the transactions are with the same counterparty, a legal right of offset exists, and the cash flows are intended to be settled on a net basis.
•
The method of recognising the resulting fair value gains or losses depends on whether the derivative is held for trading, or is designated as a hedging instrument and, if so, the nature
of the risk being hedged. All gains and losses from changes in the fair value of derivatives held for trading are recognised in the income statement.
When derivatives
are designated as hedges, HSBC classifies them as either: (i) hedges of the change
in fair value of recognised assets or liabilities or firm commitments ('fair
value
hedge'); (ii) hedges of the variability in highly probable future cash flows
attributable to a recognised asset or liability, or a forecast transaction ('cash
flow hedge'); or (iii) hedges of net investments in a foreign operation
('net investment hedge'). Hedge accounting is applied to derivatives
designated as hedging instruments in a fair value, cash flow or net investment
hedge provided certain criteria are met.
Hedge accounting
–
It is HSBC's policy to document, at the inception of a hedge, the relationship between the hedging instruments and hedged items, as well as the risk management objective and strategy
for undertaking the
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hedge.
        The policy also requires documentation of the assessment, both at hedge
        inception and on an ongoing basis, of whether the derivatives used in
        the hedging transaction are highly effective in offsetting changes in
        fair values or cash flows of hedged items attributable to the hedged
        risks. Interest on designated qualifying hedges is included in 'Net
    interest income'.
Fair
    value hedge
–
Changes
        in the fair values of derivatives that are designated and qualify as
        fair value hedging instruments
are
        recorded in the income statement, together with changes in the fair values
        of the assets or liabilities or
groups
    thereof that are attributable to the hedged risks.
–
If the
        hedging relationship no longer meets the criteria for hedge accounting,
        the cumulative adjustment to
the
        carrying amount of a hedged item is amortised to the income statement
        based on a recalculated effective
interest
        rate over the residual period to maturity, unless the hedged item has
        been derecognised whereby it is
released
    to the income statement immediately.
Cash
    flow hedge
–
The effective
        portion of changes in the fair values of derivatives that are designated
        and qualify as cash flow
hedges
        are recognised in equity. Any gain or loss relating to an ineffective
        portion is recognised
immediately
    in the income statement.
–
Amounts
        accumulated in equity are recycled to the income statement in the periods
        in which the hedged
item
        will affect the income statement. However, when the forecast transaction
        that is hedged results in the
recognition
        of a non-financial asset or a non-financial liability, the gains and
        losses
previously deferred in
equity
are transferred from equity and included in the initial measurement of the cost
of the asset or liability.
–
When a
        hedging instrument expires or is sold, or when a hedge no longer meets
        the criteria for hedge
accounting,
        any cumulative gain or loss existing in equity at that time remains in
        equity until the forecast
transaction
        is ultimately recognised in the income statement. When a forecast transaction
        is no longer
expected
        to occur, the cumulative gain or loss that was reported in equity is
    immediately transferred to the
income statement.
Net
    investment hedge
–
Hedges
        of net investments in foreign operations are accounted for in a similar
        manner to cash flow hedges.
Any
        gain or loss on the hedging instrument relating to the effective portion
        of the hedge is recognised in
equity;
        the gain or loss relating to the ineffective portion is recognised immediately
        in the income statement.
Gains and losses
accumulated in equity are included in the income statement on the disposal of
the foreign
operation.
Hedge
    effectiveness testing
–
IAS 39
        requires that at inception and throughout its life, each hedge must be
        expected to be highly effective
(prospective effectiveness) to qualify for hedge accounting.
        Actual effectiveness (retrospective
effectiveness)
        must also be demonstrated on an ongoing
basis.
–
The documentation
        of each hedging relationship sets out how the effectiveness of the hedge
        is assessed. The
method
        HSBC entities adopt for assessing hedge effectiveness will depend on
    their risk management
strategies.
–
For prospective
        effectiveness, the hedging instrument must be expected to be highly effective
        in achieving
offsetting
        changes in fair value or cash flows attributable to the hedged risk during
        the period for which the
hedge
        is designated. For retrospective effectiveness, the changes in fair value
        or cash flows must offset each
other
        in the range of 80 per cent to 125 per cent for the hedge to be deemed
    effective.
Derivatives
    that do not qualify for hedge accounting
–
All gains
        and losses from changes in the fair value of any derivatives that do
        not qualify for hedge
accounting
        are recognised immediately in the income statement. These gains and losses
        are reported in 'Net
trading
        income', except where derivatives are managed in conjunction with
    financial instruments designated
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
at fair
        value, in which case gains and losses are reported in 'Net income
        from financial instruments designated at fair value', other than
        interest settlements on derivatives used to hedge issues of own debt
    which are reported in 'Interest expense'.
From
    1 January 2004 to 31 December 2004
•
Derivative
          financial instruments comprised futures, forward, swap and option transactions
          undertaken by HSBC
in the foreign exchange, interest rate, equity, credit derivative,
          and commodity markets that were held off
balance
          sheet. Netting was applied
where a legal right of set-off existed.
•
Accounting
          for these instruments was dependent upon whether the transactions were
    undertaken for trading or
non-trading purposes.
Trading
    transactions
•
Trading
          transactions included transactions undertaken for market-making, to
    service customers' needs and for
proprietary purposes, as well as any related hedges.
•
Transactions
          undertaken for trading purposes were marked to market and the net present
          value of any gain or
loss arising was recognised in the income statement as 'Trading
          income', after appropriate deferrals for
unearned
          credit margins and future servicing costs. Derivative trading transactions
          were valued by reference to
an
          independent liquid price where this was available. For those transactions
          with
no readily available quoted
prices,
predominantly over the counter transactions, market values were determined by
reference to
independently sourced
rates, using valuation models. If market observable data was not available, the
initial
increase in fair value indicated by the valuation model, but
based on unobservable inputs, was not recognised
immediately
in the income statement. This amount was held back and recognised over the life
of the transaction
where
appropriate, or released to the income statement when the inputs became observable,
or
when the
transaction
matured or was closed out. Adjustments were made for illiquid positions when
appropriate.
•
Assets,
          including gains, resulting from derivative exchange rate, interest
          rate, equities, credit derivative and
commodity contracts which were marked to market were included
          in 'Derivatives' on the asset side of the
balance
          sheet. Liabilities, including losses, resulting from such contracts,
          were included in 'Derivatives' on the
liability
    side of the balance sheet.
Non-trading
    transactions
•
Non-trading
          transactions, which were those undertaken for hedging purposes as part
          of HSBC's risk
management strategy against cash flows, assets, liabilities
    or positions, were measured on an accrual basis.
Non-trading
    transactions included qualifying hedges and positions that synthetically
    altered the characteristics
of specified financial instruments.
•
Non-trading
          transactions were accounted for on an equivalent basis to the underlying
          assets, liabilities or net
positions. Any gains or losses arising were recognised on
          the same basis as those arising from the related assets,
liabilities
          or
positions.
•
To
          qualify as a hedge, a derivative was required effectively to reduce
          the price, foreign exchange or interest rate
risk of the asset, liability or anticipated transaction
          to which it was linked and be capable of designation as a
hedge
          at inception of the derivative contract. Accordingly, changes in the
          market value of the derivative were
required
          to be highly correlated to changes in the market value of the underlying
          hedged item at inception of the
hedge
          and over the life of the hedge contract. If these criteria were met,
          the derivative was accounted for on the
same basis as
          the underlying hedged item. Derivatives used for hedging purposes included
          swaps, forwards and
futures. Interest rate swaps were also used to alter synthetically
          the interest rate characteristics of financial
instruments.
          In order to qualify for synthetic alteration, a derivative instrument
          had to be linked to specific
individual,
          or pools of similar, assets or liabilities by the notional principal
          and
interest rate risks of the
associated
instruments, and had to achieve a result that was consistent with defined risk
management objectives.
If
these criteria were met, accruals based accounting was applied, i.e. income or
expense
was recognised and
accrued to the next settlement date in accordance with the
contractual terms of the agreement.
•
Any
          gain or loss arising on the termination of a qualifying derivative
          was deferred and amortised to earnings
over the original life of the terminated contract. Where the
    underlying asset, liability or position was sold or
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terminated,
            the qualifying derivative was immediately marked to market and any
    gain or loss arising was taken to the income statement.
US
    GAAP
•
The
        accounting under SFAS 133 'Accounting for derivative instruments
        and hedging activities' is generally
consistent with that under IAS 39, which HSBC has followed
        in its IFRSs reporting from 1 January 2005, as
described
        above. However, specific assumptions regarding hedge effectiveness under
        US GAAP are not
permitted
    by IAS 39.
•
The
    requirements of SFAS 133 have been effective from 1 January 2001.
•
The
        US GAAP 'shortcut method' permits an assumption of zero ineffectiveness
        in hedges of interest rate risk
with an interest rate swap provided specific criteria have
        been met. IAS 39 does not permit such an assumption,
requiring
        a measurement of actual ineffectiveness at each designated effectiveness
    testing date.
•
In
        addition, IFRSs allow greater flexibility in the designation of the hedged
        item. Under US GAAP, all
contractual
        cash flows must form part of the designated relationship, whereas IAS
        39 permits the designation of
identifiable
    benchmark interest cash flows only.
•
Certain
        issued structured notes are classified as trading liabilities under IFRSs,
        but not under US GAAP. Under
IFRSs,
        these notes will be held at fair value, with changes in fair value reflected
        in the income statement. Under
US
        GAAP, if the embedded derivative is not 'clearly and closely
related' to the host contract, the embedded
derivative
will be bifurcated and measured at fair value, the host contract will be measured
at amortised cost, and
changes in both will
be reflected in the income statement. If the embedded derivative is clearly and
closely
related
to the host contract, the issued note will be held at amortised cost in its entirety,
with changes in the
amortised
cost reflected in the income statement.
•
Under
        US GAAP, derivatives receivable and payable with the same counterparty
        may be reported net on the
balance
        sheet when there is an executed ISDA Master Netting Arrangement covering
        enforceable jurisdictions.
These
        contracts do not meet the requirements for offset under IAS 32 and hence
        are presented
gross on the
balance
sheet under IFRSs.
Impact
•
HSBC's
        North American subsidiaries continue to follow the 'shortcut method' of
        hedge effectiveness testing for
certain transactions in their US GAAP reporting. Alternative
        hedge effectiveness testing methodologies are
sought
        under IFRSs for these hedging
relationships.
•
Apart
        from certain subsidiaries in North America, HSBC has chosen not to adopt
        hedge accounting for US
GAAP
        purposes as this would require a designated hedged item inconsistent
        with the approach adopted under
IFRSs.
        Qualifying IAS 39 hedging derivatives have been measured at fair value
        with the
gain or loss recognised
in
net income for US GAAP purposes.
Designation
        of financial assets and liabilities at fair value through profit and
    loss
IFRSs
•
Under IAS 39, a financial instrument, other than one held for trading, is classified in this category if it meets the criteria set out below, and is so designated by management. An entity
may designate financial instruments at fair value where the designation:
–
eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring financial assets or financial liabilities or recognising the gains
and losses on them on different bases; or
–
applies to a group of financial assets, financial liabilities or a combination of both that is managed and its performance evaluated on a fair value basis, in accordance with a documented
risk management or investment strategy, and where information about that group of financial instruments is provided internally on that basis to management; or
–
relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those financial instruments.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
•
Financial
        assets and financial liabilities so designated are recognised initially
        at fair value, with transaction costs
taken directly to the income statement, and are subsequently
        remeasured at fair value. The designation, once
made,
        is irrevocable in respect of the financial instruments to which it relates.
        Financial assets and financial
liabilities
    are recognised using trade date accounting.
•
Gains
        and losses from changes in the fair value of such assets and liabilities
        are recognised in the income
statement
        as they arise, together with related interest income and expense and
        dividends, within 'Net income
from
        financial instruments designated at fair value', except for interest
        on own debt issued by HSBC, and related
derivatives,
    which is reported in 'interest expense'.
US
    GAAP
•
There
        are no provisions in US GAAP to make an election similar to that in IAS
    39.
•
Generally,
        for financial assets to be measured at fair value with gains and losses
        recognised immediately in the
income statement, they must meet the definition of trading
        securities in SFAS 115 'Accounting for Certain
Investments
        in Debt and Equity Securities' ('SFAS 115'). Financial
        liabilities are usually reported at amortised
cost
    under US GAAP.
Impact
•
HSBC has principally used the fair value designation in the following cases:
–
for certain fixed rate long-term debt issues whose interest rate characteristic has been changed to floating through interest rate swaps as part of a documented interest rate management
strategy. Approximately US$51 billion of the Group's debt issues have been accounted for using the option. The movement in fair value of these debt issues includes the effect of changes in own credit spread and any ineffectiveness in the
economic relationship between the related swaps and own debt. Such ineffectiveness arises from the different credit characteristics of the swap and own debt coupled with the sensitivity of the floating leg of the swap to changes in short-term
interest rates. In addition, the economic relationship between the swap and own debt can be affected by relative movements in market factors, such as bond and swap rates, and the relative bond and swap rates at inception. The size and direction of
the accounting consequences of changes in own credit spread and ineffectiveness can be volatile from period to period, but do not alter the cash flows envisaged as part of the documented interest rate management strategy.
–
certain financial assets held by insurance operations and managed at fair value to meet liabilities under insurance contracts (approximately US$4 billion of assets);
–
financial liabilities under investment contracts and the related financial assets, when the change in value of the assets is correlated with the change in value of the liabilities to
policyholders (approximately US$8 billion of liabilities and related assets).
•
Under US GAAP, debt issues are reported at amortised cost. An offsetting derivative providing an economic hedge for an asset or liability results in asymmetrical accounting, which in US
GAAP is reflected in net income except for some transactions in certain subsidiaries in North America where the relationship is usually elected as a fair value hedge under SFAS 133.
•
Under US GAAP, assets held to meet insurance/investment contracts are reported as available-for-sale, with gains and losses taken directly to 'Other comprehensive income'. When
the corresponding liability is reported at fair value, with movements reported immediately in net income, this also results in asymmetrical accounting being reflected in US GAAP net income.
•
All these adjustments are included as 'Derivatives and hedge accounting' in the reconciliations below.
Financial
    investments
IFRSs
•
Treasury
      bills, debt securities and equity shares intended to be held on a continuing
      basis are classified as
available-for-sale securities unless designated at fair value
    (see above) or classified as held-to-maturity.
•
Available-for-sale
      securities are initially measured at fair value plus direct and incremental
      transaction costs.
They
      are subsequently remeasured at fair value. Changes in fair value are recognised
      in equity until the securities
are
      either sold or impaired. On the sale of available-for-sale securities,
    cumulative gains or losses previously
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recognised
        in equity are recognised through the income statement and classified
        as 'Gains less losses from
financial investments'. Interest income is recognised
        on such securities using the effective interest rate method,
calculated
        over the asset's expected life. When dated investment securities
        are purchased at a premium or a
discount,
        the premiums and discounts are included in the calculation of the effective
        interest
rate.
•
If an
        available-for-sale security is determined to be impaired, the cumulative
        loss (measured as the difference
between the acquisition cost and the current fair value, less
        any impairment loss on that financial asset
previously
        recognised in the income statement) is removed from equity and recognised
        in the income statement.
If,
        in a subsequent period, the fair value of a debt instrument classified
        as available-for-sale
increases and the
increase can be objectively related to an event occurring
after the impairment loss was recognised in the income
statement,
the impairment loss is reversed through the income statement. Impairment losses
recognised in the
income
statement on equity instruments are not reversed through the income statement.
•
Foreign
        exchange differences on available-for-sale securities denominated in
        foreign currency are recognised in
net
        income to the extent that they relate to the translation of the amortised
    cost of the security.
1
    January 2004 to 31 December 2004
•
Debt
          securities and equity shares intended to be held on a continuing basis
          were classified as financial
investments and included in the balance sheet at cost less
          provision for any permanent diminution in value.
Other
      participating interests were accounted for on the same basis. Premiums
      or discounts on dated investment
securities purchased at other than face value were amortised
      through the income statement over the period from
date
      of purchase to date of maturity
and included in 'Interest income'. Any gain or loss on realisation
of these
securities
was recognised in the income statement as it arose and included in 'Gains
less losses from financial
investments'.
•
Foreign
          exchange differences on foreign currency-denominated monetary items,
    including securities, were
recognised in the income statement.
US
    GAAP
•
All debt
        securities and equity shares with a readily determinable fair value are
        classified and disclosed within
one
        of the following three categories: held-to-maturity; available-for-sale;
    or trading (SFAS 115).
•
Held-to-maturity
        debt securities are measured at amortised cost less any provision other
    than for temporary
impairment.
•
Available-for-sale
        securities are measured at fair value with unrealised holding gains and
        losses excluded from
earnings and reported net of applicable taxes and minority
        interests as a separate component of shareholders'
funds.
        Foreign exchange differences on available-for-sale securities denominated
        in foreign currency are also
excluded
        from earnings and recorded as part of the same separate component of
    shareholders' funds.
•
A decline
        in fair value below the cost of an available-for-sale or held-to-maturity
        security is treated as a realised
loss and included in earnings if it is considered 'other
        than temporary'. The reduced fair value is then treated as
the
        cost basis for the security. A decline in fair value is generally considered
        other than temporary when
management
        does not intend or expect to hold the investment for sufficient time
        to enable the fair value to
rise
back
to the original cost of the investment.
•
Equity
        shares that do not have a readily determinable fair value are measured
        at cost, less any provisions for
impairment, and are reported within 'Other assets'.
        Under SFAS 115, the fair value of an equity share is 'readily
determinable' if
        quotations
are currently available on a recognised exchange.
Impact
•
In 2004,
        available-for-sale securities, excluding equity shares that do not have
        a readily determinable fair value,
were recorded at fair value in the US GAAP balance sheet.
        This value was higher than cost in the comparative
IFRSs
    balance sheet.
•
In 2005,
        certain assets have been reported as designated as at fair value for
        IFRSs purposes (see above). Under
US
        GAAP, equity shares that do not have a readily determinable fair value
        as defined in SFAS 115 are recorded
at
    cost rather than at fair value under IFRSs.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
•
Foreign
        exchange differences on available-for-sale securities denominated in
        foreign currency are recognised in
'Net income' under IFRSs. Under US GAAP, they are
        not reflected in net income but are deferred and
recognised
        on maturity or sale of the
security.
•
Subsequent
        recoveries in the value of an impaired debt security are not reported
    in net income for US GAAP
purposes.
Interests
    in own shares held
IFRSs
•
In accordance
        with IAS 32, long positions in HSBC Holdings' shares are deducted
    from shareholders' funds. No
gains or losses are recognised on own shares held.
•
IAS 32
        also applies to derivatives over HSBC's own shares, when they meet
        the definition of an equity
instrument,
        and HSBC shares held to meet liabilities under insurance and investment
    contracts.
US
    GAAP
•
AICPA Accounting
        Research Bulletin 51, 'Consolidated Financial Statements' ('ARB
        1'), requires a reduction
in shareholders' equity for own shares held. The rules
    in ARB 51 do not extend to derivatives over own shares.
•
AICPA Accounting
        Research Bulletin 43 'Restatement and Revision of Accounting Research
        Bulletins' also
requires a reduction in shareholders' equity for own
        shares held. HSBC shares held within 'Long-term assurance
assets
        attributable to
policyholders' are classified as an asset when the criteria for classification
as 'separate
accounts' are
met.
Impact
•
Certain
        HSBC insurance operations hold shares in HSBC as part of policyholder
        funds that qualify for
classification
        as 'separate accounts'. These shares represent an addition
        to shareholders' equity for US GAAP
purposes
        and are reported within 'Other assets' with gains and losses
        during the period reported in 'Other
income',
        where they are matched with corresponding movements in the amounts attributable
        to policyholders.
No
        such gains and losses are recognised under IFRSs and the cost of the
        shares is deducted from
shareholders'
equity.
Loan
    origination
IFRSs
From
    1 January 2005
•
Certain
        loan fee income and incremental directly attributable loan origination
        costs are amortised to the income
statement over the life of the loan as part of the effective
    interest calculation under IAS 39.
1
          January 2004 to 31 December 2004
•
Prior
          to 1 January 2005, fee and commission income was accounted for in the
          period when receivable, except
when charged to cover the costs of a continuing service to,
          or risk borne for, the customer, or was interest in
nature.
          In these cases, income was recognised on an appropriate basis over
          the relevant period. Loan costs
associated
    with origination were generally expensed as incurred.
US
    GAAP
•
Certain
        loan fee income and direct but not necessarily incremental loan origination
        costs, including an
apportionment
        of overheads, are amortised to the income statement account over the
        life of the loan as an
adjustment
        to interest income (SFAS 91, 'Accounting for Non-refundable Fees
        and
Costs Associated with
Originating
or Acquiring Loans and Initial Direct Costs of Leases'.)
Impact
•
More costs
        are deferred and amortised under US GAAP, such as an apportionment of
        base salaries, than under
IFRSs.
        Base salaries are neither incremental nor directly attributable to a
        specific loan origination, and so are
written
        off in the period they are incurred under IFRSs. This difference in treatment
    results in increased net
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income
          and shareholders' equity under US GAAP because, in the years presented,
          the extra cost deferral under US GAAP exceeds the amortisation of previously
    deferred costs.
Securitisations
IFRSs
•
The recognition of securitised assets is governed by a three-step process, which may be applied to the whole asset, or a part of an asset:
–
If the rights to the cash flows arising from securitised assets have been transferred to a third party, and all the risks and rewards of the assets have been transferred, the assets
concerned are derecognised.
–
If the rights to the cash flows are retained by HSBC but there is a contractual obligation to pay them to another party, the securitised assets concerned are derecognised if certain
conditions are met such as, for example, when there is no obligation to pay amounts to the eventual recipient unless an equivalent amount is collected from the original asset.
–
If some significant risks and rewards of ownership have been transferred, but some have also been retained, it must be determined whether or not control has been retained. If control has
been retained, HSBC continues to recognise the asset to the extent of its continuing involvement; if not, the asset is derecognised.
US
    GAAP
•
SFAS 140, 'Accounting for Transfers and Servicing of Finance Assets and Extinguishments of Liabilities', requires that receivables that are sold to a special purpose entity
('SPE') and securitised can only be derecognised and a gain or loss on sale recognised if the originator has surrendered control over the securitised assets.
•
Control is surrendered over transferred assets if and only if all of the following conditions are met:
–
The transferred assets are put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership.
–
Each holder of interests in the transferee (i.e. holder of issued notes) has the right to pledge or exchange their beneficial interests, and no condition constrains this right and
provides more than a trivial benefit to the transferor.
–
The transferor does not maintain effective control over the assets through either an agreement that obligates the transferor to repurchase or to redeem them before their maturity, or
through the ability to unilaterally cause the holder to return specific assets other than through a clean-up call.
•
If these conditions are not met the securitised assets continue to be consolidated.
•
When HSBC retains an interest in securitised assets, such as a servicing right or the right to residual cash flows from the special purpose entity, HSBC recognises this interest at fair
value on sale of the assets to the SPE.
Impact
•
Gains
      on sale of assets to securitisation vehicles are recognised under US GAAP
      in cases when no such gain is
recognised under IFRSs. This results in higher US GAAP net
      income in periods in which there is significant
securitisation
      activity. Since early 2004, HSBC has reduced securitisation activity that
      results in 'gain on sale'
accounting
      under US GAAP. As a result, net income is lower under US GAAP because the
      amortisation of
HSBC's
      retained interest in previous securitisations exceeds the gains on new
      transactions where a gain is
recognised. The new transactions largely replenish short-term
    loan assets held by existing vehicles.
Consolidation
    of Special Purpose Entities or Variable Interest Entities
IFRSs
•
Under
      the IASB's Standards Interpretations Committee ('SIC') Interpretation
      12 ('SIC-12'), an SPE should be
consolidated when the substance of the relationship between
      an enterprise and the SPE indicates that the SPE is
controlled
    by that entity.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
US
    GAAP
•
FASB Interpretation
        No. 46 (revised December 2003), 'Consolidation of Variable Interest
        Entities' ('FIN 46R'),
requires consolidation of variable interest entities ('VIE's)
        in which HSBC is the primary beneficiary and
disclosures
        in respect of all other VIEs in
which it has a significant variable interest.
•
A VIE is
        an entity in which equity investors hold an investment that does not
        possess the characteristics of a
controlling financial interest or does not have sufficient
        equity at risk for the entity to finance its activities.
HSBC
        is the primary beneficiary of a VIE if its variable interests absorb
        a majority
      of the entity's expected
losses. Variable interests are contractual, ownership or other
      pecuniary interests in an entity that change with
changes
      in the fair value of an entity's net assets exclusive of variable
      interests. If no party absorbs a majority of
the
      entity's expected losses, HSBC consolidates the VIE if it receives
      a majority of the expected
residual returns
of
the entity.
Impact
•
When HSBC
        is deemed the primary beneficiary under US GAAP, but does not consolidate
        the vehicle under
IFRSs,
        the assets and liabilities of that vehicle are consolidated on the US
        GAAP balance sheet. This results in a
grossing
        up of the balance sheet but does not have a material impact on net income
        for the period or on
shareholders'
    equity.
•
When HSBC
        is deemed not to be the primary beneficiary under US GAAP of a vehicle
        that is consolidated
under
        IFRSs, the assets and liabilities of that vehicle are de-consolidated
        in the US GAAP balance sheet. This
results
        in a reclassification in the 2004 balance sheet but does not have a material
        impact on shareholders' equity
or
    on net income for 2004 or 2005.
Restructuring
    provisions
IFRSs
•
In accordance
        with IAS 37, 'Provisions, Contingent Liabilities and Contingent
        Assets', provisions are made for
any direct costs and net future operating losses arising from
        a business that management is committed to
restructure,
        sell or terminate; has a detailed formal plan to exit; and has raised
        a valid expectation of carrying out
that
    plan.
US
    GAAP
•
SFAS 146, 'Accounting
        for Costs Associated with Exit or Disposal Activities', requires
        that the fair value of a
liability for a cost associated with an exit or disposal activity
        be recognised when the liability is incurred.
Accordingly,
      provisions are recognised upon the implementation of the restructuring
    plan.
Impact
•
The recognition
        of costs associated with plans to restructure and streamline operations
        is earlier under IFRSs
than
        under US GAAP, for example, where there is a time lag between developing
        and communicating a formal
plan,
        and putting it into practice. This resulted in marginally higher net
        income and shareholders' equity under
US
    GAAP in 2005.
Loan
    impairment
IFRSs
•
When statistical
        models, using historic loss rates adjusted for economic conditions, provide
        evidence of
impairment
        in portfolios of loans, their values are written down to their net recoverable
        amount. The net
recoverable
        amount is the present value of the estimated future recoveries discounted
        at
the portfolio's original
effective
interest rate. The calculations include a reasonable estimate of recoveries on
loans individually
identified for write-off pursuant
to HSBC's credit guidelines.
US
    GAAP
•
When the
        delinquency status of loans in a portfolio is such that there is no realistic
        prospect of recovery, the
loans
        are written off in full, or to recoverable value where collateral exists.
        Delinquency depends on the number
of
        days payments is overdue. The delinquency status is applied consistently
        across similar loan products in
accordance
        with HSBC's credit guidelines. When local regulators mandate the
    delinquency status at which
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write-off
        must occur for different retail loan products and these regulations reasonably
        reflect estimated recoveries on individual loans, this basis of measuring
        loan impairment is reflected in US GAAP accounting. Cash recoveries relating
        to pools of such written-off loans, if any, are reported as loan recoveries
    upon collection.
Impact
•
Under both
        IFRSs and US GAAP, HSBC's policy and regulatory instructions mandate
        that individual loans
evidencing
        adverse credit characteristics which indicate no reasonable likelihood
        of recovery, are written off.
When,
        on a portfolio basis, cash flows can reasonably be estimated in aggregate
        from these written-off
loans, an
asset
equal to the present value of the future cash flows is recognised under IFRSs.
•
No asset
        for future recoveries arising from written-off assets was recognised
        in the balance sheet under IFRSs
prior
    to 1 January 2005.
Interest
    recognition
IFRSs
•
The calculation
        and recognition of effective interest rates under IAS 39 requires an
        estimate of 'all fees and
points paid or received between parties to the contract' that
    are an integral part of the effective interest rate be
included.
US
    GAAP
•
FAS 91
        also generally requires all fees and costs associated with originating
        a loan to be recognised as interest
but,
        when the interest rate increases during the term of the loan, it prohibits
        the recognition of interest income to
the
        extent that the net investment in the loan would increase to an amount
        greater than the amount at which the
borrower
    could settle the obligation.
Impact
•
When HSBC
        provides introductory incentives in the form of either a low or nil interest
        rate for the early period
of
        a loan, interest income on such products is recognised under IFRSs on
        the basis of the overall effective
interest
        rate over the expected life of the product. No interest income is recognised
        during the incentive period
under
    US GAAP.
Reconciliation
      of net income and shareholders' equity under IFRSs and US GAAP
The
          following tables summarise the significant adjustments to consolidated
          net income and shareholders' equity which would result from the
    application of US GAAP
:
Year
      ended 31 December
2005
2004
1
US$m
US$m
Net
      income
Profit
      attributable to shareholders of the parent company of HSBC (IFRSs)
15,081
12,918
Shareholders'
      interest in long-term assurance fund
88
(102
)
Pension
      costs
(175
)
(125
)
Stock-based
      compensation
225
(83
)
Intangible
      assets
(325
)
(323
)
Purchase
      accounting adjustments
1
(520
)
(1,239
)
Derivatives
      and hedge accounting
(2,144
)
244
Foreign
      exchange differences on available-for-sale securities
2,235
1,069
Loan
      origination
249
143
Securitisations
1
(237
)
(33
)
Loan
      impairment
20
–
Interest
      recognition
(131
)
–
Other
(44
)
74
Taxation,
      including taxation on reconciling items
578
(77
)
Minority
      interest in reconciling items
(197
)
40
Net
      income (US GAAP)
14,703
12,506
1
2004
      figures for 'Securitisations' and 'Purchase accounting adjustments'
      have been restated to reflect the split between securitisation activity
      before and after the acquisition of HSBC Finance Corporation in 2003. There
    is no overall impact on US GAAP net income or shareholders' equity.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
US$
US$
Per
      share amounts (US GAAP)
Basic
      earnings per ordinary share
1.33
1.15
Diluted
      earnings per ordinary share
1.32
1.13
At
      31 December
2005
2004
1
US$m
US$m
Shareholders'
      equity
Total
      shareholders' equity (IFRSs)
92,432
85,522
Shareholders'
      interest in long-term assurance fund
(1,077
)
(1,600
)
Pension
      costs
1,585
1,557
Fair
      value adjustment for available-for-sale securities
(597
)
1,969
Goodwill
1,048
1,594
Revaluation
      of property
(1,530
)
(1,269
)
Purchase
      accounting adjustments
1
155
389
Intangible
      assets
2,127
2,437
Derivatives
      and hedge accounting
(58
)
356
Loan
      origination
717
375
Securitisations
1
158
395
Loan
      impairment
(327
)
–
Interest
      recognition
(259
)
–
Other
112
(385
)
Taxation
      including taxation on reconciling items
(1,213
)
(1,196
)
Minority
      interest in reconciling items
251
(62
)
Total
      shareholders' equity (US GAAP)
93,524
90,082
2005
2004
US$m
US$m
Movement
      in shareholders' equity (US GAAP)
At
      1 January
90,082
80,251
Net
      income
14,703
12,506
Dividends
(7,750
)
(6,932
)
Share
      options
450
234
Shares
      issued in lieu of dividends
1,811
2,607
New
      share capital subscribed net of costs
1,405
581
Other,
      including movements in own shares held
94
(148
)
Net
        change in net unrealised losses on available-for-sale securities,
net of tax effect
(2,716
)
(837
)
Net
        change in net unrealised gains on derivatives classified as cash flow
        hedges,
net
        of tax effect
1
(349
)
Minimum
      pension liability adjustment, net of tax effect
(236
)
(195
)
Exchange
      differences and other movements
(4,320
)
2,364
Total
      other comprehensive income
(7,271
)
983
At
      31 December
93,524
90,082
1
2004 figures for 'Securitisations' and 'Purchase accounting adjustments' have been restated to reflect the split between securitisation activity before and
after the acquisition of HSBC Finance Corporation in 2003. There is no overall impact on US GAAP net income or shareholders' equity.
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Consolidated
    US GAAP balance sheet
The
        following table provides an estimated summarised consolidated balance
        sheet for HSBC which incorporates the adjustments arising from the application
        of US GAAP. The format of the US GAAP balance sheet, including comparatives,
        has been aligned with that of the format for the consolidated balance
    sheet under IFRSs which was adopted in 2005.
At
      31 December
2005
2004
US$m
US$m
Assets
Cash
      and balances at central banks
13,712
9,893
Items
      in the course of collection from other banks
11,300
6,352
Hong
      Kong Government certificates of indebtedness
12,554
11,878
Trading
      assets
193,312
114,202
Trading
      assets which may be repledged or resold by counterparties
42,652
–
Derivatives
29,295
50,611
Loans
      and advances to banks
125,751
143,077
Loans
      and advances to customers
689,414
660,493
Financial
      investments
182,596
191,471
Financial
      investments which may be repledged or resold by counterparties
6,041
–
Interest
      in associates and joint ventures
7,163
3,366
Goodwill
      and intangible assets
35,081
36,307
Property,
      plant and equipment
14,891
15,655
Other
      assets (including prepayments and accrued income)
43,182
23,060
Total
      assets
1,406,944
1,266,365
Liabilities
Hong
      Kong currency notes in circulation
12,554
11,878
Deposits
      by banks
69,895
83,539
Customer
      accounts
704,647
700,948
Items
      in the course of transmission to other banks
7,022
5,301
Trading
      liabilities
148,451
46,460
Derivatives
29,410
47,353
Debt
      securities in issue
225,681
190,766
Retirement
      benefit liabilities
3,217
4,892
Other
      liabilities (including accruals and deferred income)
39,385
18,724
Liabilities
      under insurance contracts issued
14,157
–
Liabilities
      to policyholders under long-term assurance business
–
19,289
Provisions
4,285
7,201
Subordinated
      liabilities
45,612
37,685
Total
      liabilities
1,304,316
1,174,036
Equity
Total
      shareholders' equity
93,524
90,082
Minority
      interests
9,104
2,247
Total
      equity
102,628
92,329
Total
      equity and liabilities
1,406,944
1,266,365
Net
      assets arising due to reverse repo transactions of US$47,207 million
      (2004: US$36,543 million) and US$43,282 million (2004: US$29,346
      million) are included in 'Loans and advances to banks' and 'Loans
      and advances to customers' respectively.
Net
      liabilities arising due to repo transactions of US$24,113 million (2004:
      US$11,590 million) and US$51,633 million (2004: US$32,137 million)
      are included in 'Deposits by banks' and 'Customer accounts'
      respectively. Average repo liabilities during the year were US$74,143
      million (2004: US$46,229 million). The maximum quarter-end repo liability
      outstanding during the year was US$78,590 million (2004: US$53,188
      million).
At
      31 December 2005, collateral received under reverse repo transactions which
      HSBC had the right to sell or repledge amounted to US$103,977 million
      gross (2004: US$84,767 million). Approximately US$79 billion (2004:
      approximately US$36 billion) of the collateral obtained from reverse
      repo transactions had been sold or repledged by HSBC in connection with
      repo transactions and securities sold not yet purchased.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
HSBC
        also enters into stock lending and borrowing transactions by which either
        cash or other securities may be received in exchange for stock. At 31
        December 2005, stock borrowing transactions where the securities borrowed
        were subject to sale or repledge amounted to US$25,783 million (2004:
    US$28,354 million).
(a)
Pension and
    post-retirement costs
Pensions
For the
        purpose of the above reconciliations, the provisions of SFAS 87 'Employers' accounting
        for pensions' have been applied to HSBC's main defined benefit
        pension
plans, which make up approximately 96 per cent of all HSBC's schemes by
plan assets. For non-US schemes, HSBC has applied SFAS 87 with effect from 30
June 1992 as it was not feasible to apply it as at 1 January 1989, the date specified
in the
standard.
When a
        pension plan's accumulated benefit obligation (the value of the
        benefits accrued based on employee service up to the balance sheet date)
        exceeds the fair value of its assets, an additional minimum pension liability
        equal to this excess is recognised by the employer to the extent that
        the excess is greater than any accrual which has already been established
        for unfunded pension costs. Simultaneously, an intangible asset is established
        equal to the lower of the liability recognised for the unfunded benefit
    obligation and the amount of any unrecognised prior service cost.
At 31 December
        2005, HSBC recognised an additional minimum pension liability of US$3,206
        million (2004: US$3,261 million) in respect of its unfunded accumulated
        benefit obligation. This liability was partially offset in 2004 by an
        intangible asset of US$12 million. The net effect of these items
        was to increase HSBC's total shareholders' equity under US
        GAAP by US$1,585 million (2004:
US$1,557million) compared with the net pension surplus or deficit recognised
under IFRSs.
Estimated
    pension costs for these plans computed under SFAS 87 are as follows:
2005
2004
US$m
US$m
Components
      of net periodic benefit cost
Service
      cost
666
573
Interest
      cost
1,314
1,247
Expected
      return on plan assets
(1,355
)
(1,309
)
Amortisation
      of prior service cost
7
7
Amortisation
      of recognised net actuarial loss
165
142
Curtailment
(4
)
225
Net
      periodic pension cost
793
885
The
        US GAAP pension cost of US$793 million (2004: US$885 million)
    compares with US$618 million under IFRSs (2004: US$760 million).
2005
2004
US$m
US$m
Funded
      status as per IFRSs balance sheet note 7
(3,941
)
(5,573
)
Unrecognised net actuarial loss
4,756
4,757
Unrecognised
      prior service cost
35
49
Accrued
      pension cost
850
(767
)
Additional minimum liability
(3,206
)
(3,261
)
Intangible
      assets
–
12
Net
      amount recognised under US GAAP
(2,356
)
(4,016
)
Amounts recognised under US GAAP in the balance sheet consist of:
–
prepaid
      benefit cost
1,434
783
–
accrued benefit liability
(584
)
(1,550
)
–
additional
      minimum liability
(3,206
)
(3,261
)
–
intangible assets
–
12
(2,356
)
(4,016
)
US GAAP adjustment
Amount
      recognised under US GAAP
(2,356
)
(4,016
)
Amounts recognised for these schemes under IFRSs
(3,941
)
(5,573
)
1,585
1,557
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In 2005,
          plans with an aggregate accumulated benefit obligation of US$21,098
          million
(2004:
          US$20,566 million) and assets with an aggregate fair value of US$18,444
          million (2004: US$16,128 million) had an accumulated benefit obligation
          in excess of plan assets. Plans with an aggregate projected benefit
          obligation of US$22,595 million (2004: US$22,914 million) and
          assets with an aggregate fair value of US$18,795 million (2004:
          US$17,422 million) had a projected benefit obligation in excess
          of plan assets.
The projected
        benefit obligations at 31 December 2005 and 2004 for HSBC's main
        pension plans have been calculated using the same financial assumptions
    as detailed in note 7.
The
      accumulated benefit obligation in respect of the above schemes was:
2005
2004
US$m
US$m
HSBC
      Bank (UK) Pension Scheme
19,709
19,063
Other
      schemes
5,241
4,829
Post-retirement
      benefits
The
      components of post-retirement expense for HSBC's schemes were as follows:
2005
2004
US$m
US$m
Components
      of net periodic post-retirement benefit cost
Service
      cost
18
17
Interest
      cost
63
58
Expected
      return on plan assets
(10
)
(8
)
Amortisation
      of prior service cost
(13
)
(2
)
Amortisation
      of transition obligation
8
12
Net
      periodic post-retirement benefit cost
66
77
2005
2004
US$m
US$m
Funded
      status of plan
Funded
      status at 31 December per IFRSs note 7
(928
)
(903
)
Unrecognised
      net actuarial (gain)/loss
43
(5
)
Unrecognised
      net transition obligation
24
32
Accrued
      post-retirement benefit obligation US GAAP
(861
)
(876
)
The
      projected benefit obligations at 31 December 2005 and 2004 for HSBC's
      main post-retirement healthcare plans have been calculated using the same
      financial assumptions as detailed in note 7.
(b)
Goodwill
Goodwill
      arises on the acquisition of subsidiary or associated undertakings when
      the cost of acquisition exceeds the fair value of HSBC's share of the
      identifiable assets, liabilities and contingent liabilities acquired.
Under IFRSs
      (and before them, UK GAAP), goodwill arising on acquisitions made on or
      after 1 January 1998 is included in the balance sheet in 'Goodwill
      and intangible assets' in respect of subsidiary undertakings, and in
      'Interests in associates and joint ventures' in respect of associates
      and joint ventures. Capitalised goodwill was amortised over its estimated
      useful life on a straight-line basis until the adoption of IFRSs on 1 January
      2004, since then it is not amortised but is subject to annual impairment
      testing. Goodwill arising on acquisitions prior to 1 January 1998 was charged
      against reserves in the year of acquisition. This goodwill was not reinstated
      on the balance sheet upon adoption of IFRSs.
Under US
      GAAP, goodwill on acquisitions made before 1 July 2001, including those
      made before 1 January 1998, would have been capitalised and amortised over
      its useful economic life. Goodwill on acquisitions made after 1 July 2001
      is capitalised but not amortised, and is subject to annual impairment testing.
      Goodwill on acquisitions made before 1 July 2001 ceased to be amortised
      on 1 January 2002 and is subject to annual impairment testing.
At 31 December
      2005, the cost of goodwill arising on the acquisition of subsidiary undertakings
      on a US GAAP basis was US$34,147 million (2004: US$36,084 million)
      and the accumulated amortisation of goodwill was US$3,873 million (2004:
      US$4,385 million).
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
(c)
Intangible
      assets
The following
      intangible assets were recognised under US GAAP:
2005
2004
US$m
US$m
Balance
      brought forward at 1 January
4,608
4,421
Additions
580
532
On
      acquisition of subsidiaries
271
572
Amortisation
      charge
(905
)
(836
)
Provision
      for impairment
34
(102
)
Exchange
      differences and other movements
114
21
Balance
      carried forward at 31 December
4,702
4,608
Since 1
      January 2004, the accounting treatment for intangible assets has been consistent
      between IFRSs and US GAAP. The additional intangible assets recognised under
      US GAAP represent those acquired in business combinations during the period
      between SFAS 141 'Business combinations' becoming effective on
      30 June 2001 and IFRSs being adopted on 1 January 2004. They primarily comprise
      credit card and other loan relationships, merchant relationships and other
      intangibles assumed on the acquisition of HSBC Finance.
Provision
      for impairment in 2004 relates to the write-down of mortgage servicing rights,
      as a low interest rate environment has encouraged consumers to refinance
      mortgages at a faster rate than initially expected. Part of this provision
      was released in 2005 as prepayment rates slowed.
HSBC conducts
      an annual impairment test of intangible assets which are not subject to
      annual amortisation since HSBC determines these assets have indefinite lives.
      As a result of this testing, an impairment charge of US$13 million was
      recorded related to a trade name in the United Kingdom.
At
      31 December 2005
Weighted
      average
amortisation
period
Months
Cost
US$m
Accumulated
amortisation
US$m
Carrying
value
US$m
Intangible
      assets subject to annual amortisation
Purchased
      credit card relationships and related
programmes
111
2,039
(462
)
1,577
Retail
      services merchant relationship
60
270
(149
)
121
Other
      loan related relationships
110
326
(104
)
222
Mortgage
      servicing rights
66
985
(567
)
418
Technology,
      customer lists and other contracts
60
2,514
(1,554
)
960
Core
      deposit relationships
215
237
(127
)
110
Other
67
436
(39
)
397
6,807
(3,002
)
3,805
Intangible
      assets not subject to annual
amortisation
Trade
      name
910
(13
)
897
7,717
(3,015
)
4,702
The intangible
      asset amortisation expense under US GAAP for the next five years is estimated
      to be:
2006
2007
2008
2009
2010
US$m
US$m
US$m
US$m
US$m
Amortisation
      charge
701
662
605
562
423
(d)
Derivatives
      and hedge accounting
Under
        IFRS,  all derivatives are recorded at fair value, consistent with US
        GAAP. Under
      IFRS, HSBC has elected either hedge accounting or fair value option for
         certain hedging relationships. With the exception of US operating subsidiaries,

      HSBC has not elected hedge accounting in its US GAAP financial statements.
HSBC's
      US operating subsidiaries designate certain derivative financial  instruments
      as qualifying hedges of under SFAS 133.
When the
      critical terms of the hedge instrument are identical to those of the hedged
      item at the hedge inception date, HSBC's US subsidiaries make use of the
      assumption of no ineffectiveness in its fair value hedge accounting
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(commonly
      referred to as the 'shortcut' method) for certain of these hedging relationships.
      As a result, no retrospective or prospective assessment of effectiveness
      is required and no hedge ineffectiveness is recognised. If any one of the
      criteria for utilising the shortcut method was not met, the hedging relationship
      was either accounted for under the 'long-haul' method whereby effectiveness
      is assessed and ineffectiveness on effective hedges is recorded in the income
      statement, or the hedge relationship was determined to be ineffective for
      accounting purposes and the derivative was marked to market with gains and
      losses recorded directly in net income.
During
      2005, new designations of hedges have generally been designated using the
      long-haul method of accounting under SFAS 133 and certain relationships
      have been re-designated using this method. As a result, there were no longer
      any cash flow hedges using the shortcut method of accounting at 31 December
      2005, and HSBC's US operating subsidiaries have significantly reduced
      the number of fair value hedges using the shortcut method of accounting
      at this date.
The following
      table summarises HSBC's hedges of financial instruments that have been designated
      and qualify as effective hedges under SFAS 133 at the end of the period
.
Nominal
      values
Number
      of derivatives
Fair
      value
Cash
      flow
Fair
      value
Cash
      flow
Fair
      value
Cash
      flow
Fair
      value
Cash
      flow
hedges
hedges
hedges
hedges
hedges
hedges
hedges
hedges
2005
2005
2004
2004
2005
2005
2004
2004
US$bn
US$bn
US$bn
US$bn
US$bn
US$bn
US$bn
US$bn
Financial
investments:
Available
        for
sale
        debt
securities
Shortcut
–
–
1.0
–
1
–
38
–
Long-haul
0.2
–
–
–
10
–
–
–
Customer
deposits
Shortcut
–
–
1.0
10.4
–
–
8
17
Long-haul
–
6.8
–
5.8
1
17
–
17
Debt
        securities
in
        issue and
subordinated
liabilities
Shortcut
3.0
–
16.5
11.6
16
–
119
106
Long-haul
18.2
46.8
9.3
6.6
45
165
29
10
Total
21.4
53.6
27.8
34.4
73
182
194
150
Fair
      value hedges
HSBC's
      US operating subsidiaries designate certain derivative financial instruments
      as qualifying fair value hedges of certain fixed rate assets and liabilities
      under SFAS 133. In order to qualify initially, hedge effectiveness is assessed
      and demonstrated on a prospective basis utilising statistical regression
      analysis
.
2004
During
      2004, the short-cut method of accounting could not be utilised for a small
      number of fair value hedges of fixed rate liabilities. Ineffectiveness of
      such fair value hedges recognised in 2004 in net income under US GAAP (but
      not under IFRS) was a gain of US$1 million.
HSBC's
      US mortgage bank has historically hedged fixed rate closed residential mortgage
      loans held for sale with forward sale commitments. In 2004, ineffectiveness
      on these hedging activities recognised in net income under US GAAP (but
      not under IFRS) was a gain of US$2 million. Such hedging activity was
      ceased on 30 September 2005.
2005
Since
        1 January 2005, almost all derivatives designated as fair value hedges
        under US GAAP in HSBC's US operating subsidiaries have been reported
        under the fair value option for IFRSs purposes, with movements in fair
        value reported as 'Net income from financial instruments designated
        as at fair value'.
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H S B C   H
  O L D I N G S   P L C
Notes
  on the Financial Statements
(continued)
Reporting
      of these arrangements as fair value hedges under US GAAP resulted in decreased
      net income for 2005 of US$179 million, including US$7 million arising
      from elimination of losses due to movements in own credit spread recorded
      in IFRSs net income and reduced ineffectiveness of US$172 million on
      shortcut fair value hedges for US GAAP purposes.
In addition,
      there were US$102 million of losses on such derivatives that did not
      qualify for hedging accounting under US GAAP.
On electing
      to report under the fair value option under IAS 39, unamortised purchase
      accounting adjustments on HSBC Finance Corporation's own debt were eliminated
      through retained earnings upon transition to IAS 39 on 1 January 2005. As
      a result, a US$409 million benefit to 2005 US GAAP net income was not
      recognised under IFRS.
Cash
      flow hedges
HSBC's
      US operating subsidiaries designate under SFAS 133 certain derivative financial
      instruments, including interest rate swaps and future contracts, as qualifying
      cash flow hedges of the forecast repricing of certain deposit liabilities
      and issues of debt. A number of variable rate commercial loans were also
      subject to cash flow hedges up until 2004.
In order
      to qualify initially, hedge effectiveness is assessed and demonstrated on
      a prospective basis utilising both statistical regression analysis and the
      cumulative dollar offset method. The latter is used in order to satisfy
      the retrospective assessment of effectiveness for SFAS 133, and subsequent
      ineffectiveness is recognised in the income statement on a monthly basis.
      The time value component of the derivative contracts is excluded from the
      assessment of hedge effectiveness.
2004
Ineffectiveness
      of cash flow hedging activities resulted in a loss of US$1 million being
      recognised in net income reported under US GAAP for 2004. Shareholders'
      equity at 31 December 2004 increased by US$133 million under US GAAP
      as a result of these hedges.
2005
Since
        1 January 2005, such hedging arrangements have been recognised as cash
        flow hedges for IFRSs purposes. US GAAP net income for 2005 was lower
        than that under IFRSs by US$6 million, relating to unrecorded ineffectiveness
        on shortcut cash flow hedges for US GAAP purposes.
Trading
      derivatives
2004
All other
      IFRSs hedging derivatives were marked to market in 2004 for US GAAP purposes
      with the gain or loss recognised in net income for the period. This gave
      rise to an increase in US GAAP reported net income for 2004 of US$210
      million. The other principal effect of applying SFAS 133 at 31 December
      2004 was to reduce 'Other assets' by US$5,487 million and
      'Other liabilities' by US$5,754 million. Under IFRSs, prior
      to 2005, internal derivatives used to hedge banking book transactions could
      be accruals accounted but, under US GAAP, all derivatives were held at fair
      value.
2005
From 1
      January 2005, certain hedging relationships outside North America were elected
      and qualified as fair value hedges, were designated under the fair value
      option, or were elected and qualified as cash flow hedges under IAS 39,
      but were not elected as hedges under SFAS 133. The mark to market for these
      derivatives has been reported directly in net income for US GAAP purposes.
For fair
      value hedges recognised under IFRSs, no corresponding, offsetting fair value
      movement of the hedged item with respect to the hedged risk has been recorded
      for US GAAP purposes. For hedging relationships designated as at fair value
      for IFRSs purposes, no fair value movement in respect of own debt is recorded
      under US GAAP.
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The
      effect of this was to decrease US GAAP net income by US$1,266 million,
      net of elimination of a loss under IFRS of US$76 million of own credit
      spread, outside North America.
Fair
      value option
2005
      only
HSBC
      has also applied the fair value option under IFRSs to groups of financial
      assets and liabilities which are managed and evaluated on a fair value basis,
      and to financial instruments containing embedded derivatives (see note 3).
      In addition, movements in the fair value of certain liabilities which meet
      the definition of 'held for trading' under IAS 39 are taken through
      net income. US GAAP does not include a fair value election and does not
      generally permit liabilities to be reported at fair value. The elimination
      of such accounting reduced US GAAP net income for 2005 by US$733 million.
(e)
Foreign
      exchange gains on available-for-sale securities
HSBC
      holds, in a number of different currencies, securities which are classified
      as available-for-sale within individual legal entities. For example, in
      the private bank in Switzerland, for which the US dollar is the reporting
      currency, the Group holds euro-denominated bonds funded in euros and Swiss
      franc securities funded in Swiss francs. No foreign exchange exposure arises
      from this because, although the value of the assets in US dollars changes
      with the exchange rate, there is an identical offsetting change in the US
      dollar value of the related funding. Under IFRSs both the assets and the
      liabilities are translated at closing exchange rates and the differences
      between historical book value and current value are reflected in foreign
      exchange dealing profits. This reflects the economic substance of holding
      currency assets financed by currency liabilities.
However,
      under US GAAP, SFAS 115 and Emerging Issues Task Force ('EITF')
      Abstract 96-15 'Accounting for the Effects of Changes in Foreign Currency
      Exchange Rates on Foreign-currency-denominated Available-for-sale Debt Securities'
      the change in value of the investments classified as available-for-sale
      is taken directly to reserves while the offsetting change in US dollar terms
      of the borrowing is taken to earnings. This leads to an accounting result
      which, although in compliance with US GAAP, does not necessarily reflect
      either the underlying risk position or the economics of the transactions.
      It is also a situation that will reverse on maturity of the asset or earlier
      sale. A similar difference arises when foreign currency exposures on foreign
      currency assets are covered using forward contracts but HSBC does not manage
      these hedges to conform with the detailed hedge designation requirements
      of SFAS 133.
The result
      is that for 2005, US GAAP net income increased by US$2,235 million (2004:
      increased by US$1,069 million) compared with IFRSs net income. There
      was no difference in total shareholders' equity between IFRSs and US
      GAAP as a result of this reconciling item.
The
      adjustment for 2005 and 2004 largely reflects the reversal of adjustments
      in prior periods on the maturity or disposal of securities. The impact in
      2005 also included increased US GAAP net income as a result of a strengthening
      of the US and Hong Kong dollar against the principal currencies in which
      HSBC hold available for sale securities. The impact in 2004 was offset by
      the effect of a weakening in the US and Hong Kong dollar against these principal
      currencies.
(f)
Investment securities
Under
      US GAAP, HSBC's financial investments with a readily determinable market
      value are classified as available-for-sale securities, except for certain
      securities held by Republic New York Corporation at acquisition, which were
      classified as held-to-maturity. All other securities are categorised as
      trading securities.
HSBC
      has taken advantage of the exemption within IFRS 1 from presenting comparative
      information for 2004 in accordance with IAS 32 and IAS 39. Consequently,
      comparative IFRSs information has been prepared in accordance with HSBC's
      previous accounting policies, disclosed separately in Note 46(g).
In
      2005, the IFRSs to US GAAP adjustment to financial instruments reduces shareholders'
      equity by US$597 million because under US GAAP equity shares that do
      not have a readily determinable fair value (as defined in SFAS 115) are
      measured at cost less provision for any permanent diminution in value. This
      is lower than the fair value at which they are measured under IAS 39, which
      is determined by comparison to similar equity investments which are quoted,
      or by using discounted cash flow calculations.
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
In
            2004, all financial investments were reported under IFRSs at cost
            less provision for any permanent diminution in value. The increase
            in the US GAAP balance sheet of US$1,969 million represents the
            excess of fair value over cost (less provisions for permanent diminution
            in value) for debt securities and equity shares with a readily determinable
    fair value.
The
            amortised cost of available-for-sale investment securities which
            are subject to the provisions of SFAS 115 was US$188,868 million
            (2004: US$173,607 million) under US GAAP. During the year, excluding
            the effects of foreign exchange, US$899 million (2004: gains
            of US$376 million) of net unrealised losses on available-for-sale
            securities were included in 'Other comprehensive income'.
            US$626 million (2004: gains of US$476 million) of net gains
            were reclassified out of 'Other comprehensive income' and
    recognised as part of income for the year.
During
            2004, HSBC recorded net losses under US GAAP of US$127 million
            in respect of impairments of available-for-sale securities which
            were considered to be other than temporary. These losses were treated
            as realised items and included in net income. Since 1 January 2005,
            the recording of impairments of available-for-sale securities has
    been consistent between IFRSs and US GAAP.
Available-for-sale
Unrealised
    losses on investment securities
The
            following investment securities that had unrealised losses at 31
            December 2005 were not considered 'other-than-temporarily' impaired
    under US GAAP:
Period
    investment has been in an unrealised loss position
Less than one year
Greater
    than or equal to one
year
Total
Unrealised
Unrealised
Unrealised
Fair value
losses
Fair value
losses
Fair value
losses
US$m
US$m
US$m
US$m
US$m
US$m
US Treasury
1,136
(22
)
78
(1
)
1,214
(23
)
US Government agencies
1,385
(28
)
570
(24
)
1,955
(52
)
US
    Government sponsored
entities
8,955
(192
)
2,811
(100
)
11,766
(292
)
UK Government
56
–
225
(1
)
281
(1
)
Hong Kong Government
1,259
(23
)
126
–
1,385
(23
)
Other governments
3,457
(33
)
6,187
(54
)
9,644
(87
)
Asset-backed securities
1,522
(7
)
367
(5
)
1,889
(12
)
Corporate
    debt and other
securities
32,423
(284
)
8,726
(131
)
41,149
(415
)
Debt securities
50,193
(589
)
19,090
(316
)
69,283
(905
)
Equity securities
52
(6
)
–
–
52
(6
)
Total
50,245
(595
)
19,090
(316
)
69,335
(911
)
Under
          US GAAP, 3,615 debt security investments and 15 investments in equity
    shares had unrealised losses at 31 December 2005.
Under
          both IFRSs and US GAAP, HSBC recognises in the income statement
an 'other-than-temporary' impairment if the market value of an investment
security has been significantly below its carrying value for a period exceeding
six months. The only exception to this policy is in respect of debt securities
whose decline in market value is due solely to an increase in underlying interest
rates, and which HSBC has the ability to hold until maturity. None of the securities
disclosed in the table above were considered 'other-than-temporarily' impaired
at 31 December 2005.
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(g)
Taxation
The
              components of the net deferred tax liability calculated under SFAS
    109 'Accounting for income taxes', were as follows:
2005
2004
US$m
US$m
Deferred tax liabilities
Leasing transactions
2,533
1,924
Capital allowances
138
280
Provision for additional UK tax on overseas dividends
18
107
Reconciling items
2,163
2,661
Other
2,004
1,101
Total deferred tax liabilities
6,856
6,073
Deferred tax assets
Loan impairment allowances
1,974
2,530
Tax losses
587
827
Reconciling items
1,050
3,066
Other
4,981
2,254
Total deferred tax assets before valuation allowance
8,592
8,677
Less: valuation allowance
(794
)
(1,062
)
Deferred tax assets less valuation allowance
7,798
7,615
Net deferred tax asset under SFAS 109
942
1,542
Included within 'other assets' under US GAAP
2,717
3,272
Included within 'deferred tax liabilities' under US
    GAAP
(1,775
)
(1,730
)
The valuation allowance against deferred tax assets principally relates to trading and capital losses carried forward, which have not been recognised due to uncertainty over their
utilisation. A valuation allowance is established to reduce deferred tax assets if, based on available evidence, it is considered more likely than not that any of the deferred tax assets will not be realised.
At 31 December 2005, HSBC had recognised deferred tax assets in
respect of tax losses (net of valuation allowances) totalling US$223 million (2004: US$115 million), of which
US$4 million (2004: US$7 million) expire within two to five years and US$219 million (2004: US$108
million) expire in 5 years or more.
(h)
Loans and advances
Loans assessed under SFAS 114 'Accounting by creditors for
impairment of a loan'
SFAS 114 was amended by SFAS 118 'Accounting by creditors for impairment of a loan – income recognition and disclosures'. SFAS 114 addresses accounting by creditors for
impairment of a loan by specifying how allowances for credit losses for certain loans should be determined. A loan is impaired when it is probable that the creditor will be unable to collect all amounts in accordance with the contractual terms of
the loan agreement. Impairment is measured based on the present value of expected future cash flows discounted at the loan's effective rate or, as an expedient, at the fair value of the loan's
collateral. Leases, smaller-balance homogeneous loans and debt securities are
excluded from the scope of SFAS 114.
At 31 December 2005, HSBC estimated that the difference between
the carrying value of its loan portfolio on the basis of SFAS 114 and its value
in HSBC's IFRSs financial statements
was such that no adjustment to net income or total shareholders' equity
was required.
The value of impaired loans at 31 December 2005 was US$11,535 million (2004: US$12,453 million). Of this total, loans which were included within the scope of SFAS 114 and for
which a provision had been established amounted to US$5,082 million (2004: US$6,780 million). The impairment reserve in respect of these loans estimated in accordance with the provisions of SFAS 114 was US$2,675 million (2004:
US$3,981 million). During the year ended 31 December 2005, impaired loans, including those excluded from the scope of SFAS 114, averaged US$11,289 million (2004: US$13,739 million) and interest income recognised on these loans was
US$120 million (2004: US$184 million).
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
Loans
    outside the scope of SFAS 114
For smaller-balance homogeneous loans for which
      future cash flows from written-off balances can reasonably be estimated
      on a portfolio basis, an asset equal to the present value of the cash flows
      is recognised under IFRSs as it was previously under UK GAAP. This asset
      is not recognised for US GAAP purposes. This divergence resulted in higher
      net income in 2005 of US$20 million under US GAAP compared with IFRSs,
      and a reduction in the carrying value of loans and advances to customers
      and shareholders' equity at 31 December 2005 of US$327 million.
      There was no difference in reported net income or shareholders' equity
    for 2004.
(i)
Earnings per share
Basic earnings per share under US GAAP, SFAS 128 'Earnings per Share', is calculated by dividing net income of US$14,703 million (2004: US$12,506
million) by the weighted average number of ordinary shares in issue in 2005 of
11,042 million (2004: 10,916 million).
Diluted earnings per share under US GAAP is calculated by dividing net income, which requires no adjustment for the effects of dilutive ordinary potential shares, by the weighted average
number of shares outstanding plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares in 2005 of 11,334 million (2004: 11,063 million).
(j)
Variable interest entities ('VIEs')
Nature, purpose and activities of VIEs with which HSBC is involved
HSBC uses VIE structures in the normal course of business in a variety
of activities (outlined below), but primarily to facilitate client needs. HSBC's involvement in VIEs is,
therefore, commercially driven. VIEs are only used after careful consideration is given to the most appropriate structure to achieve HSBC's
objectives from control, risk allocation, taxation and regulatory perspectives.
The main VIEs are
discussed below.
(i)
Asset-backed conduits ('ABCs') and securitisation
    vehicles
ABCs and securitisation vehicles are structures in which interests in consumer and commercial receivables are sold to investors. ABCs generally consist of entities which purchase assets
from clients to meet their financing needs, while securitisation vehicles generally acquire assets originated by HSBC itself and thereby provide HSBC with a cost-effective source of financing. Under both structures, commercial paper, notes, or
equity interests are issued to investors to fund the purchase of receivables, and cash received from the receivables is used to service the finance provided by the investors. In certain instances, HSBC receives fees for providing liquidity facility
commitments and for acting as administrator of the vehicle.
HSBC's exposure to loss generally arises from commitments to
provide back-up liquidity facilities for the vehicles; interest-rate swaps in
which HSBC is the counterparty; retained or acquired interests in the receivables
sold; or acquired interests in the vehicles themselves. In certain vehicles,
the risk of loss to HSBC is reduced by credit enhancements provided by the originator
of the receivables or other
parties.
In addition to these securitisation vehicles, HSBC (primarily through its North American subsidiaries) securitises assets through entities that are not considered VIEs, including
government-sponsored financing vehicles and vehicles considered qualifying special-purpose entities under US GAAP. These entities are not consolidated under US GAAP although certain of them are consolidated under IFRSs.
(ii)
Infrastructure projects and funds
HSBC acts as an arranger for both public and private infrastructure
projects and funds. The use of VIE structures in such projects is common as a
method of attracting a wider class of investor by dividing into tranches the
risk associated with such projects. HSBC's exposure to loss generally arises
from the provision of subordinated or mezzanine debt finance to projects, either
directly or through a consolidated investment fund investing in infrastructure
projects.
HSBC is deemed to be the primary beneficiary of an infrastructure
project or fund when its investment in a project's equity, subordinated
debt or mezzanine debt, or its interest in a fund, is at a level at which it
absorbs the majority of the expected losses or residual returns of the project
or fund.
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Application
    of FIN 46R
FIN
              46R requires the consolidation of VIEs in which HSBC is the primary
              beneficiary, and disclosures in respect of other VIEs in which
    HSBC has a significant variable interest.
Under
              IFRSs, HSBC consolidates entities in which it has a controlling
              interest. As IFRSs normally require a risk and rewards approach
              to consolidation, HSBC's interests in entities deemed to be
              VIEs may result in differences in accounting and disclosure treatment
    under US GAAP.
The
          following table analyses HSBC's total consolidated VIE assets
    in a US GAAP balance sheet:
At 31 December
2005
2004
US$m
US$m
Classification
Loans and advances to customers
23,843
12,256
Debt securities and equity shares
4,403
1,996
Tangible fixed assets
2,017
1,865
Other assets
256
599
30,519
16,716
Of the 2005 total, US$23,843 million (2004: US$12,256 million) represented asset-backed commercial paper conduits and securitisation vehicles, and US$2,017 million (2004:
US$1,612 million) represented infrastructure projects and funds. The remaining balance consisted of guaranteed pension funds, investment funds, and other entities. Certain of these entities with assets of approximately US$19,475 million at
31 December 2005 (2004: US$12,256 million) were consolidated by HSBC in its
IFRSs financial statements. There was no significant impact on net income under
US GAAP for the year ended 31 December 2005 as a result of consolidating these
VIEs.
HSBC also had significant involvement in, but was not the primary
beneficiary of, VIEs with total assets of approximately US$86.2 billion (2004:
US$32.8 billion), including
asset-backed commercial paper conduits and securitisation vehicles with assets
of approximately US$14.7 billion (2004: US$15.8 billion), infrastructure
projects and funds of approximately US$6.2 billion (2004: US$4.5 billion),
and  interests in investment funds, low income housing tax credit partnerships,
guaranteed pension funds, government debt restructuring programmes and other
entities. HSBC's maximum exposure to loss in relation to these entities
was estimated at
US$9.7 billion (2004: US$10.7 billion) which arose from guarantees, retained
interests and recourse liabilities. HSBC was also involved in other investment
funds and similar entities that are considered VIEs for which its involvement
was
limited to that of administrator, investment adviser, or other service provider.
In addition, HSBC had an interest in certain capital funding vehicles
that are consolidated under IFRSs. However, under US GAAP, these vehicles were
not recognised on HSBC's balance
sheet because it was not the primary beneficiary. HSBC's deconsolidation of these vehicles resulted in non-equity minority interests under IFRSs of US$10,114
million being reclassified as subordinated liabilities under US GAAP at 31 December
2004.
(k)
Consolidated cash flow statement
HSBC prepares its cash flow statement in accordance with IAS 7 'Cash Flow Statements', which is consistent with the objectives and principles of SFAS 95 'Statement of Cash
Flows' as amended by SFAS 104 'Statement of Cash Flows – Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions'.
(l)
Securitisations
HSBC Finance
Following the acquisition of HSBC Finance Corporation in 2003, HSBC
increased its securitisation activity and the following discussion relates only
to HSBC Finance Corporation's
securitisation activities including securitised credit card receivables transferred to HSBC Bank USA. In other HSBC entities such activities do not represent a significant part of HSBC's
business and retained interests in securitisations are
not significant.
In the third quarter of 2004, HSBC began to structure all new collateralised
funding transactions as secured financings. In a secured financing, the underlying
receivables and debt remain
on HSBC's balance sheet. HSBC
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
does
          not recognise a gain in a secured financing transaction. At 31 December
          2005, secured financings of US$18.2 billion included in long-term
    debt were secured by US$25.6 billion of customer loans.
Prior
            to the third quarter of 2004, HSBC sold MasterCard and Visa private
            label, personal non-credit card and vehicle finance loans in various
            securitisation transactions. HSBC continues to service and receive
            servicing fees on the outstanding balance of these securitised loans
            and retains rights to future cash flows arising from the loans after
            the investors receive their contractual return. HSBC has also, in
            certain cases, retained other subordinated interests in these securitisations.
            These transactions result in the recording of interest-only strip
            receivables, which represent the value of the future residual cash
            flows from securitised loans. The investors and the securitisation
            trusts have only limited recourse to HSBC assets for failure of debtors
            to pay. That recourse is limited to HSBC's rights to future
            cash flows and any subordinated interest retained. Servicing assets
            and liabilities are not recognised in conjunction with securitisations
            since HSBC receives adequate compensation relative to current market
            rates to
service the loans sold.
Securitisation-related
            revenue includes income associated with the current and prior period
            securitisation of loans with limited recourse structured as sales
            under US GAAP. Such income includes gains on sales, net of the estimate
            of probable credit losses under the recourse provisions, servicing
    income and excess spread relating to those loans.
The
    following table provides a summary of securitisation revenue:
2005
2004
US$m
US$m
Net initial gains
–
25
Net replenishment gains from revolving securitisations
154
414
Servicing revenue and excess spread
212
569
Other
6
–
Total securitisation revenue
372
1,008
Interest-only
        strip receivables, net of the related losses and excluding the fair value
        adjustment recorded in accumulated 'Other comprehensive income' decreased
        by US$258
million in 2005 (2004: US$466 million).
Net
        initial gains, which represent
gross initial gains net of management's estimate of probable credit losses
under the recourse provisions, and the key economic assumptions used in measuring
the net initial gains from securitisations,
were as follows:
Personal
Vehicle
MasterCard/
Private
non-credit
2005
finance
Visa
label
card
Total
Net initial gains (US$ millions)
–
–
–
–
–
2004
Net initial gains (US$ millions)
6
1
14
5
–
25
Key economic assumptions
2
Weighted average life (in years)
2.1
0.3
0.4
–
Payment speed
35.0
%
93.5
%
93.5
%
–
Expected
    credit losses (annual rate)
5.7
%
4.9
%
4.8
%
–
Discount
    rate for future cash flows
10.0
%
9.0
%
10.0
%
–
Cost of funds
3.0
%
1.5
%
1.4
%
–
1
In
          2004, vehicle finance was involved in a securitisation which later
          was restructured as a secured financing. The initial gain reflected
          above was the gain on the initial transaction that remained after the
          securitisation was restructured.
2
Weighted
          average rates for securitisations entered into during the year for
          securitisations of loans with similar characteristics.
Certain
        revolving securitisation trusts, such as credit cards, are established
        at fixed levels and require frequent sales of new loan balances into
        the trusts to replace loans as they run off. These replenishments totalled
        US$17.5 billion in 2005 (2004: US$30.3 billion). Net gains (gross
        gains less estimated credit losses under the recourse provisions) related
        to these replenishments were calculated using weighted average assumptions
        consistent with those used for calculating gains on initial securitisations,
        and totalled US$154
million
in 2005 (2004: US$414 million).
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Cash
    flows received from securitisation trusts were as follows:
Personal
Real estate
Vehicle
MasterCard/
Private
non-credit
secured
finance
Visa
label
card
Total
US$m
US$m
US$m
US$m
US$m
US$m
2005
Proceeds
    from initial
securitisations
–
–
–
–
–
–
Servicing fees received
–
45
97
50
99
291
Other
              cash flows received on
retained
              interests
1
–
(30
)
239
109
(2
)
316
2004
Proceeds
    from initial
securitisations
–
–
550
190
–
740
Servicing fees received
1
86
185
93
161
526
Other
              cash flows received on
retained
              interests
1
4
(9
)
705
252
80
1,032
1
Other
            cash flows included all cash flows from interest-only strip receivables,
            excluding servicing
fees.
At
          31 December 2005, the sensitivity of the current fair value of the
          interest-only strip receivables to an immediate 10 per cent and 20
          per cent unfavourable change in assumptions are presented in the table
          below. These sensitivities are based on assumptions used to value interest-only
    strip receivables at 31 December 2005.
Personal
Vehicle
MasterCard/
Private
non-credit
finance
Visa
label
card
Carrying
              value (fair value) of interest-only strip
receivables
    (US$ millions)
(13
)
20
15
16
Weighted average life (in years)
1.2
0.3
0.5
0.5
Payment speed assumption (annual rate)
55.8
%
96.3
%
82.8
%
86.9
%
Impact
    on fair value of 10% adverse change (US$ millions)
–
(2
)
(1
)
(1
)
Impact
    on fair value of 20% adverse change (US$ millions)
–
(4
)
(2
)
(2
)
Expected credit losses (annual rate)
10.6
%
4.6
%
4.9
%
9.4
%
Impact
    on fair value of 10% adverse change (US$ millions)
(12
)
(2
)
(3
)
(4
)
Impact
    on fair value of 20% adverse change (US$ millions)
(25
)
(3
)
(6
)
(8
)
Discount rate for residual cash flows (annual rate)
10.0
%
9.0
%
10.0
%
11.0
%
Impact
    on fair value of 10% adverse change (US$ millions)
(2
)
–
–
–
Impact
    on fair value of 20% adverse change (US$ millions)
(3
)
–
–
–
Variable returns to investors (annual rate)
–
2.9
%
5.1
%
5.7
%
Impact
    on fair value of 10% adverse change (US$ millions)
–
(1
)
(4
)
(2
)
Impact
    on fair value of 20% adverse change (US$ millions)
–
(2
)
(7
)
(5
)
These
        sensitivities are hypothetical and should not be considered to be predictive
        of future performance. As the figures indicate, the change in fair value
        based on a 10 per cent variation in assumptions cannot necessarily be
        extrapolated because the relationship of the change in assumption to
        the change in fair value may not be linear. Also, in this table, the
        effect of a variation in a particular assumption on the fair value of
        the residual cash flow is calculated independently from any change in
        another assumption. In reality, changes in one factor may contribute
        to changes in another (for example, increases in market interest rates
        may result in lower prepayments) which might magnify or counteract the
        sensitivities. Furthermore, the estimated fair values as disclosed should
    not be considered indicative of future earnings on these assets.
Static
        pool credit losses are calculated by summing actual and projected future
        credit losses and dividing them by the original balance of each pool
        of asset. Due to the short-term revolving nature of MasterCard, Visa,
    and
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H S B C   H
O L D I N G S   P L C
Notes
        on the Financial Statements
(continued)
private
            label loan balances, the weighted average percentage of static pool
            credit losses is not considered to be materially different from the
            weighted average charge-off assumptions used in determining the fair
            value of interest-only strip receivables in the table above. At 31
            December 2005, static pool credit losses for vehicle finance loans
            securitised in 2003 were estimated to be 10.6 per cent and for vehicle
            finance loans securitised in 2002 were estimated to be 14.8 per cent
    (2004: 14.7 per cent).
Activities
    of other North American subsidiaries
Through
              its subsidiaries, HSBC Markets (USA) Inc. and HSBC Bank USA, N.A.,
              HSBC began acquiring residential mortgage loans from unrelated
              third parties in the middle of 2005 with the intention to sell
              these loans to securitisation trusts. HSBC received US$540
              million in proceeds from the initial securitisation transaction
              under this program and recorded a gain on sale of US$6 million.
              HSBC does not service these loans and at 31 December 2005 held
              no residual interests resulting from this transaction. In addition,
              HSBC securitised the net interest margin ('NIM') associated
              with the initial securitisation. A NIM securitisation is a structured
              finance transaction backed by the residual cash flows from an Asset
              Backed Security ('ABS') deal. NIMs are collateralised
              by the excess spread left after absorbing the realised losses and
              satisfying the required over-collateralisation levels in the underlying
              ABS deals. HSBC received US$39 million in proceeds from this
              securitisation transaction and recorded no gain on sale. HSBC holds
              a residual interest of US$14 million resulting from the NIM
              securitisation. The residual interest is recorded in trading assets
              and is measured at fair value in accordance with SFAS 115. As the
              NIM securitisation occurred late in 2005, HSBC received no income
    from the residual interest in 2005.
48
Approval of accounts
These accounts were approved by the Board of Directors on 6 March 2006.
49
Non-statutory accounts
The information set out in these accounts does not constitute the
company's statutory accounts for the years ended 31 December 2005 or 2004. Those accounts have been reported on by
the company's auditors: their reports were unqualified and did not contain
a statement under section 237(2) or (3) of the Companies Act 1985. The accounts
for 2004 have been delivered to the Registrar of Companies and those for 2005
will be
delivered in due course.
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H S B C   H
  O L D I N G S   P L C
Taxation
of
  Shares and Dividends
Taxation
The following is a summary, under current law, of the principal UK tax considerations that are likely to be material to the ownership and disposition of shares. The summary does not
purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of shares. In particular, the summary deals principally with shareholders who are resident in the United Kingdom for UK tax purposes and only
with holders who hold the shares as investments and who are the beneficial owners of the shares, and does not address the tax treatment of certain classes of holders such as dealers in securities. Holders and prospective purchasers should consult
their own advisers regarding the tax consequences of an investment in shares in light of their particular circumstances, including the effect of any national, state or local laws.
Taxation of dividends
Currently no tax is withheld from dividends paid by HSBC Holdings. However, dividends are paid with an associated tax credit which is available for set-off by certain shareholders against
any liability they may have to UK income tax. Currently, the associated tax credit is equivalent to 10 per cent of the combined cash dividend and tax credit, i.e. one-ninth of the cash dividend.
For individual shareholders who are resident in the United Kingdom for taxation purposes and liable to UK income tax at the basic rate, no further UK income
tax liability arises on the receipt of a dividend from HSBC Holdings. Individual shareholders who are liable to UK income tax at the higher rate on UK dividend income (currently 32.5 per cent) are taxed on the combined amount of the dividend and the
tax credit. The tax credit is available for set-off against the higher rate liability, leaving net higher rate tax to pay equal to 25 per cent of the cash dividend. Individual UK resident shareholders are not entitled to any tax credit
repayment.
Although non-UK-resident shareholders are generally not entitled to any repayment of the tax credit in respect of any UK dividend received, some such
shareholders may be so entitled under the provisions of a double taxation agreement between their country of residence and the United Kingdom. However, in most cases no amount of the tax credit is, in practice, repayable.
Information on the taxation consequences of the HSBC Holdings scrip dividends offered in lieu of the 2004 fourth interim dividend and the first,
second
and third interim dividends for 2005 was set out in the Secretary's letters to shareholders of 31 March, 1 June, 31 August and 6 December 2005. In each case, the market value of the
scrip dividend was not substantially different from the dividend forgone and, accordingly, the price of HSBC Holdings US$0.50 ordinary shares (the 'shares') for UK tax purposes for the dividends was the cash dividend
foregone.
Taxation of capital gains
The computation of the capital gains tax liability arising on disposals of shares in HSBC Holdings by shareholders subject to UK capital gains tax can be complex, partly depending on
whether, for example, the shares were purchased since April 1991, acquired in 1991 in exchange for shares in The Hongkong and Shanghai Banking Corporation Limited, or acquired subsequent to 1991 in exchange for shares in other companies.
For capital gains tax purposes, the acquisition cost for ordinary shares is adjusted to take account of subsequent rights and capitalisation issues. Further
adjustments apply where an individual shareholder has chosen to receive shares instead of cash dividends, subject to scrip issues made since 6 April 1998 being treated for tax as separate holdings. Any capital gain arising on a disposal may also be
adjusted to take account of indexation allowance and, in the case of individuals, taper relief. Except for gains made by a company chargeable to UK corporation tax, any such indexation allowance is calculated up to 5 April 1998 only.
If in doubt, shareholders are recommended to consult their professional advisers.
Shares or ADSs held by an individual whose domicile is determined to be the United States for the purposes of the United States-United Kingdom Double
Taxation Convention relating to estate and gift taxes (the 'Estate Tax Treaty') and who is not for such purposes a national of the United Kingdom will not, provided any US Federal estate or gift tax chargeable has been paid, be subject to
UK inheritance tax on the individual's death or on a lifetime transfer of shares or ADSs except in certain cases where the shares or ADSs (i) are comprised in a settlement (unless, at the time of the settlement, the settlor was domiciled in the
United States and was not a national of the United Kingdom), (ii) is part of the business property of a UK permanent establishment of an enterprise, or (iii) pertains to a UK fixed base of an individual used for the performance of independent
personal services. In such cases, the Estate Tax Treaty generally provides
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H S B C   H
  O L D I N G S   P L C
Taxation
      of Shares  and Dividends
(continued)
a credit against US Federal tax liability for the amount of any tax paid in the United Kingdom in a case where the shares or ADSs are subject to both UK inheritance tax and to US Federal
estate or gift tax.
Stamp duty and stamp duty reserve tax
Transfers of shares by a written instrument of transfer generally will be subject to UK stamp duty at the rate of 0.5 per cent of the consideration paid for the transfer, and such stamp
duty is generally payable by the transferee.
An agreement to transfer shares, or any interest therein, normally will give rise to a charge to stamp duty reserve tax at the rate of 0.5 per cent of the
consideration. However, provided an instrument of transfer of the shares is executed pursuant to the agreement and duly stamped before the date on which the stamp duty reserve tax becomes payable, under current UK Inland Revenue practice it will not
be necessary to pay the stamp duty reserve tax, nor to apply for such tax to be cancelled. Stamp duty reserve tax is generally payable by the transferee.
Paperless transfers of shares within CREST, the United Kingdom's paperless share transfer system, are liable to stamp duty reserve tax at the rate of
0.5 per cent of the consideration. In CREST transactions, the tax is calculated and payment made automatically. Deposits of shares into CREST generally will not be subject to stamp duty reserve tax, unless the transfer into CREST is itself for
consideration.
Taxation – US
    residents
The following is a summary, under current law, of the principal UK tax and US Federal tax considerations that are likely to be material to the ownership and disposition of shares or ADSs
by a holder that is a resident of the United States for the purposes of the income tax convention between the United States and the United Kingdom (the 'Treaty'), and is fully eligible for benefits under the Treaty (an 'eligible US
holder'). The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of shares or ADSs. In particular, the summary deals only with eligible US holders that hold shares or
ADSs as capital assets, and does not address the tax treatment of holders that are subject to special tax rules, such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies, persons that hold shares or ADSs as part
of an integrated investment (including a 'straddle') comprised of a share or ADS and one or more other
positions, and persons that own, directly or indirectly, 10 per cent or more of the voting stock of HSBC Holdings. This discussion is based on laws, treaties, judicial decisions and
regulatory interpretations in effect on the date hereof, all of which are subject to change. A new income tax treaty (the 'new Treaty') between the United Kingdom and the United States entered into effect on 1 May 2003 with respect to
withholding taxes on dividends superseding the previous tax treaty (the 'old Treaty'). Following entry into effect of the new Treaty, eligible US holders are no longer entitled to claim a special foreign tax credit in respect of dividends
that was available under the terms of the old Treaty, except for a limited period of time during which such holders may have elected to apply the old Treaty in its entirety in preference to the new Treaty.
Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares or ADSs in light of their
particular circumstances, including the effect of any national, state or local laws.
In general, the beneficial owner of a share or ADS will be entitled to benefits under the new Treaty (and, therefore, will be an eligible US holder) if it is
(i) an individual resident of the United States, a US corporation meeting ownership criteria specified in the new Treaty or other entity meeting criteria specified in the new Treaty; and (ii) not also resident in the United Kingdom for UK tax
purposes. Special rules, including a limitation of benefits provision, may apply. The Treaty benefits discussed below generally are not available to US holders that hold shares or ADSs in connection with the conduct of a business through a permanent
establishment, or the performance of personal services through a fixed base, in the United Kingdom.
Taxation of dividends
An eligible US holder must include cash dividends paid on the shares or ADSs in ordinary income on the date that such holder or the ADS depositary receives them, translating dividends
paid in UK pounds sterling into US dollars using the exchange rate in effect on the date of receipt. Subject to certain exceptions for positions that are hedged or held for less than 61 days, and subject to a foreign corporation being considered a
'qualified foreign corporation' (which includes not being classified for US federal income tax purposes as specified types of foreign investment companies), certain dividends ('qualified dividends') received by an individual
eligible US holder before 2009 generally will be subject to US taxation at a maximum rate of 15 per
404
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cent. Based on the company's audited financial statements and relevant market and shareholder data, HSBC Holdings believes that it was not treated as a passive foreign investment
company, foreign personal holding company, or foreign investment company for US federal income tax purposes with respect to its 2004 or 2005 taxable year. In addition, based on the company's audited financial statements and current expectations
regarding the value and nature of its assets, and the sources and nature of its income, HSBC Holdings does not anticipate being classified as a passive foreign investment company for its 2006 taxable year. Accordingly, dividends paid on the shares
or ADSs generally should be treated as qualified dividends.
Taxation of capital gains
Gains realised by an eligible US holder on the sale or other disposition of shares or ADSs normally will not be subject to UK taxation unless at the time of the sale or other disposition
the holder carries on a trade, profession or vocation in the United Kingdom through a branch or agency or permanent establishment and the shares or ADSs are or have been used, held or acquired for the purposes of such trade, profession, vocation,
branch or agency or permanent establishment. Such gains will be included in income for US tax purposes, and will be long-term capital gains if the shares or ADSs were held for more than one year. A long-term capital gain realised by an individual
holder generally is subject to US tax at a maximum rate of 5 or 15 per cent.
Stamp duty and stamp
duty reserve tax – ADSs
If shares are transferred
into a clearance service or depository receipt ('ADR') arrangement
(which will include a transfer of shares to the Depository) UK stamp duty and/or
stamp
duty
reserve
 tax will be payable. The stamp duty or stamp duty reserve tax is generally payable
on the consideration for the transfer and is payable at the aggregate rate of
1.5 per cent.
The amount of stamp duty reserve tax payable on such a transfer will be reduced by any stamp duty paid in connection with the same transfer.
No stamp duty will be payable on the transfer of, or agreement to transfer, an ADS, provided that the ADR and any separate instrument of transfer or written
agreement to transfer remain at all times outside the United Kingdom, and provided further that any such transfer or written agreement to transfer is not executed in the United Kingdom. No stamp duty reserve tax will be payable on a transfer of, or
agreement to transfer, an ADS effected by the transfer of an ADR.
On a transfer of shares from the Depository to a registered holder of an ADS upon cancellation of the ADS, a fixed stamp duty of £5 per instrument of
transfer will be payable by the registered holder of the ADR cancelled.
US backup withholding tax and information reporting
Distributions made on shares and proceeds from the sale of shares or ADSs that are paid within the United States, or through certain financial intermediaries to US holders, are subject to
information reporting and may be subject to a US 'backup' withholding tax unless, in general, the US holder complies with certain certification procedures or is a corporation or other person exempt from such withholding. Holders that are
not US persons generally are not subject to information reporting or backup withholding tax, but may be required to comply with applicable certification procedures to establish that they are not US persons in order to avoid the application of such
information reporting requirements or backup withholding tax to payments received within the United States or through certain financial intermediaries.
405
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H S B C   H O L
D I N G S   P L C
Shareholder
Information
Fourth
    interim dividend for 2005
The Directors
        have declared a fourth interim dividend of US$0.31 per ordinary share
        (in lieu of a final dividend) which, together with the first, second
        and third interim dividends,
each of US$0.14, already paid, will make a total distribution for the year
of US$0.73 per share, an increase of 11 per cent on 2004. Information on
the scrip dividend scheme and currencies in which shareholders may elect to have
the cash dividend paid will be sent to shareholders on or about 4 April 2006.
The timetable for the dividend is:
2006
Shares
        quoted ex-dividend in London, Hong Kong and Bermuda; ADSs quoted ex-dividend
    in New York
22 March
Record
        date and closure of Hong Kong Overseas Branch Register of shareholders
    for one day
24 March
Shares
    quoted ex-dividend in Paris
27 March
Mailing
          of
Annual
          Report and Accounts 2005
and/or
Annual
          Review 2005
,
          Notice of Annual General Meeting and
dividend
    documentation
4 April
Final
        date for receipt by registrars of forms of election and revocations of
    standing instructions for scrip dividends
27 April
Exchange
    rate determined for payment of dividends in sterling and Hong Kong dollars
2 May
Payment
          date: dividend warrants, new share certificates or transaction advices
          and notional tax vouchers mailed and
shares
    credited to stock accounts in CREST
11 May
Shareholder
    profile
At 31
    December 2005 the register of members recorded the following details:
Number of
Total
Ordinary shares held
Shareholders
Shares Held
1-100
28,090
914,508
101-400
33,477
8,526,648
401-500
8,923
4,039,341
501-1,000
32,077
24,013,213
1,001-5,000
68,843
159,388,080
5,001-10,000
16,134
114,017,890
10,001-20,000
8,853
122,663,721
20,001-50,000
5,204
159,257,896
50,001-200,000
2,635
246,983,711
200,001-500,000
658
208,276,567
500,001 and above
927
10,285,522,367
Total
205,821
11,333,603,942
Memorandum
    and Articles of Association
The discussion
        under the caption "Memorandum and Articles of Association" contained
        in HSBC Holdings Annual Reports on Form 20-F for the years ended 31 December
        2000 and 2001 is
incorporated by reference herein.
406
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Annual
    General Meeting
The 2006
        Annual General Meeting will be held at the Barbican Hall, Barbican Centre,
    London EC2 on 26 May 2006 at 11 am.
The results
        of the polls on the resolutions considered at the 2005 Annual General
    Meeting were:
Total votes
Resolution
For
1
Against
Abstain
1.
To receive the Report and Accounts for 2004
4,188,264,091
6,118,493
88,050,257
2.
To re-elect the following as Directors:
(i)
Sir John Bond
4,087,518,427
35,336,901
158,770,790
(ii)
R K F Ch'ien
4,119,809,500
32,967,572
128,710,109
(iii)
J
    D Coombe
4,273,656,415
7,019,850
926,894
(iv)
The Baroness Dunn
4,254,966,533
26,192,450
444,808
(v)
D J Flint
4,269,214,839
11,740,518
651,058
(vi)
J W J Hughes-Hallett
4,273,852,389
7,090,408
648,766
(vii)
Sir
    Brian Moffat
4,272,730,719
8,065,251
883,817
(viii)
S
    W Newton
4,273,404,835
7,323,052
898,632
(ix)
H Sohmen
4,259,449,879
13,998,760
8,208,565
3.
To reappoint the Auditor
4,189,566,522
34,267,063
58,565,560
4.
To approve the Directors' Remuneration Report for 2004
4,042,390,563
238,935,100
1,001,043
5.
To authorise the Directors to allot shares
4,248,533,662
34,530,610
775,383
6.
To disapply pre-emption rights (Special Resolution)
4,237,314,079
45,636,207
807,662
7.
To authorise the Company to purchase its own Ordinary Shares
4,277,201,897
5,720,170
890,586
8.
To amend the HSBC Holdings Savings-Related Share Option Plan
4,256,919,733
21,915,186
4,695,692
9.
To amend the HSBC Holdings Savings-Related Share Option Plan:
International
4,256,986,127
21,917,140
4,613,955
10.
To approve the HSBC US Employee Stock Plan
4,252,360,655
26,756,715
4,402,810
11.
To approve The HSBC Share Plan
4,139,629,417
125,440,646
17,238,305
12.
To alter the Articles of Association (Special Resolution)
4,276,758,493
4,704,696
1,642,885
1
Includes
    discretionary votes.
Interim
    results
The interim
        results for the six months to 30 June 2006 will be announced on 31 July
    2006.
Interim
    dividends for 2006
The Board
        has adopted a policy of paying quarterly dividends. Under this policy
        it is intended to have a pattern of three equal interim dividends with
        a variable fourth interim dividend. It is envisaged that the first interim
        dividend in respect of 2006 will be US$0.15 per ordinary share. The
    proposed timetables for the dividends in respect of 2006 are:
Interim dividends for 2006
First
Second
Third
Fourth
Announcement
2 May 2006
31 July 2006
6 November 2006
5 March 2007
ADSs quoted ex-dividend in New York
17 May 2006
16 August 2006
21 November 2006
21 March 2007
Shares
    quoted ex-dividend in London, Hong Kong
and
    Bermuda
17 May 2006
16 August 2006
22 November 2006
21 March 2007
Record
              date and closure of Hong Kong Overseas Branch Register of shareholders
    for one day
19 May 2006
18 August 2006
24 November 2006
23 March 2007
Shares quoted ex-dividend in Paris
22 May 2006
21 August 2006
27 November 2006
26 March 2007
Payment date
6 July 2006
4 October 2006
18 January 2007
10 May 2007
407
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H S B C   H O L
D I N G S   P L C
Shareholder
      Information
(continued)
Shareholder
    enquiries and communications
Enquiries
Any enquiries
        relating to your shareholding, for example transfers of shares, change
        of name or address, lost share certificates or dividend cheques, should
        be sent to the
Registrars:
Principal Register
Hong Kong Overseas Branch Register:
Bermuda Overseas Branch Register:
Computershare Investor Services PLC
Computershare Hong Kong Investor
Corporate Shareholder
Services
PO Box 1064, The Pavilions
Services Limited
The Bank of Bermuda Limited
Bridgwater Road
Hopewell Centre, 46th
Floor
6 Front Street
Bristol BS99 3FA
183 Queen's Road East
Hamilton HM 11
UK
Wan Chai
Bermuda
Hong Kong
Any
    enquiries relating to ADSs should be sent to the depositary:
The
    Bank of New York
101
    Barclay Street
Floor
    22W
New
    York, NY 10286
USA
Any
      enquiries relating to shares held through Euroclear France, the settlement
      and central depositary system for Euronext Paris, should be sent to the
    paying agent:
HSBC
    France
103,
      avenue des
Champs Elysées
75419,
    Paris Cedex 08
France
Further
      copies of this
Annual
    Report and Accounts 2005
may be obtained by writing to the following departments.
For those in Europe, the Middle East and
Africa
For those in Asia-Pacific:
For those in the Americas:
Group Corporate Affairs
Group Public Affairs
Employee Communications
HSBC Holdings plc
The Hongkong and Shanghai Banking
HSBC-North America
8 Canada Square
Corporation Limited
2700 Sanders Road
London E14 5HQ
1 Queen's Road Central
Prospect Heights
UK
Hong Kong
Illinois 60070
USA
Electronic communications
Shareholders
      may at any time choose to receive corporate communications in printed form
      or electronically. To register online to receive electronic communications,
      or revoke or amend an instruction to receive electronic communications,
      go to www.hsbc.com/ecomms. If you received this document electronically
      and would like to receive a printed copy or would like to receive future
      shareholder communications in printed form, please write to the appropriate
      Registrars at the address given above. Printed copies will be provided
    without charge.
408
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Chinese
    translation
A Chinese
    translation is available on request after 4 April 2006 from the Registrars:
Computershare
    Hong Kong Investor Services Limited
Hopewell
    Centre, 46th Floor
183 Queen's
    Road East
Wan Chai
Hong Kong
Computershare
    Investor Services PLC
PO Box
    1064, The Pavilions
Bridgwater
    Road
Bristol
    BS99 3FA
UK
Please
        also contact the Registrars if you wish to receive Chinese translations
        of future documents or if you have received a Chinese translation of
        this document and do not wish to
receive such translations in future.
Investor relations
Enquiries
    relating to HSBC's strategy or operations may be directed to:
Senior Manager
Investor Relations
Director – Corporate
Finance and
Investor
Relations
Senior Manager External
Relations
HSBC Holdings plc
HSBC Finance Corporation
The Hongkong and Shanghai Banking
8 Canada Square
2700 Sanders Road
Corporation Limited
London E14 5HQ
Prospect Heights, IL 60070
1 Queen's Road Central
UK
USA
Hong Kong
Telephone:   +44 (0)20 7991 8041
1 847 564 6478
852 2822 4929
Facsimile:     +44 (0)20 7991 4663
1 847 205 7538
852 2845 0113
E-mail:           investorrelations@hsbc.com
investor.relations@us.hsbc.com
investorrelations@hsbc.com.hk
Where
    more information about HSBC is available
This
Annual
          Report and Accounts 2005
, and other information on HSBC, may be viewed on our web
    site: www.hsbc.com.
US
        Investors may read and copy the reports, statements or information that
        HSBC Holdings files with the Securities Exchange Commission at its public
        reference room in Washington, DC, which is located at Judiciary Plaza,
        450 Fifth Street, N.W., Room 1024, Washington, DC 20549. These documents
        will also be available at the Commission's regional offices located
        at the Woolworth Building, 233 Broadway, New York, NY 10279 and at Citicorp
        Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Investors
        should call the Commission at 1-800-SEC-0330 for further information
        on the operation of the public reference rooms. Investors can request
        copies of these documents upon payment of a duplicating fee, by writing
        to the Commission at 450 Fifth Street, N.W., Washington, DC 20549. Investors
        may also obtain the reports and other information HSBC Holdings files
        at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
    New York, NY 10005.
409
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H S B C   H O L
D I N G S   P L C
Shareholder
      Information
(continued)
Dividends
    on the ordinary shares of HSBC Holdings
HSBC Holdings
    has paid dividends on its ordinary shares every year without interruption
    since it became the HSBC Group holding company by a scheme of arrangement
    in 1991. The dividends declared, per ordinary share, for each of the last
five years were:
First
Second
Third
Fourth
interim
interim
interim
interim
Total
2
2005
1
US$
0.140
0.140
0.140
0.310
0.730
£
0.077
0.079
0.079
0.180
0.415
HK$
1.088
1.086
1.085
2.404
5.663
2004
US$
0.130
0.130
0.130
0.270
0.660
£
0.071
0.072
0.069
0.140
0.352
HK$
1.013
1.014
1.013
2.104
5.144
2003
US$
0.240
0.120
0.240
–
0.600
£
0.146
0.065
0.134
–
0.345
HK$
1.860
0.931
1.863
–
4.654
2002
US$
0.205
0.325
–
–
0.530
£
0.130
0.202
–
–
0.332
HK$
1.600
2.534
–
–
4.134
2001
US$
0.190
0.290
–
–
0.480
£
0.129
0.200
–
–
0.329
HK$
1.482
2.261
–
–
3.743
1
The
              fourth interim dividend for 2005 of US$0.31 per share has been translated
              into pounds sterling and Hong Kong dollars at the closing rate on 31 December
              2005. The
dividend will be paid on 11 May 2006.
2
The above dividends declared are accounted for as disclosed in Note 11 on the Financial Statements.
Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong
Kong dollars, or satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.
Nature
    of trading market
HSBC Holdings
    ordinary shares are listed or admitted to trading on the London Stock Exchange,
    the Hong Kong Stock Exchange ('HKSE'), Euronext Paris, NYSE and the Bermuda Stock
  Exchange. HSBC Holdings maintains its principal share register in London and overseas branch share registers in Hong Kong and Bermuda (collectively, the 'share register').
As at 31 December 2005, there were a total of 205,821 holders of record of HSBC Holdings ordinary shares.
As at 31 December 2005, a total of 13,403,975 of
the HSBC Holdings ordinary shares were registered in the HSBC Holdings share register in the name of 9,188 holders of record with addresses in the United States. These shares represented 0.12 per cent of the total HSBC Holdings ordinary shares in
issue.
As at 31 December 2005, there were 11,642 holders of record of ADSs holding approximately 105 million ADSs, representing approximately 525 million HSBC
Holdings ordinary shares. 11,411 of these holders had addresses in the United States, holding approximately 104.8 million ADSs, representing 524 million HSBC Holdings ordinary shares. As at 31 December 2005, approximately 4.6 per cent of the HSBC
Holdings ordinary shares were represented by ADSs held by holders of record with addresses in the United States.
The following table shows, for the years, calendar quarters and months indicated, the highest and lowest prices for the HSBC Holdings ordinary shares and
ADSs. These are based on mid-market prices at close of business on the London Stock Exchange, HKSE, Euronext Paris, NYSE and the Bermuda Stock Exchange.
Past share price performance should not be regarded as a guide to future performance.
410
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High
      and low mid-market
closing prices
London
Hong
    Kong
New York
Paris
Bermuda
2
US$0.50 shares
US$0.50 shares
ADSs
1
US$0.50 shares
US$0.50 shares
High
Low
High
Low
High
Low
High
Low
High
Low
pence
pence
HK$
HK$
US$
US$
euro
euro
US$
US$
2005
950
825
133.5
120.1
85.8
77.5
13.9
12.0
17.1
15.7
2004
954
784
136.5
109.5
87.8
70.0
13.6
11.8
17.3
14.5
2003
914
631
122.5
80.3
78.8
51.1
13.4
9.3
–
–
2002
866
643
97.5
78.8
64.4
50.3
13.9
10.2
–
–
2001
1092
608
121.5
68.5
79.7
44.8
17.3
9.5
–
–
London
Hong Kong
New York
Paris
Bermuda
US$0.50 shares
US$0.50 shares
ADSs
1
US$0.50 shares
US$0.50 shares
High
Low
High
Low
High
Low
High
Low
High
Low
pence
pence
HK$
HK$
US$
US$
euro
euro
US$
US$
2005
4
th
Quarter
950
873
126.5
120.1
81.6
77.5
13.9
12.8
16.5
15.7
3
rd
Quarter
936
885
129.2
123.0
83.2
79.0
13.6
13.0
16.6
16.0
2
nd
Quarter
895
825
127.0
122.5
81.4
78.6
13.5
12.0
16.2
15.8
1
st
Quarter
907
832
133.5
122.5
85.8
78.3
13.3
12.2
17.1
15.9
2004
4
th
Quarter
954
860
136.5
124.5
87.8
79.8
13.6
12.4
17.3
16.0
3
rd
Quarter
888
784
124.0
114.5
79.8
72.7
13.1
11.8
15.9
14.6
2
nd
Quarter
836
789
118.5
109.5
76.5
70.0
12.6
11.8
15.3
14.5
1
st
Quarter
893
802
128.5
115.5
82.5
73.5
13.2
12.0
16.5
14.7
London
Hong
    Kong
New York
Paris
Bermuda
US$0.50 shares
US$0.50
    shares
ADSs
1
US$0.50
    shares
US$0.50
    shares
High
Low
High
Low
High
Low
High
Low
High
Low
pence
pence
HK$
HK$
US$
US$
euro
euro
US$
US$
2006
January
969
924
131.3
124.5
85.5
80.5
14.2
13.4
17.1
16.4
2005
December
937
910
126.5
124.0
81.5
80.3
13.9
13.5
16.5
16.2
November
950
891
125.7
121.9
81.6
78.9
13.9
13.1
16.3
16.1
October
923
873
126.0
120.1
81.2
77.5
13.6
12.8
16.2
15.7
September
921
885
127.0
125.0
82.3
80.6
13.5
13.0
16.6
16.2
August
932
888
129.2
124.3
83.2
79.9
13.5
13.0
16.5
16.1
July
936
896
127.3
123.0
81.8
79.0
13.6
13.1
16.2
16.0
Notes
1
In New York each ADS represents 5 underlying ordinary shares.
2
Shares were not listed on the Bermuda Stock Exchange prior to 18 February 2004.
Stock Symbols
HSBC Holdings
    ordinary shares trade under the following stock symbols:
London Stock Exchange
HSBA
Hong Kong Stock Exchange
5
New York Stock Exchange (ADS)
HBC
Euronext Paris
HSB
Bermuda Stock Exchange
HSBC
411
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H S B C   H O L
D I N G S   P L C
Organisational
Structure
The
  HSBC Group
Structure
of
Principal
Operating
Companies
at
January
2006
NOTES
1)
This
      chart is a simplified ownership diagram only; not all intermediate holding
      companies are shown.
2)
A percentage figure in brackets inside a company name box indicates the
      ultimate percentage owned of that company within the HSBC Group.
3)
Where
      no figure appears the company is wholly owned.
4)
Places
      of incorporation are shown in Notes 20 and 24 on the Financial Statements.
412
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H S B C   H O L
    D I N G S   P L C
SEC 20-F
      Cross-Reference
Sheet and Glossary
Cross-Reference
          Sheet
Form
          20-F Item Number and Caption
Location
Page
PART
        I
1.
Identity
        of Directors, Senior Management
Not
        required for Annual Report
—
and
    Advisers
2.
Offer
        Statistics and Expected Timetable
Not
        required for Annual Report
—
3.
Key
        Information
A.
Selected
        Financial Data
Five-Year
        Comparison
3
US
        GAAP Selected Financial Data
4
B.
Capitalisation
        and Indebtedness
Not
        required for Annual Report
—
C.
Reasons
        for the Offer and use of
Not
        required for Annual Report
—
Proceeds
D.
Risk Factors
Not
        Applicable
—
4.
Information
        on the Company
A.
History
        and Development of the
Description
        of Business
7-19
Company
Financial
        Review
26-98,
        420
B.
Business
        Overview
Description
        of Business
7-19
Governance,
        Regulation and Supervision
20-24
Financial
        Review
26-98
C.
Organisational
        Structure
Description
        of Business
7
Organisational
        Structure Chart
412
Note
        24 – Notes on the Financial
301-303
Statements
D.
Property,
        Plants and Equipment
Description
        of Property
25
Report
        of the Directors
189
Note
        23 – Notes on the Financial
298-300
Statements
5.
Operating
        and Financial Review and
Prospects
A.
Operating
        Results
Financial
        Review
26-149
B.
Liquidity
        and Capital Resources
Financial
        Review
150-152
173-177
C.
Research
        and Development, Patents
Not
        Applicable
—
and
Licences,
        etc.
D.
Trend Information
Financial
        Review
26-149
E.
Off-Balance
        Sheet Arrangements
Other
        Information
182-183
F.
Contractual
        Obligations
Other
        Information
183
6.
Directors,
        Senior Management and
Employees
A.
Directors
        and Senior Management
Board
        of Directors and Senior
184-188
Management
B.
Compensation
Directors' Remuneration
        Report
215-232
C.
Board Practices
Report
        of the Directors
200-210,
215
Directors' Remuneration
        Report
223-225
D.
Employees
Description
        of Business
10
E.
Share Ownership
Report
        of the Directors
211-213
Directors' Remuneration
        Report
229-232
7.
Major
        Shareholders and Related Party
Transactions
A.
Major Shareholders
Report
        of the Directors
213
413
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H S B C   H O L
    D I N G S   P L C
SEC 20-F
      Cross-Reference
Sheet and Glossary
(continued)
B.
Related
        Party Transactions
Note
        43 – Notes on the Financial
330-332
Statements
C.
Interests
        of Experts and Counsel
Not
        Applicable
—
8.
Financial
        Information
A.
Consolidated
        Statements and Other
Financial
        Statements
233-402
Financial
        Information
Legal
        Proceedings
25
Note
        42 – Notes on the Financial
330
Statements
Shareholder
        Information
410
B.
Significant
        Changes
Not
        Applicable
—
9.
The
        Offer and Listing
A.
Offer
        and Listing Details
Shareholder
        Information
406-411
B.
Plan
        of Distribution
Not
        required for Annual Report
—
C.
Markets
Shareholder
        Information
406-411
D.
Selling
        Shareholders
Not
        required for Annual Report
—
E.
Dilution
Not
        required for Annual Report
—
F.
Expenses
        of the Issue
Not
        required for Annual Report
—
10.
Additional
        Information
A.
Share
        Capital
Not
        required for Annual Report
—
B.
Memorandum
        and Articles of
Shareholder
        Information
406
Association
C.
Material
        Contracts
Not
        Applicable
—
D.
Exchange
        Controls
Exchange
        controls and other limitations
affecting
        security holders
7
E.
Taxation
Shareholder
        Information
403-405
F.
Dividends
        and Paying Agents
Not
        required for Annual Report
—
G.
Statements
        by Experts
Not
        required for Annual Report
—
H.
Documents
        on Display
Shareholder
        Information
408-409
I.
Subsidiary
        Information
Not
        Applicable
—
11.
Quantitative
        and Qualitative Disclosures
Financial
        Review
152-172
About
        Market Risk
Note
        17 and 34 – Notes on the Financial
285-289
Statements
316-317
12.
Description
        of Securities Other than Equity
Securities
A.
Debt
        Securities
Not
        required for Annual Report
—
B.
Warrants
        and Rights
Not
        required for Annual Report
—
C.
Other
        Securities
Not
        required for Annual Report
—
D.
American
        Depositary Shares
Not
        required for Annual Report
—
PART
        II
13.
Defaults,
        Dividends Arrearages and
Not
        Applicable
—
Delinquencies
14.
Material
        Modifications to the Rights of
Not
        Applicable
—
Securities
        Holders and Use of Proceeds
15.
Controls
        and Procedures
Disclosure
        Controls
184
16.
[Reserved]
A.
Audit
        Committee Financial Expert
Report
        of the Directors
203-204
B.
Code
        of Ethics
Report
        of the Directors
206-208
C.
Principal
        Accountant Fees and Services
Report
        of the Directors
203-206
Note
        8 – Notes on the Financial
269
Statements
D.
Exemptions
        from the Listing Standards
Not
        Applicable
—
for
        Audit Committees
E.
Purchases
        of Equity Securities by the
Report
        of the Directors
213
Issuer
        and Affiliated Purchasers
413a
Back to Contents
PART
        III
17
.
Financial
        Statements
Not
        Applicable
—
18
.
Financial
        Statements
Financial
        Statements
233-402
19
.
Exhibits
        (including Certifications)
*
Glossary
          of accounting terms and abbreviations
Accounting
          terms used
US
          equivalent or brief description
Accounts
Financial
        Statements
Allotted
Issued
Articles
        of Association
Bylaws
Associates
Long-term
        equity investments accounted for by the equity method
Attributable
        profit
Net income
Balance
        sheet
Statement
        of financial position
Bills
Notes
Called-up
        share capital
Ordinary
        shares, issued and fully paid
Capital
        allowances
Tax depreciation
        allowances
Creditors
Payables
Debtors
Receivables
Deferred
        tax
Deferred
        income tax
De-mutualising
Process
        by which a mutual society is converted into a public limited company
Depreciation
Amortisation
Finance
        lease
Capital
        lease
Freehold
Ownership
        with absolute rights in perpetuity
Interests
        in associates and joint ventures
Long-term
        equity investments accounted for by the equity method
Loans and
        advances
Lendings
Loan capital
Long-term
        debt
Nominal
        value
Par value
One-off
Non-recurring
Ordinary
        shares
Common
        stock
Overdraft
A line
        of credit, contractually repayable on demand unless a fixed-term has
        been agreed, established through a customer's current account
Preference
        shares
Preferred
        stock
Premises
Real estate
Provisions
Allowances
Share capital
Ordinary
        shares or common stock issued and fully paid
Shareholders' equity
Stockholders' equity
Share premium
        account
Additional
        paid-in capital
Shares
        in issue
Shares
        outstanding
Undistributable
        reserves
Restricted
        surplus
Write-offs
Charge-offs
413b
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H S B C   H O L
    D I N G S   P L C
SEC 20-F
      Cross-Reference
Sheet and Glossary
(continued)
Abbreviations used
Brief description
ABC
Asset-backed conduits
ABS
Asset-backed securities
Achievement shares
Restricted
          share awards made under the HSBC Holdings Restricted Share Plan
ADR
American depositary
    receipt
ADS
American depositary share
AICPA
The American Institute of Certified Public Accountants
AIEA
Average interest-earning assets
ALCO
Asset and liability management committee
Amparos
Argentinian
judicial orders that allow certain depositors relief from the
 pesification rules
 and recovery of their historical US dollar deposits
 at current exchange
 rates.
ARB
Accounting Research Bulletin (US)
ARM
Adjustable rate mortgage
Bank of Bermuda
The Bank of Bermuda Limited, which was acquired in February 2004
Bank of Communications
Bank of Communications Limited, mainland China's fifth largest bank in which
    HSBC acquired a 19.9% interest in August 2004.
Basel Committee
The Basel Committee on Banking Supervision
Basel II
The Final Accord of the Basel Committee on proposals for a new capital adequacy
    framework
Brazilian operations
HSBC
      Bank Brazil and subsidiaries, plus Banco Lloyds TSB S.A. and Losango Promotora
      de Vendas Limitada.
CCF
CCF S.A., the former name of HSBC France
CD
Certificate of deposit
CGU
Cash generating unit
Combined Code
Combined
    Code on Corporate Governance issued by the Financial Reporting Council
CRM
Customer relationship management
CSA
Credit support annex
CSR
Corporate social responsibility
Decision One
Decision One Mortgage Company, HSBC Finance's subsidiary which
    originates loans referred by mortgage brokers
DPF
Discretionary participation feature of insurance and investment contracts
EITF
Emerging Issues Task Force (US)
EPS award
Earnings per share measure applied to half of the award of performance shares
    under the HSBC Share Plan
EU
European Union
FASB
Financial Accounting Standards Board (US)
FDIC
Federal Deposit Insurance Corporation (US)
FHC
Financial
holding company, as defined under the Gramm-Leach-Bliley Act amendments to the
BHCA
FIN
FASB Interpretation (US)
FinCEN
The
Financial Crimes Enforcement Network, a bureau of the US Treasury Department
FSA
Financial Services Authority (UK)
FSMA
Financial Services and Markets Act 2000 (UK)
FTE
Full-time equivalent staff numbers
FTSE
Financial Times – Stock Exchange index
GAAP
Generally Accepted Accounting Principles
GDP
Gross domestic product
GHOS
Hong Kong Government Home Ownership Scheme
Global Markets
HSBC's treasury and capital markets services in Corporate, Investment
    Banking and Markets
Group
HSBC Holdings together with its subsidiary undertakings
414
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Abbreviations used
Brief description
Hang Seng Bank
Hang Seng Bank Limited, the second largest bank in Hong Kong by market
    capitalisation
HFC Bank
HFC Bank Limited, the UK-based consumer finance business acquired through
    the acquisition by HSBC of HSBC Finance Corporation
HKMA
The Hong Kong Monetary Authority
Hong Kong Model Code
Rules governing the listing of securities on the HKSE
HKSE
The Stock Exchange of Hong Kong Limited
Hong Kong
The Hong Kong Special Administrative Region of the People's Republic of
    China
Hong Kong GAAP
Hong Kong Generally Accepted Accounting Principles
HNAH
HSBC North America Holdings Inc, the bank holding company formed on
    1 January 2004 to hold all of HSBC's North America operations
HSBC
HSBC Holdings together with its subsidiary undertakings
HSBC Bank
HSBC Bank plc, formerly Midland Bank plc
HSBC Bank Argentina
HSBC Bank Argentina S.A.
HSBC Bank Brazil
HSBC Bank Brasil S.A.-Banco Múltiplo, HSBC's retail banking operation
    in Brazil, formerly Banco Bamerindus do Brasil S.A.
HSBC Bank Delaware
HSBC Trust Company (Delaware), N.A., a US nationally chartered bank
restricted to trust
activities
HSBC Bank Malaysia
HSBC Bank Malaysia Berhad
HSBC Bank Middle East
HSBC Bank Middle East Limited, formerly The British Bank of the Middle
    East
HSBC Bank Nevada
HSBC Bank Nevada, NA, (formerly Household Bank (SB), N.A.) a  nationally
    chartered 'credit card bank' in the US which is a subsidiary of
    HSBC Finance Corporation
HSBC Bank USA
HSBC's retail bank in the US. From 1 July 2004, HSBC Bank USA, N.A. (formerly
    HSBC Bank USA, Inc,)
HSBC Finance
HSBC Finance Corporation, the US consumer finance company acquired
    in March 2003 (formerly Household International, Inc.)
HSBC France
HSBC's French banking subsidiary, whose name was changed from CCF S.A.
    (previously Crédit Commercial de France S.A.) in 2005
HSBC Holdings
HSBC Holdings plc, the parent company of HSBC
HSBC Mexico
HSBC México S.A., the commercial banking subsidiary of Grupo Financiero
    HSBC, S.A. de C.V. and the fifth-largest bank in Mexico by deposits and assets
HSBC Private Bank (Suisse)
HSBC Private Bank (Suisse) S.A., HSBC's private bank in Switzerland (formerly
    HSBC Republic Bank (Suisse) S.A.)
IAS
International Accounting Standard
IFRSs
International Financial Reporting Standards
IFRIC
International Financial Reporting Interpretations Committee
IGU
Income generating unit
Industrial Bank
Industrial Bank
Co. Limited, a national joint-stock bank in China of which Hang Seng acquired
a 15.98 per cent interest in 2004
IPO
Initial public offering
Key Management Personnel
Directors and Group Managing Directors of HSBC Holdings
KPMG
KPMG Audit plc and its affiliates
Losango
Losango Promotora
de Vendas Limitada, the Brazilian consumer finance company acquired in December
2003
Mainland China
People's Republic of China excluding Hong Kong
Metris
Metris Companies Inc., US credit card issuer acquired in December 2005
M&S Money
Marks and Spencer
Retail Financial Services Holdings Limited, acquired by HSBC in November 2004.
MMEs
Middle market enterprises
MSCI
Morgan Stanley Capital International index
MSRs
Mortgage servicing rights
415
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H S B C   H O L
D I N G S   P L C
SEC 20-F
      Cross-Reference
Sheet and Glossary
(continued)
Abbreviations used
Brief description
NA
Nationally Chartered,
a designation for certain categories of banks in the US
NIM
Net interest margin
NYSE
New York Stock Exchange
OCC
Office of the Comptroller of the Currency (US)
OCI
Other comprehensive income
OFT
Office of Fair Trading (UK)
OTC
Over-the-counter dealing products
Patriot Act
The US Patriot Act of October 2001
Performance shares
Awards of HSBC
Holdings ordinary shares under employee share plans that are subject to corporate
performance conditions
Pesification
The
    mandatory and asymmetrical conversion of onshore US dollar-denominated assets
    and liabilities
in Argentina
PFS
HSBC's Personal Financial Services customer group
Ping An Insurance
Ping An Insurance
Company of China Limited, the second-largest life insurer in the PRC, in which
HSBC holds a 19.9 per cent interest
PVBP
Present value of a basis point
PVIF
Present value of in-force long-term insurance business
QUEST
HSBC's Qualifying Employee Share Ownership Trust
REIT
Real Estate Investment Trust
Repos
Sale and repurchase transactions
Reverse repos
Securities purchased under commitments to sell
RMB
Renminbi, the currency of mainland China
SEC
Securities and Exchange Commission (US)
SIC
Standard Interpretations Committee (US)
Senior Management
Group Managing Directors, Group General Managers and the Group Company
    Secretary
SFAS
Statement of Financial Accounting Standards (US)
Sinopia
Sinopia Asset Management
SME
Small and medium-sized enterprise
SOP
Statement of Position issued by the AICPA (US)
SORP
Statement of Recommended Accounting Practice issued by the BBA (UK)
SPE
Special purpose entity
The Act
The Companies Act 1985 (UK)
The Amendment
The Amendment to
IAS 39 'Financial
Instruments: Recognition and Measurement: The Fair Value Option'
The Hongkong and
Shanghai Banking Corporation
The Hongkong and
Shanghai Banking Corporation Limited, the founding member of the HSBC Group
TSR
Total shareholder return
TSR award
TSR measure applied
to half of the award of performance shares under the HSBC Share Plan
UK
United Kingdom
UK GAAP
UK Generally Accepted Accounting Principles
Units
8.875 per cent adjustable convertible rate equity security units issued by HSBC
    Finance Corporation
US
United States of America
US GAAP
US Generally Accepted Accounting Principles
VAR
Value at risk
VIE
Variable interest entity
WHIRL
Worldwide Household International Revolving Lending system
WTAS
Wealth and Tax Advisory Services, Inc.
416
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H S B C   H O L
D I N G S   P L C
lndex
Accounting
product
    offering 13
developments
    (future) 103
Corporate
    social responsibility (CSR) committee
policies
    (significant) 244
206
requirements
    in UK and Hong Kong 332
Cost efficiency
    ratio 41
Accounts
    (approval) 402
Credit
    risk management 115
Administrative
    expenses 269
Credit
    quality 127
Annual
    General Meeting 214, 407
Critical
    accounting policies 99
Assets
Cross-border
    exposures 132, 149
by
    customer group 11, 280
Customer
    groups 11, 44 – 98
by geographical
    region 15, 55, 277
Dealings
    in HSBC Holdings plc shares 213
charged
    as security 317
Debt securities
    in issue 305
deployment
    41
rating
    agency designation 129
other 303
Defined
    terms
frontispiece
Associates
    and joint ventures (interests in) 292
Deposits
Assurance
    fund (IFRSs/US GAAP differences) 375
average
    balances and average rates 179
Audit committee
    (Group) 203
Derivatives
    285
Auditor
    214
IFRSs/US
    GAAP differences 378, 392
report
    234
Directors
Balance
    sheet
biographies
    184
average
    104
board of
    directors 200, 217
consolidated
    237
emoluments
    227
HSBC Holdings
    240
interests
    211
US GAAP
    basis 389
other directorships
    225
Basis
    of preparation of accounts 243
remuneration
    215
Business
    highlights 46 – 54
responsibilities
    (statement of) 233
Calendar
    (financial) 406
service
    contracts and terms of appointment 223
Capital
Dividends
    406, 407, 410
events
    189
Donations
    214
management
    and allocation 173
Earnings
    per share 276
Cash
    flow
IFRSs/US
    GAAP differences 398
consolidated
    statement 239
Economic
    background
notes 326
Europe
    57
IFRSs/US
    GAAP differences 399
Hong Kong
    67
Cautionary
    statement regarding forward-looking
Rest of
    Asia-Pacific 74
statements
    6
North America
    83
Certificates
    of deposit and other time deposits
South America
    93
(maturity
    analysis) 181
Economic
    profit 43
Collateral
    and credit enhancements 143
Employees
    10
Commercial
    Banking
compensation
    and benefits 260
business
        highlights 48
remuneration
    policy 215
performance
        in Europe 60
disabled
    213
performance
        in Hong Kong 68
involvement
    213
performance
        in Rest of Asia-Pacific 76
Enforceability
    of judgements made in the US 6
performance
        in North America 87
Enquiries
    (from shareholders) 408
performance
        in South America 95
Equity
    323
product
        offering 12
Europe
Committees
        (board) 203
competitive
    environment 16
Communication
        with shareholders 211
economic
    background 57
Competitive
        environment 16
profit/(loss)
    56, 64
Constant
        currency 2
regulation
    and supervision 20
Contents
frontispiece
Events
    after the balance sheet date 332
Contingent
        liabilities and contractual commitments
Exchange
    controls and other limitations affecting
327
security
    holders 6
Contractual
        obligations 183
Fee income
    (net) 30
Corporate,
        Investment Banking and Markets
Financial
    assets and liabilities
business
        highlights 50
by measurement
    basis 281
performance
        in Europe 61
IFRSs/US
    GAAP differences 381
performance
        in Hong Kong 69
Financial
    assets designated at fair value 284
performance
        in Rest of Asia-Pacific 77
Financial
    highlights 1
performance
        in North America 88
Financial
    instruments
performance
        in South America 96
fair value
    313
net income
    from 257
417
Back to Contents
H S B C   H O L
D I N G S   P L C
lndex
(continued)
valuation
        101
Investment
    securities
Financial
    investments 290, 382
IFRSs/US
        GAAP differences 395
Financial
    liabilities designated at fair value 304
Investor
    relations 409
Financial
    risk management 210
Lease
    commitments 328
Five-year
    comparison 3
Legal
    proceedings 25, (litigation) 330
Fixed
    assets (intangible) 294
Liabilities
Foreign
    exchange exposures 316, 395
other
        306
Funds
    under management 42
subordinated
        309
Gains
    less losses from financial investments 34
Liquidity
    and funding management 150
Geographical
    regions 15
Loans
    and advances
Goodwill
by
        industry sector 119
and
        intangible assets 294
impairment
        38, 99, 146
impairment
        101
maturity
        and interest sensitivity 178
IFRSs/US
        GAAP differences 377, 391
IFRSs/US
        GAAP differences 384, 397
Governance
    20, 206
Loan
    impairment charges 38
HSBC
        Holdings/New York Stock Exchange
IFRSs/US
        GAAP differences 386
corporate
        governance differences 206
Management
    Board (Group) 203
Group
    Managing Directors 186
Market
    risk management 152
Health
    and safety 210
Maturity
    analysis of assets and liabilities 315
Hong
    Kong
Memorandum
    and Articles of Association 406
competitive
        environment 17
Minority
    interests 318
economic
        background 67
Nomination
    committee 203
profit/(loss)
        66, 71
North
    America
regulation
        and supervision 21
competitive
        environment 18
HSBC
    Holdings plc
economic
        background 83
balance
        sheet 240
profit/(loss)
        82, 90
cash
        flow 242
regulation
        and supervision 22
credit
        risk 143
Off-balance
    sheet arrangements 182
employee
        compensation and benefits 268
Operating
    income (net) 259
history
        and development 7
Operating
    income (other) 36
information
        409
Operating
    expenses 39
liquidity
        and funding management 151
Operational
    risk management 161
statement
        of changes in total equity 241
Organisational
    structure chart 412
structural
        foreign exchange exposures 159
Outlook
    8
Impairment
    assessment 130
Own
    shares held
Impairment
    allowances 132
IFRSs/US
        GAAP differences 384
collectively
        assessed 131
Pensions
movement
        by industry and geographical
for
        directors 228
region
        134
IFRSs/US
        GAAP differences 376, 390
Impairment
    charge to income statement 38, 139
Personal
    Financial Services
Impairment
    of assets other than financial
business
        highlights 46
instruments
        296
performance
        in Europe 58
Income
    from financial instruments (net) 33
performance
        in Hong Kong 67
Income
    statement
performance
        in Rest of Asia-Pacific 75
by
        geographical region 55
performance
        in North America 84
consolidated
        26, 236
performance
        in South America 94
Insurance
product
        offering 11
claims
        incurred (net) and movements in
Principal
    activities and business review 189
policyholders' liabilities
        37, 259
Private
    Banking
liabilities
        under contracts issued 306
business
        highlights 52
net
        earned premiums 35, 258
performance
        in Europe 62
risk
        management 162
performance
        in Hong Kong 70
Intangible
    assets
performance
        in Rest of Asia-Pacific 78
IFRSs/US
        GAAP differences 377, 392
performance
        in North America 89
Interest
    income (net) 28
performance
        in South America 96
average
        balance sheet 104
product
        offering 14
Interest
    recognition
Profit
    before tax
IFRSs/US
        GAAP differences 387
by
        customer group 11, 44, 64, 71, 80, 90, 97, 280
Internal
    control 208
by
        geographical region 15, 56, 66, 73, 82, 92, 278
International
    Financial Reporting Standards
Property,
        plant and equipment 25, 298
US
        GAAP comparison / differences 103, 375
IFRSs/US
        GAAP differences 377
transition
        332
valuation
        of land and buildings 200
Provisions
        308
418
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Purchase
    accounting
Troubled
    debt restructurings 147
IFRSs/US
        GAAP differences 377
US
    GAAP
Ratios – capital
    and performance 2
IFRSs
        comparison/differences 103, 375
Regulation
    and supervision 20
selected
        financial data 4
Related
    party transactions 330
Value
    at risk 152
Remuneration
    Committee 205, 215
Variable
    interest entities
Reputational
    risk 162
IFRSs/US
        GAAP differences 385, 398
Residual
    risk management 161
Rest
    of Asia Pacific
competitive
        environment 18
economic
        background 74
profit/(loss)
        73, 80
Restructuring
    provisions
IFRSs/US
        GAAP differences 386
Risk
    elements in loan portfolio 148
Risk
    management 115
capital
        management and allocation 173
credit
        115
insurance
        162
liquidity
        and funding management 150
market
        152
operational
        161, 209
reputational
        162, 209
residual
        value 161
Risk-weighted
    assets (by principal subsidiary) 177
Securitisations
    291
IFRSs/US
        GAAP differences 385, 399
Segment
    analysis 277
Senior
    management
biographies
        186
remuneration
        217
Share-based
    payments 269
Share
    capital 318
and
        reserves 189
notifiable
        interests 213
Share
    option plans
Bank
        of Bermuda plans 199
HSBC
        France and subsidiary plans 195
discretionary
        plans 193
for
        directors 229
for
        employees 191
HSBC
        Finance Corporation and subsidiary
plans
        196
IFRSs/US
        GAAP differences 376
Shareholder
    profile 406
Short-term
    borrowings (analysis) 182
South
    America
competitive
        environment 18
economic
        background 93
profit/(loss)
        92, 97
Statement
    of recognised income and expense 238
Strategy
    9
Stock
    symbols 411
Structural
    foreign exchange exposure 159
Subsidiaries
    301
Supplier
    payment policy 213
Taxation
    275, 403, 404 (US residents)
IFRSs/US
        GAAP differences 397
Total
    shareholder return 220
Trading
    assets and financial investments 42, 284
Trading
    income (net) 32
Trading
    market (nature of) 410
419
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HSBC
          HOLDINGS PLC
STOCKBROKERS
Incorporated
          in England on 1 January 1959 with
Goldman
        Sachs
limited
          liability under the UK Companies Act.
Peterborough
        Court
Registered
          in England: number 617987
133
        Fleet Street
London
        EC4A 2BB
REGISTERED
          OFFICE AND GROUP HEAD
United
        Kingdom
OFFICE
8
        Canada Square
HSBC
    Bank plc
London
        E14 5HQ
8
    Canada Square
United
        Kingdom
London
    E14 5HQ
Telephone:44
        (0) 20 7991 8888
United
    Kingdom
Facsimile:
        44 (0) 20 7992 4880
Web:
        www.hsbc.com
REGISTRARS
Principal
          Register
Computershare
        Investor Services PLC
PO
        Box 1064, The Pavilions
Bridgwater
        Road
Bristol
        BS99 3FA
United
        Kingdom
Telephone:
        44 (0) 870 702 0137
Hong
          Kong Overseas Branch Register
Computershare
        Hong Kong Investor Services
Limited
46
th
floor,
        Hopewell Centre
183
        Queen's Road East
Hong
        Kong
Telephone:
        852 2862 8628
Bermuda
          Overseas Branch Register
Corporate
        Shareholder Services
The
        Bank of Bermuda Limited
6
        Front Street
Hamilton
        HM11
Bermuda
Telephone:
        1 441 299 6737
ADR
          Depositary
The
        Bank of New York
101
        Barclay Street
Floor
        22W
New
        York, NY 10286
USA
Telephone:
        1 888 269 2377
Paying
          Agent (France)
HSBC
        France
103
        avenue des Champs Elysées
75419
        Paris Cedex 08
Telephone:
        33 1 40 70 22 56
420
Back to Contents
Item 19. Exhibits
Documents filed as exhibits to this Form 20-F:
Exhibit
Number
Description
1.1
Memorandum and Articles of Association of HSBC Holdings plc
2.1
The total amount of long-term debt securities of HSBC Holdings plc authorized under any instrument does not exceed 10 percent of the total assets of the Group on a consolidated basis. HSBC Holdings plc hereby agrees to furnish to the Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of HSBC Holdings plc or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.1
Employment Agreement dated November 14, 2002, by and between Household International Inc. and William F. Aldinger. *
4.2
Amendment to Employment Agreement, dated February 26 ,2005 by and between HSBC Finance Corporation (formerly Household International, Inc.) and William F. Aldinger **
4.3
Service Agreement dated July 14, 1994 between HSBC Holdings plc and John R.H. Bond. *
4.4
Service Agreement dated September 29, 1995 between HSBC Holdings plc and Douglas Jardine Flint.*
4.5
Service Agreement dated March 9, 1998 between HSBC Holdings plc and Stephen Keith Green. *
4.6
Service Agreement dated January 14, 2000 between HSBC Holdings plc and Alan Wayne Jebson. *
4.7
Service Agreement dated May 25, 2004 between HSBC Asia Holdings BV and Michael F Geoghegan. **
8.1
Subsidiaries of HSBC Holdings plc (set forth in Note 24 to the consolidated financial statements included in this Form 20-F).
12.1
Certificate of HSBC Holdings plc's Group Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2
Certificate of HSBC Holdings plc's Group Finance Director pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1
Annual Certification of HSBC Holdings plc's Group Chairman and Group Finance Director pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Back to Contents
14.1
Consent of KPMG Audit plc
14.2
Pages of HSBC Holdings plc's 2000 Form 20-F/A dated February 26, 2001 relating to the Memorandum and Articles of Association of HSBC Holdings plc that are incorporated by reference into this Form 20-F.
14.3
Pages of HSBC Holdings plc's 2001 Form 20-F dated March 13, 2002 relating to the Memorandum and Articles of Association of HSBC Holdings plc that are incorporated by reference into this Form 20-F.
*
As previously filed with the Securities and Exchange Commission as an exhibit to HSBC Holdings plc's Form 20-F dated March 5, 2004.
**
As previously filed with the Securities and Exchange Commission as an exhibit to HSBC Holdings plc's Form 20-F dated March 4, 2005.
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SIGNATURE
The registrant hereby certifies that it meets
    all of the requirements for filing on Form 20-F and that it has duly caused
    and authorized the undersigned to sign this annual report on its behalf.
HSBC HOLDINGS PLC
By: /s/ DOUGLAS J FLINT
Name: Douglas J Flint
Title: Group Finance Director
Date: March 20, 2006